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[AMERIDATA LETTERHEAD]
May 24, 1996
Dear Stockholder:
On behalf of the Board of Directors of AmeriData Technologies, Inc., I am
pleased to inform you that on May 20, 1996, AmeriData Technologies, Inc. entered
into an Agreement and Plan of Merger with General Electric Capital Corporation
('Parent') and GAC Acquisition I Corp., an indirect wholly-owned subsidiary of
Parent ('Purchaser'), pursuant to which Purchaser has commenced today a tender
offer to purchase all of the outstanding shares (the 'Shares') of AmeriData
Technologies, Inc.'s common stock at $16.00 per Share in cash (the 'Offer'). The
tender offer is currently scheduled to expire at 12:00 midnight, New York City
time, on Friday, June 21, 1996.
Following the successful completion of the Offer, upon approval by
stockholder vote, if required, Purchaser will be merged with and into AmeriData
Technologies, Inc. (the 'Merger'), and all Shares not purchased pursuant to the
Offer will be converted into the right to receive in cash $16.00 per Share or
such higher price as may be offered pursuant to the Offer, without interest.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF AMERIDATA TECHNOLOGIES, INC.
STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
AMERIDATA TECHNOLOGIES, INC. STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES OF AMERIDATA TECHNOLOGIES, INC. COMMON STOCK PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the enclosed
Solicitation/Recommendation Statement on Schedule 14D-9 which is being filed
with the Securities and Exchange Commission. Among other things, the Board
considered the opinion of its financial advisor, Alex. Brown & Sons Incorporated
('Alex. Brown'), that the consideration to be received by the holders of the
Shares pursuant to the Offer and the Merger is fair, from a financial point of
view, to such holders. The enclosed Schedule 14D-9 describes the Board's
decision and contains other important financial information relating to that
decision. I urge you to read it carefully.
Accompanying this letter, in addition to the Schedule 14D-9 and Alex.
Brown's fairness opinion, is the Offer to Purchase, together with related
materials including a letter of transmittal for use in tendering the Shares.
These documents set forth the terms and conditions of the Offer and provide
instructions as to how to tender your Shares. I urge you to read the enclosed
materials carefully and consider all factors set forth therein before making
your decision with respect to the Offer.
I, personally, along with the entire Board of Directors, management and
employees of AmeriData Technologies, Inc., thank you for the support you have
given AmeriData Technologies, Inc.
Sincerely,
/s/ Gerald A. Poch
Gerald A. Poch
Co-Chairman and Co-President
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 24, 1996
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------
AMERIDATA TECHNOLOGIES, INC.
(NAME OF SUBJECT COMPANY)
AMERIDATA TECHNOLOGIES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
------------------------
03069V103
(CUSIP NUMBER OF CLASS OF SECURITIES)
------------------------
GERALD A. POCH
CO-CHAIRMAN AND CO-PRESIDENT
AMERIDATA TECHNOLOGIES, INC.
700 CANAL STREET
STAMFORD, CT 06902
(203) 357-1464
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
WITH COPIES TO:
<TABLE>
<S> <C>
GWEN HIGGINS, ESQ. JONATHAN L. FREEDMAN, ESQ.
AMERIDATA TECHNOLOGIES, INC. DEWEY BALLANTINE
700 CANAL STREET 1301 AVENUE OF THE AMERICAS
STAMFORD, CT 06902 NEW YORK, NY 10019-6092
(203) 357-1464 (212) 259-8000
</TABLE>
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is AmeriData Technologies, Inc., a Delaware
corporation (the 'Company'). The address of the principal executive offices of
the Company is 700 Canal Street, Stamford, Connecticut 06902. The title of the
class of equity securities to which this Solicitation/Recommendation Statement
on Schedule 14D-9 (the 'Schedule 14D-9' or the 'Statement') relates is the
common stock, with $.01 par value, of the Company (the 'Common Stock').
ITEM 2. TENDER OFFER OF THE PURCHASER.
This Statement relates to the tender offer by General Electric Capital
Corporation, a New York corporation ('Parent') and its indirect, wholly-owned
subsidiary, GAC Acquisition I Corp., a Delaware corporation ('Purchaser'),
disclosed in a Tender Offer Statement on Schedule 14D-1, dated May 24, 1996 (the
'Schedule 14D-1'), to purchase all of the outstanding shares (the 'Shares') of
Common Stock at $16.00 per Share, net to the Seller in cash, upon the terms and
subject to the conditions, set forth in Purchaser's Offer to Purchase dated May
24, 1996 (the 'Offer to Purchase') and in the related Letter of Transmittal
(which, together with any amendments or supplements hereto or thereto,
collectively constitute the 'Offer'), copies of which are filed hereto as
Exhibits A and B, respectively, and incorporated herein by reference.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 20, 1996 (the 'Merger Agreement'), by and among Parent, Purchaser and
the Company, a copy of which is filed hereto as Exhibit C and incorporated
herein by reference. Pursuant to the Merger Agreement, as soon as practicable
after completion of the Offer and satisfaction or waiver, if permissible, of all
conditions to the Merger Agreement, Purchaser will be merged with and into the
Company (the 'Merger'), and the Company will become an indirect, wholly-owned
subsidiary of Parent (the 'Surviving Corporation'). At the effective time of the
Merger (the 'Effective Time'), each Share then outstanding (other than Shares
held by Parent, the Purchaser or any other wholly-owned subsidiary of Parent and
Shares held by stockholders who perfect their dissenters' rights under Section
262 of the Delaware General Corporation law) will be converted into the right to
receive $16.00 in cash or any higher price per Share paid in the Offer.
Based on information in the Offer to Purchase, the principal executive
offices of Purchaser, are located at 6875 Jimmy Carter Boulevard, Suite 3200,
Norcross, Georgia 30071 and the principal executive offices of Parent are
located at 260 Long Ridge Road, Stamford, Connecticut 06927.
ITEM 3. IDENTITY AND BACKGROUND.
(a) Name and Address of the Company. The name and address of the Company,
which is the person filing this Statement, is set forth in Item 1 above. All
information contained in this Statement or incorporated herein by reference
concerning the Purchaser, Parent or their affiliates, or actions or events with
respect to any of them, was provided by the Purchaser or Parent, respectively,
and the Company takes no responsibility for such information.
(b) Material Contracts, Etc. Each material contract, agreement, arrangement
and understanding and actual or potential conflict of interest between the
Company and/or its affiliates and (i) its executive officers, directors or
affiliates and (ii) Parent, its executive officers, directors or affiliates, is
described in the Information Statement attached hereto as Schedule I and herein
incorporated by reference or set forth below.
(b)(1) Certain Contracts, Etc. Certain contracts, agreements,
arrangements and understandings between the Company or its affiliates and
certain of its directors and executive officers are described under the captions
'Directors' Compensation', 'Proposal Two: Amendment to the 1991 Stock Option
Plan', 'Executive Compensation', 'Security Ownership of Certain Beneficial
Owners and Management', 'Executive Compensation--Report of the Compensation
Committee' and 'Compensation Committee Interlocks and Insider Participation' on
pages 3 through 14 of the Company's Proxy Statement dated April 4, 1996 for the
Company's 1996 Annual Meeting of Stockholders (the '1996 Annual Meeting Proxy
Statement'), a copy of which was previously sent to stockholders. A copy of such
portion of the 1996 Annual Meeting Proxy Statement is filed as Exhibit D hereto
and is incorporated herein by reference.
1991 Stock Option Plan. As described in greater detail in the 1996
Annual Meeting Proxy Statement, the most significant form of long-term incentive
compensation for executives of the Company is the grant of
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stock options under the Company's 1991 Stock Option Plan (the 'Stock Option
Plan'). Stock options under the Stock Option Plan ('Plan Options') are granted
to executive officers at the fair market value of the Common Stock on the date
of grant. The majority of such Plan Option grants do not vest at a rate of more
than 25% each year and are exercisable for periods ranging from 5 to 10 years.
Exercise prices of Plan Options granted to directors and executive officers
range from $2.00 to $14.75 per Share, in each case representing the fair market
value of the Common Stock on the date of grant. As of December 31, 1995, Plan
Options covering 621,725 Shares were outstanding to the named executive
officers, of which Plan Options covering 275,300 Shares were exercisable on such
date.
At the Effective Time, each holder of a then-outstanding Plan Option,
whether or not then exercisable, will, in settlement thereof, receive for each
share subject to such Plan Option an amount (subject to applicable withholding
tax) in cash equal to the difference between the Offer Price (as defined in the
Offer to Purchase) and the per share exercise price of such Plan Option,
whereupon the Option will be cancelled (except that, with respect to any person
subject to Section 16(a) of the Securities Exchange Act of 1934, as amended (the
'Exchange Act'), any such amount shall be paid as soon as practicable after the
first day payment can be made without liability to such person under Section
16(b) of the Exchange Act). The surrender of a Plan Option to the Company in
exchange for such consideration will be deemed a release of any and all rights
the holder had or may have had in respect of such Plan Option. The Company has
amended the Stock Option Plan to provide that it, among other things, shall
terminate as of the Effective Time.
Employment Agreements. As described in greater detail in the 1996
Annual Meeting Proxy Statement, Messrs. Poch, Fassler and McCleary have entered
into employment agreements with the Company which expire in December 1998. Such
contracts provide for a base salary of $322,000 for 1996, subject to cost of
living increases, and an automobile allowance not to exceed $500 per month.
Messrs. Poch, Fassler and McCleary are each also entitled to a bonus equal to
2.5% of the Company's pre-tax income; provided, however, that the bonus and
salary for each of Messrs. Poch, Fassler and McCleary for any year shall not
exceed an aggregate of $1 million each.
Messrs. Poch, Fassler and McCleary have each amended their respective
employment agreements with the Company (each, an 'Amended Employment
Agreement'), effective upon, and subject to, the acceptance by Purchaser of, or
payment by Purchaser for, Shares pursuant to the Offer. Upon effectiveness of
the Amended Employment Agreements for each of Messrs. Poch and McCleary, such
Amended Employment Agreements shall (i) modify and extend to forty-eight months
following the executive's termination of employment the provisions relating to
such executive's non-competition with the Company, non-solicitation of customers
of the Company and non-disclosure of Company information, (ii) provide that the
Company can terminate the executive at any time, (iii) provide that the
executive's employment with the Company shall be deemed terminated if there is
an attempt to change the executive's place of work to a location more than 15
miles from its present location and, in the case of Mr. Poch, if there is a
material diminution in the executive's duties, (iv) provide for severance pay
(A) in the amount of $1,000,000 if the executive's employment is terminated
(other than for cause or on account of death or disability) during the 12-month
period following the effective date of the Amended Employment Agreement and (B)
subsequent to such 12-month period, in a lump-sum amount equal to the
compensation not yet paid under the terms of sum Amended Employment Agreement if
the executive's employment is terminated (other than for cause or on account of
death or disability), (v) provide that the Company and the executive will
negotiate to amend the bonus provisions in the executive's employment agreement
so as not to result in an enlargement or diminution of the executive's right to
bonus compensation following the Merger (except as provided in clause (vi) and
(vi) in the case of Mr. Poch, provides for a $100,000 increase in the amount of
his bonus in respect of each of the first two years following the effective date
of his Amended Employment Agreement in order to incentivize Mr. Poch in
connection with his management of the disposition of the Company's radio assets.
Similarly, upon the effectiveness of Mr. Fassler's Amended Employment
Agreement, pursuant to such agreement, for a period of two and one-half years,
Mr. Fassler will be employed as an advisor to the Company in connection with
future mergers and acquisitions by the Company. During the first two years of
his amended agreement, Mr. Fassler will be available to the Company for up to 50
days per year and, during the last six months of such agreement, he will be
available to the Company for up to 25 days. Mr. Fassler will not be required to
perform advisory services on a regular basis at a location which is more than 15
miles from Stamford,
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Connecticut, other than reasonable travel requirements. The Company will pay Mr.
Fassler (i) $500,000 at the effective date of his amended employment agreement,
(ii) $275,000 per year for the first two years of his Amended Employment
Agreement and (iii) $100,000 for the last six months of his Amended Employment
Agreement, in each case irrespective of whether the Company uses Mr. Fassler's
advisory services. To the extent that the employee benefits which Mr. Fassler
received prior to the effective date of his Amended Employment Agreement cannot
reasonably be provided to him under the Company's benefit plans, he will receive
a cash payment economically equivalent to such benefits. In the event of
termination of Mr. Fassler's employment prior to the end of the Amended
Employment Agreement's term (other than for cause), Mr. Fassler is entitled to
receive a lump sum payment equal to Mr. Fassler's compensation pursuant to such
agreement, discounted based on the prime rate of Chemical Bank then in effect.
The non-competition, non-solicitation and non-disclosure provisions of Mr.
Fassler's employment agreement have been amended by his Amended Employment
Agreement in the same manner described above concerning Messrs. Poch and
McCleary. Although Mr. Fassler's original employment agreement would have
provided for future bonuses, his Amended Employment Agreement does not provide
for such bonuses.
A copy of each of Mr. Poch's and Mr. McCleary's employment agreement is
attached hereto as Exhibits K and M, respectively, and incorporated herein by
reference. A copy of each of Messrs. Poch's, McCleary's and Fassler's Amended
Employment Agreement is attached Exhibits L, N and O, respectively, and
incorporated herein by reference.
Additionally, in connection with the acquisition of David Mitchell &
Associates, Inc., AmeriData Consulting, Inc. entered into an employment
agreement dated September 9, 1994 with David F. Mitchell, President of AmeriData
Consulting, Inc., a wholly-owned subsidiary of the Company. The agreement
expires on December 31, 1999 and provides for a base salary of up to $250,000
per year, subject to annual increases at the discretion of the Board of
Directors, and an automobile allowance not to exceed $500 per month. The
agreement provides that Mr. Mitchell is entitled to an annual bonus equal to 10%
of the pre-tax income of AmeriData Consulting, Inc. and its subsidiaries
commencing in 1996; provided, however, that the bonus and salary for Mr.
Mitchell for any year shall not exceed an aggregate of $1 million.
AmeriData Technologies, Inc. Employee Savings Plan. The executive
officers of the Company are eligible to participate in the AmeriData
Technologies, Inc. Employee Savings Plan (the 'Savings Plan'). The Savings Plan
is a tax-qualified, profit-sharing plan which allows the executive officers to
make salary-deferral elections pursuant to Section 401(k) of the Internal
Revenue Code and provides for a discretionary Company matching contribution. To
date, no matching contributions have been made by the Company to the Plan. One
of the investment alternatives available under the Savings Plan is the Common
Stock Fund which is entirely invested in Common Stock. The trustee of the
Savings Plan votes all Shares of the Common Stock held under the Savings Plan on
each matter presented to the shareholders in such manner as it determines in its
discretion. Accordingly, such trustee will have the right to vote on the Merger
with respect to Shares held under the Savings Plan. In connection with the
Merger, all Common Stock held under the Savings Plan will be converted into cash
at the Offer price.
(b)(2) The Merger Agreement. The summary of the Merger Agreement
contained in the Offer to Purchase, which has been filed with the Commission as
Exhibit A to the Schedule 14D-1, is filed herewith as Exhibit C and incorporated
herein by reference. Such summary should be read in its entirety for a more
complete description of the terms and provisions of the Merger Agreement. The
following summarizes certain portions of the Merger Agreement which relate to
arrangements among the Company, Parent and the Company's executive officers and
directors. The summary of the Merger Agreement contained in the Offer to
Purchase and the following summary are each qualified in their entirety by
reference to the Merger Agreement.
The Offer. The Merger Agreement provides for the commencement of the
Offer. Purchaser has expressly reserved the right to increase the price per
Share payable in the Offer or to make any other changes in the terms and
conditions of the Offer, except that without the prior written consent of the
Company, Purchaser has agreed that it will not (i) decrease or change the form
of the Offer Price or decrease the number of Shares sought pursuant to the
Offer, (ii) impose additional conditions to the Offer, (iii) extend the
expiration date of the Offer (except as required by law or the applicable rules
and regulations of the Securities and Exchange Commission (the 'Commission') and
except that Purchaser may extend the expiration date of the Offer (x) for up to
twenty
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(20) business days after the initial expiration date or (y) for longer periods
(not to exceed 120 calendar days from the date of commencement) in the event
that any condition to the Offer is not satisfied), or (iv) amend any term of the
Offer in any manner adverse to stockholders; provided, however, that, except as
set forth above, Purchaser may waive any condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the Commission. Assuming the
prior satisfaction or waiver of the conditions to the Offer, Purchaser will
accept for payment, and pay for, in accordance with the terms of the Offer, all
Shares validly tendered and not withdrawn pursuant to the Offer as soon as
practical after the expiration date thereof.
Payment for Shares. Prior to the Effective Time, Parent will deposit or
shall cause to be deposited with the Paying Agent (as defined in the Merger
Agreement) in a separate fund established for the benefit of the holders of
Shares, for payment in accordance with the Merger Agreement (the 'Payment
Fund'), immediately available funds in amounts necessary to make the payments
pursuant to the Merger Agreement to holders of Shares (other than the Company or
any wholly-owned Subsidiary of the Company or Parent, Sub or any other
wholly-owned Subsidiary of Parent, or holders of Dissenting Shares). The Paying
Agent shall, pursuant to irrevocable instructions, pay the Merger Consideration
out of the Payment Fund.
Any portion of the Payment Fund which remains undistributed to the holders
of Shares for six months after the Effective Time shall be delivered to the
Company, upon demand, and any holders of Shares who have not theretofore
complied with the Merger Agreement and the instructions set forth in the letter
of transmittal mailed to such holder after the Effective Time shall thereafter
look only to the Company for payment of the Merger Consideration (as defined in
the Merger Agreement) to which they are entitled; provided that if, but only if,
the Company shall have defaulted in its obligation to make such payment within a
reasonable period of time after receipt of written request therefor from any
such holder, such holder may thereafter look to Parent for payment of the Merger
Consideration to which they are entitled. All interest accrued in respect of the
Payment Fund shall inure to the benefit of and be paid to Parent.
Board Representation. The Merger Agreement provides that promptly upon the
purchase pursuant to the Offer by Parent or any of its subsidiaries (including
Purchaser) of such number of Shares which represents at least a majority of the
Shares outstanding, and from time to time thereafter, Parent will be entitled to
designate such number of directors, rounded up to the next whole number, on the
Company's Board that equals the product of (x) the number of directors (the
'Parent's Designees') on the Board (giving effect to any increase in the number
of directors pursuant to the Merger Agreement) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the 'Board Percentage'), and the Company will,
subject to Parent's having theretofore provided the Company with the information
with respect to the Parent's Designees required pursuant to compliance with
Section 14(f) of the Exchange Act, promptly satisfy the Board Percentage by (i)
increasing the size of the Board or (ii) securing the resignations of such
number of directors as is necessary to enable Parent's Designees to be elected
to the Company's Board (and the Company shall use its best efforts to cause the
then remaining members of the Board to promptly so elect Parent's Designees). At
the request of Parent, the Company will take, at the Company's expense, all
lawful action necessary to effect any such election, including, without
limitation, mailing to the Company's stockholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, unless
such information has previously been provided to the Company's stockholders in
the Schedule 14D-9. Following the election or appointment of Parent's Designees
pursuant to the Merger Agreement and prior to the Effective Time, any amendment
or termination of the Merger Agreement, extension for the performance or waiver
of the obligations or other acts of Parent or Purchaser, or waiver of the
Company's rights under the Merger Agreement will require the concurrence of a
majority of directors of the Company then in office who are directors on the
date of the Merger Agreement and who voted to approve the Merger Agreement;
provided that if there are no such directors, such actions may be effected by
majority vote of the entire Board of Directors of the Company.
Consideration to be Paid in the Merger. The Merger Agreement provides
that, upon the terms and subject to the conditions set forth in the Merger
Agreement, and in accordance with the Delaware General Corporation Law (the
'DGCL'), Purchaser will be merged with and into the Company at the Effective
Time. At the Effective Time, the separate corporate existence of Purchaser will
cease, and the Company will continue as the Surviving Corporation. At the
Effective Time, by virtue of the Merger, each Share issued and outstanding
immediately prior to the Effective Time (excluding shares owned, directly or
indirectly, by the Company or any
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wholly-owned subsidiary of the Company or by Parent, Purchaser or any other
wholly-owned subsidiary of Parent and excluding Dissenting Shares (as defined in
the Merger Agreement)) will be converted into the right to receive the Merger
Consideration, without any interest thereon, upon surrender and exchange of a
certificate which immediately prior to the Effective Time represented such
Shares (each, a 'Certificate'). Each share of the capital stock of Purchaser
issued and outstanding immediately prior to the Effective Time will be converted
into one fully paid and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation which will thereupon become an indirect,
wholly-owned subsidiary of Parent. Each Share of Company Common Stock and all
other shares of capital stock of the Company that are owned by the Company and
all Shares and other shares of capital stock of the Company owned by Parent,
Purchaser or any other wholly-owned subsidiary of Parent or the Company will be
cancelled and retired and will cease to exist and no consideration will be
delivered or deliverable in exchange therefor. Subject to the provisions of the
Merger Agreement, the Merger will become effective upon the filing of a
Certificate of Merger with the Secretary of State of the State of Delaware or at
such time thereafter as is provided in the Certificate of Merger.
Options, Warrants and Other Purchase Rights. After the Effective Time,
each holder of (i) a then outstanding option (collectively, the 'Employee
Options') to purchase Shares under the Stock Option Plan and the Option
Agreements (as defined in the Merger Agreement) between the Company and certain
of its officers, directors, employees and consultants (the 'Stock Option
Plans'), (ii) a Warrant (as defined in the Merger Agreement), and (iii) except
as provided in the Merger Agreement, any other option, warrant or other right to
acquire (upon purchase, exchange, conversion or otherwise) Shares (collectively,
the 'Other Options' and, together with the Employee Options, the 'Options'),
shall upon exercise of such Option or Warrant in accordance with its terms, be
entitled to receive for each Share subject to such Option or Warrant, in
settlement and cancellation thereof, an amount (subject to any applicable
withholding tax) in cash equal to the difference between the Offer Price and the
per Share exercise price of such Option or Warrant, as the case may be, to the
extent such difference is a positive number; provided, however, that with
respect to any person subject to Section 16(a) of the Exchange Act, any such
amount shall be paid as soon as practicable after the first date payment can be
made without liability to such person under Section 16(b) of the Exchange Act.
At the Effective Time, each holder of a right to purchase Shares under the
Company's 1991 Stock Purchase Plan (the 'Stock Purchase Plan') pursuant to any
offering under the Stock Purchase Plan (a 'Right'), whether or not then
exercisable, shall, in settlement and cancellation thereof, receive for such
Right an amount (subject to any applicable withholding tax) in cash (such amount
being hereinafter referred to as the 'Rights Consideration') equal to the sum of
(i) the product of such holder's Accrued Shares (as defined below) with respect
to such offering times the difference between (A) the Offer Price and (B) the
lower of (I) 85% of the fair market value of the Shares on the effective date of
the related offering under the Stock Purchase Plan (determined in accordance
with the Stock Purchase Plan) and (II) 85% of the fair market value of the
Shares on the date immediately prior to the public announcement of the Offer
(such lower amount with respect to an offering, the 'Applicable Per Share
Price'), to the extent such difference is a positive number, plus (ii) an amount
equal to the aggregate amount in such holder's payroll deduction account with
the Company with respect to such offering at the Effective Time (the 'Related
Deduction Account Amount'); provided, however, that with respect to any person
subject to Section 16(a) of the Exchange Act, any such amount shall be paid as
soon as practicable after the first date payment can be made without liability
to such person under Section 16(b) of the Exchange Act. Upon receipt of the
related Rights Consideration, the Right shall be canceled and such receipt shall
be deemed a release of any and all rights the holder had or may have had in
respect of any and all rights the holder had or may have had in respect of such
Right. The 'Accrued Shares' of a holder of a Right with respect to any offering
under the Stock Purchase Plan shall mean the amount obtained by dividing (I) the
Related Deduction Account Amount with respect to such offering by (II) the
Applicable Per Share Price with respect to such offering, rounded up to the next
whole share.
After the Effective Time, each holder of a Subordinated Debenture (as
defined below) shall be entitled to receive, upon conversion thereof in
accordance with the terms thereof, in settlement and cancellation thereof,
solely an amount (subject to any applicable withholding tax) in cash equal to
the amount receivable upon the consummation of the Merger by a holder of that
number of Shares into which the Subordinated Debentures of such holder were
convertible immediately prior to the Merger. The foregoing will apply whether
such conversion
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of the Subordinated Debenture occurs upon conversion of any of the Preferred
Securities in accordance with the terms thereof or otherwise.
Prior to the Effective Time, the Company will use its commercially
reasonable efforts to obtain all necessary consents or releases from holders of
Options, Warrants, Rights, Preferred Securities and Suboridnated Debentures
(collectively, the 'Equity Purchase Rights') and shall take all such other
lawful action as may be necessary to give effect to the transactions described
above. Prior to the Effective Time, the Company will (i) terminate the Stock
Option Plans and Stock Purchase Plan without liability to the Company or the
Surviving Company (other than as contemplated by the Merger Agreement) as of the
Effective Time and terminate or cancel as of the Effective Time the provisions
in any other plan, program or arrangement providing for the issuance or grant of
any other interest in respect of the capital stock of the Company or any
Subsidiary thereof and (ii) take all action reasonably necessary to ensure that
following the Effective Time no holder of any Equity Purchase Right or
participant in any other plan, program or arrangement shall have any right
thereunder to acquire equity securities of the Company, the Surviving
Corporation or any subsidiary thereof.
Dissenting Shares. Shares that are outstanding immediately prior to the
Effective Time and which are held by stockholders who shall have not voted in
favor of the Merger or consented thereto in writing and who shall have demanded
properly in writing appraisal for such shares in accordance with Section 262 of
the DGCL (collectively, the 'Dissenting Shares') will not be converted into or
represent the right to receive the Merger Consideration. Such shares instead
will, from and after the Effective Time, represent only the right to receive
payment of the appraised value of such shares held by them in accordance with
the provisions of such Section 262, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such shares under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender, in the manner
provided in the Merger Agreement, of the Certificate or Certificates that,
immediately prior to the Effective Time, evidenced such shares.
Stockholder's Meeting. The Merger Agreement provides that the Company
will, as soon as practicable following the acceptance for payment of and payment
for Shares by Purchaser in the Offer, duly call, give notice of, convene and
hold a stockholders' meeting (the 'Company Stockholders' Meeting') for the
purpose of approving the Merger Agreement and the transactions contemplated
thereby. At the Company Stockholders' Meeting, the Company's Board will
recommend to its stockholders the adoption and approval of the Merger Agreement
and the transactions contemplated thereby. As soon as practicable following the
acceptance for payment of and payment for Shares by Purchaser in the Offer, the
Company and Parent will prepare and file with the Commission a proxy statement,
if necessary. The Company shall use its best efforts to respond to all
Commission comments with respect to the proxy statement and to cause the proxy
statement and the form of proxy, which will comply as to form with all
applicable laws, to be mailed to the Company's stockholders at the earliest
practicable date.
Notwithstanding the preceding paragraph, in the event that Purchaser or any
other subsidiary of Parent acquires at least 90% of the outstanding Shares in
the Offer, the parties to the Merger Agreement have agreed, at the request of
Purchaser, to take all necessary and appropriate action to cause the Merger to
become effective, as soon as practicable after the expiration of the Offer,
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL. Subject to the foregoing sentence, Parent will cause Purchaser to
take all actions necessary to approve the Merger Agreement and the transactions
contemplated thereby.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties. These include representations and
warranties by the Company to Parent and Purchaser with respect to (i)
organization; standing and power, (ii) capital structure, (iii) authority; no
violations; consents and approvals, (iv) Commission documents; financial
statements, (v) information supplied, (vi) compliance with applicable laws,
(vii) litigation, (viii) taxes, (ix) pension and benefit plans; ERISA, (x)
absence of certain changes or events, (xi) no undisclosed material liabilities,
(xii) opinion of financial advisor, (xiii) vote required, (xiv) labor matters,
(xv) intangible property, (xvi) environmental matters, (xvii) real property;
other assets, (xviii) insurance, (xix) material contracts, (xx) related party
transactions, (xxi) liens, (xxii) brokerage fees and
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commissions; other fees, (xxiii) no excess parachute payments, (xxiv) state
takeover statutes, (xxv) pending and proposed transactions and (xxvi) media
interests.
Parent and Purchaser also have made certain representations and warranties
to the Company with respect to (i) organization; standing and power, (ii)
authority; no violations; consents and approvals; (iii) interim operations of
Purchaser, (iv) information supplied, (v) brokerage fees and commissions and
(vi) financial capability.
Conduct of Business Pending the Merger. The Company has agreed that during
the period from the date of the Merger Agreement and continuing until the
Effective Time (except as Parent otherwise consents to in writing), the Company
and its subsidiaries will carry on their businesses in the ordinary course in
substantially the same manner as previously conducted, and will use all
reasonable efforts to preserve intact its present business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business will not be impaired in any
material respect at the Effective Time. Except as provided in the Merger
Agreement, the Company has further agreed that neither it, nor any of its
subsidiaries will: (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, except for cash dividends
or distributions paid on or with respect to the capital stock of a wholly-owned
subsidiary and except for cash distributions payable with respect to the
Preferred Securities (as defined in the Merger Agreement) in accordance with
their present terms; (ii) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock; (iii)
redeem, repurchase or otherwise acquire, or propose to redeem, repurchase or
otherwise acquire, or permit any subsidiary to purchase or otherwise acquire,
any shares of its capital stock; (iv) grant any options, warrants or rights to
purchase Shares; (v) amend or reprice any Option or Warrant or the Stock Option
Plans or the Rights or the Stock Purchase Plan; (vi) issue, deliver or sell, or
pledge or otherwise encumber, or authorize or propose to issue, deliver or sell,
or pledge or otherwise encumber, any shares of its capital stock of any class or
series, any Company Voting Debt (as defined in the Merger Agreement) or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares, Company Voting Debt or convertible or
exchangeable securities, other than the issuance of Shares upon (A) the exercise
of Options outstanding on the date of the Merger Agreement in accordance with
their present terms, (B) the exercise of the Warrants outstanding on the date of
the Merger Agreement in accordance with their present terms, (C) the exercise of
Rights pursuant to the Stock Purchase Plan in accordance with their present
terms, and (D) the conversion of the Subordinated Debentures by the holders
thereof in accordance with their present terms; (vii) amend or propose to amend
its Certificate of Incorporation or Bylaws or other comparable constituent
documents; (viii) acquire or agree to acquire by merger or consolidation or
purchase of a substantial equity interest in or substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or any assets
that are material, individually or in the aggregate, to the Company and its
subsidiaries as a whole; (ix) sell, lease, encumber or otherwise dispose of or
agree to sell, lease (whether such lease is an operating or capital lease),
encumber or otherwise dispose of any asset (except for dispositions in the
ordinary course of business consistent with past practice which are not (other
than sales of inventory) material, individually or in the aggregate to the
Company and its subsidiaries); (x) authorize, recommend, propose, adopt or
announce an intention to adopt a plan of complete or partial liquidation or
dissolution of the Company or any of its subsidiaries other than the dissolution
of Dormant Subsidiaries (as defined in the Merger Agreement); (xi) take or agree
or commit to take any action that is reasonably likely to result in any of the
Company's representations or warranties pursuant to the Merger Agreement being
untrue in any material respect, or in any of the conditions to the Merger
Agreement not being satisfied; (xii) grant any increases in the compensation of
any of its directors, officers or key employees other than regularly scheduled
increases representing (in the case of all directors and officers, and all key
employees whose annual compensation (including salary and bonus) exceeds
$100,000) an aggregate increase of not more than 5%; pay or agree to pay any
pension, retirement allowance or other employee benefit not required or
contemplated by any of the existing Company Benefit Plans or Company Pension
Plans (each as defined in the Merger Agreement) as in effect on the date of the
Merger Agreement to any such director, officer or key employee, whether past or
present; enter into any new, or materially amend any existing, employment or
severance or termination agreement with any such director, officer or key
employee other than At-Will Employment Agreements (as defined in the Merger
Agreement) providing for total annual compensation (including salary and bonus)
of less than $100,000; terminate or amend the Amended Employment Agreements
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of Messrs. Poch, Fassler or McCleary; or, except as may be required to comply
with applicable law, become obligated under any new Company Employee Benefit
Plan or Company Pension Plan (each as defined in the Merger Agreement), which
was not in existence on the date of the Merger Agreement, or amend any such plan
or arrangement in existence on the date of the Merger Agreement if such
amendment would have the effect of materially enhancing any benefits thereunder;
(xiii) assume or incur any Indebtedness (as defined in the Merger Agreement) for
borrowed money (other than pursuant to credit facilities existing on the date of
the Merger Agreement in accordance with their present terms) or guarantee any
such Indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of its subsidiaries or
guarantee any debt securities of others or enter into any lease (whether such
lease is an operating or capital lease) or create any mortgages, liens, security
interests or other encumbrances on the assets or property of the Company or any
of its subsidiaries in connection with any Indebtedness thereof (other than
security interests arising pursuant to mortgages or other security agreements in
effect on the date of the Merger Agreement covering credit facilities existing
on the date of the Merger Agreement), or enter into any 'keep well' or other
agreement or arrangement to maintain the financial condition of another Person
(as defined in the Merger Agreement) or make any loans, advances or capital
contributions to, or investments in, any other person, other than to the Company
or any direct or indirect wholly-owned subsidiary of the Company and other than
loans or advances to customers and employees in the ordinary course of business
consistent with past practice; (xiv) enter into, modify, rescind, terminate,
waive, release or otherwise amend in any material respect any of the terms or
provisions of any contract agreement, commitment, arrangement or right specified
on a certain schedule to the Merger Agreement or which, if such contract,
agreement, arrangement or right had existed as of the date of the Merger
Agreement, would have been required to be so specified; provided, however, that
the foregoing does not limit the right of the Company or any of its subsidiaries
to enter into certain contracts in the ordinary course of business consistent
with past practice and involving annual payments of not more than $5,000,000;
(xv) permit a material change in any of its financial reporting, tax, or
accounting practices or policies or in any assumption underlying such practices
or policies, or in any method of calculating any bad debt, contingency, or other
reserve for financial reporting purposes or for other accounting purposes,
except as may be required by generally accepted accounting principles; (xvi)
except for capital expenditures for MIS and rental inventory purchases, make or
authorize any capital expenditures in excess of $100,000 individually and
$500,000 in the aggregate per month; (xvii) make any tax election or settle or
compromise any material tax liability; or (xviii) pay, discharge, settle or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, in the ordinary course of business consistent with
past practice or in accordance with their terms, of any of its liabilities or
obligations, or waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any of
its subsidiaries is a party. The Company has further agreed that it and its
subsidiaries will: (i) confer with Parent to the extent reasonably requested by
Parent, report on operational matters and promptly advise Parent orally and in
writing of any change or event having, or which, insofar as reasonably can be
foreseen, could have, a Material Adverse Effect (as defined in the Merger
Agreement) on the Company, and promptly provide Parent (or its counsel) with
copies of all filings made by the Company with the Commission or any other
state, federal or foreign Governmental Entity (as defined in the Merger
Agreement), in connection with the Merger Agreement and the transactions
contemplated thereby; (ii) prepare and timely file any income tax return of the
Company or any subsidiary that has not yet been filed and is required to be
filed on or prior to the Effective Time, in a manner consistent with prior years
and all applicable laws and regulations (or shall obtain a valid extension of
time in which to make such filings); (iii) promptly inform Parent of any notice
or other communication from any person alleging that their consent is or may be
required in connection with the transactions contemplated by the Merger
Agreement; (iv) promptly inform Parent of any notice or other communication from
any Governmental Entity in connection with the transactions contemplated by the
Merger Agreement; (v) promptly inform Parent of any actions, suits, claims,
investigations or proceedings commenced or, to the best of its knowledge,
threatened against, relating to or involving or otherwise affecting the Company
or any subsidiary which, if pending on the date of the Merger Agreement, would
have been required to have been disclosed pursuant to the Merger Agreement or
which relate to the consummation of the transactions contemplated by the Merger
Agreement; and (vi) maintain its books and records in the usual manner and
consistent with past practice.
Other Agreements. The Company, Purchaser and Parent have agreed to take
all reasonable actions necessary to comply promptly with all legal requirements
which may be or may have been imposed on such party
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with respect to the Offer, the Merger (including furnishing all information
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the 'HSR Act') and in connection with approvals of or filings with any
other Governmental Entity) and the Stockholders Agreement and to cooperate with
and furnish information to each other. Without limiting the generality or effect
of the foregoing, the Company will, and will cause its subsidiaries to, take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party, required to
be obtained or made by the Company, Parent or any of their subsidiaries in
connection with the Offer, the Merger, the Merger Agreement, or the taking of
any action contemplated hereby or thereby; provided, however, that Parent need
not so comply if required by the Department of Justice or any other Governmental
Entity to hold separate, sell or otherwise dispose of any subsidiary of Parent
or the Company or assets or properties of any of the foregoing, in each case, or
to agree to any conditions deemed by Parent to be adverse to it or the Company
(or any of their respective subsidiaries).
No Solicitation. The Merger Agreement provides that from and after the
date of the Merger Agreement until the termination of the Merger Agreement, the
Company will not, and will not permit or authorize any of its subsidiaries, or
any of its or their officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, financial
advisor, attorney, accountant or other representative retained by the Company or
any of its subsidiaries) to, directly or indirectly, initiate, solicit or
encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any person in furtherance of such inquiries or to
obtain or with respect to an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, provided, however, that prior to the Company Stockholders'
Meeting, if in the good faith opinion of the Board, based on the advice of
outside legal counsel, the failure to proceed in accordance with clause (A)
and/or (B) below of this paragraph would violate its fiduciary duties to the
stockholders under applicable law, the Company may, subject to compliance with
certain notice requirements to Parent concerning any inquiry with respect to or
which could lead to any Acquisition Proposal as specified in the Merger
Agreement, in response to an unsolicited written bona fide Acquisition Proposal
that in the good faith opinion of the Board of Directors of the Company, based
on the advice of an independent nationally recognized financial advisor and
outside legal counsel, would reasonably be expected to result in a Superior
Proposal (as defined below), (A) furnish information with respect to the Company
to such person making such proposal pursuant to a customary confidentiality
agreement with such person and (B) participate in negotiations regarding such
Acquisition Proposal; provided that, in the case of clauses (A) and (B) above,
the Company has provided a written notice to Parent of its intention to proceed
under such clause (A) or (B) above. The Merger Agreement further provides that
without limiting the foregoing, any violation of the restrictions set forth in
the preceding sentence by any director or executive officer of the Company or
any of its subsidiaries or any investment banker, financial advisor, attorney,
accountant or other representative of the Company or any of its subsidiaries,
acting on behalf or under authority of the Company or any subsidiary of the
Company, would be deemed to be a breach of this paragraph by the Company. For
purposes of the Merger Agreement, 'Acquisition Proposal' means an inquiry, offer
or proposal regarding any of the following (other than the transactions between
the Company, Parent and Purchaser contemplated under the Merger Agreement)
involving the Company or any of its subsidiaries: (w) any merger, consolidation,
share exchange, recapitalization, business combination, or other similar
transaction; (x) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 20% or more of the assets of the Company and its subsidiaries,
taken as a whole, in a single transaction or series of transactions; (y) any
tender offer or exchange offer for or other purchase of 20% or more of the
outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act of 1933, as amended, in
connection therewith; or (z) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
The Company has also agreed that, except as set forth in the Merger
Agreement, the Board and any committee thereof will not (A) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent or Purchaser,
the approval or recommendation by such Board or any such committee of the Merger
or the Merger Agreement, (B) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal or (C) enter into any agreement with respect
to any Acquisition Proposal. Notwithstanding the preceding sentence, in the
event that prior to the Company Stockholders' Meeting, the Company's Board
determines in
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good faith, based on the advice of outside counsel, that the failure to proceed
in accordance with clause (x), (y) and/or (z) below of this paragraph would
violate its fiduciary duties to the Company's stockholders under applicable law,
the Company's Board of Directors may (subject to the terms of this sentence and
the following sentence) (x) withdraw or modify its recommendation of the Merger
or the Merger Agreement, (y) approve or recommend a Superior Proposal, and (z)
cause the Company to enter into an agreement with respect to a Superior
Proposal, in each case at any time following Parent's receipt of a written
notice advising Parent that the Company's Board of Directors has received a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal; provided that
the Company will not take any of the actions specified in such clauses (x), (y)
or (z) unless the Company has furnished Parent with written notice (defined in
the Merger Agreement) specifying such actions to be taken no later than 12:00
noon New York City time four business days prior to the date such actions are
proposed to be taken and will not take any of the actions set forth in clauses
(y) or (z) above if, after taking into account modifications to the Merger
Agreement proposed by Parent, such Acquisition Proposal would not be a Superior
Proposal. In addition, if the Board or the Company proposes to take any of the
actions permitted by the preceding sentence with respect to any Acquisition
Proposal, then the Company will, prior to taking such action, pay, or cause to
be paid, to Parent the Expenses (as defined below) and the Termination Fee (as
defined below), and, in the case of clauses (y) and (z), cause the person making
the Superior Proposal to acknowledge such obligations.
Under the Merger Agreement, the term 'Superior Proposal' means any bona
fide Acquisition Proposal that has the following characteristics: (x) it is a
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or readily marketable securities, (A) Shares representing 100% of the
voting power of (I) the outstanding Shares, (II) the Shares issuable upon (aa)
the conversion of the Subordinated Debentures, (bb) the exercise of the options
outstanding and (cc) the exercise of the warrants outstanding, or (B) all or
substantially all the assets of the Company, (y) the terms of such proposal in
the good faith judgment of the Company's Board of Directors (based on the
written opinion of an independent financial advisor of nationally recognized
reputation) provide a per share consideration to the stockholders which is
higher than the per share consideration provided by the Merger (after taking
into account any modifications to the Merger Agreement proposed by Parent) and
(z) the transactions envisioned by such proposal, in the good faith judgment of
the Board, based on the advice of an independent nationally recognized financial
advisor and outside legal counsel, is readily financeable and reasonably likely
to be consummated without unreasonable delay or unusual conditions compared to
the transactions contemplated by the Merger Agreement.
In addition to the obligations set forth in the Merger Agreement with
respect to an Acquisition Proposal as stipulated in the Merger Agreement, the
Company will immediately advise Parent orally and in writing of any request for
information relating to an Acquisition Proposal or of any Acquisition Proposal,
or any inquiry with respect to or which could lead to any Acquisition Proposal,
the material terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person making any such request, Acquisition
Proposal or inquiry. The Company will keep Parent fully and timely informed of
the status and details (including amendments or proposed amendments) of any such
request, Acquisition Proposal or inquiry.
Fees and expenses. The Merger Agreement provides that, except as described
below, all costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated by the Merger Agreement will be paid by the
party incurring the expense. The Company has agreed to immediately pay, or cause
to be paid, in same day funds to Parent the Termination Payment upon demand if
(a) Parent terminates the Merger Agreement in the event that (i) the Board of
Directors of the Company or any committee thereof withdraws or modifies its
approval or recommendation of the Merger Agreement or the Merger or approves or
recommends an Acquisition Proposal or resolves to do any of the foregoing or
(ii) the Company enters into an agreement with respect to an Acquisition
Proposal; (b) the Company terminates the Merger Agreement in the event that (x)
the Company's Board withdraws or modifies its approval or recommendation of the
Merger Agreement or the Merger or (y) the Company enters into a definitive
agreement pursuant to an Acquisition Proposal as stipulated in the Merger
Agreement; (c) the Offer terminates, is withdrawn, is abandoned or expires by
reason of the failure of any condition set forth in Exhibit A to the Merger
Agreement to be satisfied and prior to such termination a bona fide Acquisition
Proposal shall have been made; or (d) Parent or the Company terminates the
Merger Agreement in the event that Company Stockholder Approval has not been
obtained by reason of the failure to obtain the required vote upon a vote held
at a duly held meeting of shareholders or at any
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adjournment thereof and prior to such termination a bona fide Acquisition
Proposal shall have been made or (e) the Company terminates the Merger Agreement
in the event that the Offer shall have expired or have been withdrawn, abandoned
or terminated without any Shares being purchased by Purchaser thereunder on or
prior to the 120th day after May 24, 1996 and, prior to such termination, a bona
fide Acquisition Proposal shall have been made. 'Termination Payment' means the
sum of (i) all of Parent's out-of-pocket expenses incurred in connection with
the transactions contemplated by the Merger Agreement (the 'Expenses') and (ii)
$10,000,000 (the 'Termination Fee'); provided that if at or prior to the time
the Termination Payment is payable the Company has entered into a definitive
agreement with a third party for such third party to acquire the Company in a
transaction which would qualify to be accounted for, under applicable guidelines
of the Commission, as a pooling of interests transaction but for the size of the
Termination Payment, then the amount of the Termination Payment shall be reduced
to the extent necessary to enable such transaction to qualify as a pooling of
interests (but in no event will the Termination Payment be reduced below 1% of
the transaction value). The amount of Expenses so payable shall be the amount
set forth in an estimate delivered by Parent upon termination subject to upward
or downward adjustment as provided in the next sentence. In the event that
Parent's actual out-of-pocket expenses exceed such estimate, the amount of any
such excess shall be payable upon demand, and in the event that Parent's actual
expenses are less than the amount of such estimate, Parent shall promptly refund
such lesser amount.
Brokers or Finders Fees. Pursuant to the Merger Agreement, the Company
agrees to indemnify and hold Parent harmless from and against any and all
claims, liabilities or obligations with respect to any fees, commissions or
expenses asserted by any Person to the extent such fee, commission or expense is
attributable to any action taken by or on behalf of the Company or any of its
subsidiaries or affiliates. Parent agrees to indemnify and hold Company harmless
from and against any and all claims, liabilities or obligations with respect to
any fees, commissions or expenses asserted by any Person to the extent such fee,
commission or expense is attributable to any action taken by or on behalf of
Parent.
Conditions to the Merger. Pursuant to the Merger Agreement, the obligation
of each party to effect the Merger is subject to the satisfaction, prior to the
closing date of the Merger, of the following conditions: (i) the Merger
Agreement and the Merger will have been approved and adopted by the affirmative
vote of the holders of a majority of the Shares entitled to vote thereon if such
vote is required by applicable law, (ii) the waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act will
have expired or been terminated, and any formal investigations relating to the
Merger that may have been opened by the Department of Justice or the Federal
Trade Commission (by means of a written request for additional information or
otherwise) will have been terminated, (iii) no temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger will be in effect; provided, however, that prior to
invoking this condition, each party will use all commercially reasonable efforts
to have any such order, injunction, restraint or prohibition vacated; and (iv)
the Federal Communications Commission (the 'FCC') will have granted the Pro
Forma Application (as defined below).
The obligations of Parent and Purchaser to effect the Merger are subject to
the satisfaction of the following conditions, any or all of which may be waived
in whole or in part by Parent and Purchaser: (a) Purchaser will have accepted
for payment and paid for all Shares tendered in the Offer such that, after such
acceptance and payment, Parent and its affiliates will own, at consummation of
the Offer, a sufficient number of outstanding Shares to satisfy the Minimum
Tender Condition as defined in Exhibit A to the Merger Agreement, except if the
failure of this condition to occur is caused by the material breach of the
Merger Agreement by Parent or Purchaser; (b) the representations and warranties
of the Company set forth in the Merger Agreement will be true and correct as of
the date of the Merger Agreement and (except to the extent such representations
and warranties expressly speak as of an earlier date) as of the closing date of
the Merger (the 'Closing Date') as though made on and as of the Closing Date,
and Parent will have received a certificate signed on behalf of the Company by
the chief executive officer and by the chief accounting officer of the Company
to such effect; (c) the Company will have performed in all material respects all
obligations and agreements, and complied in all material respects with all
covenants, required to be performed or complied with by it under the Merger
Agreement at or prior to the Effective Time, and Parent will have received a
certificate signed on behalf of the Company by the chief executive officer and
by the chief accounting officer of the Company to such effect; (d) all consents
and
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approvals (collectively, 'Consents') of third parties as are necessary to cure
any Violation (as defined in the Merger Agreement) of any agreement arising out
of the transactions contemplated by the Merger Agreement will have been
obtained, except with respect to those agreements listed or referred to on a
certain schedule of the Merger Agreement and such Consents the failure to
deliver which could not reasonably be expected to have a Material Adverse Effect
(as defined in the Merger Agreement) with respect to the Company; (e) other than
the filing of the Certificate of Merger as provided for in the Merger Agreement,
all licenses, permits, authorizations, consents, orders, qualifications or
approvals of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity (including those in connection with: (1)
premerger notification under the HSR Act and the expiration or termination of
the applicable waiting period thereunder, (2) the proxy statement, Schedule
14D-9 or other reports required to be filed with the Commission, (3) the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware and (4) certain filings, consents and approvals, as may be required
pursuant to the Competition Act (Canada), the Federal Law on Economic
Competition of Mexico, the Austrian Cartel Act of 1988, as amended, and the FCC)
requisite to consummation of the Merger and the transactions contemplated
thereby, will have been filed, occurred or been obtained, as the case may be;
(f) the transactions referred to in 'FCC Matters' below shall have been
consummated on terms reasonably satisfactory to Parent, and the Long Form
Application (as defined below) shall have been filed; (g) there will not be
pending or threatened any suit, action or proceeding by any governmental entity
(i) challenging the acquisition by Parent of any Shares, seeking to restrain or
prohibit the consummation of the Offer or the Merger or any of the other
transactions contemplated by the Merger Agreement or seeking to obtain from the
Company, Parent, or any of their respective subsidiaries any damages that are
material in relation to the Company and its subsidiaries taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation by the Company, Parent,
or any of their respective subsidiaries of any material portion of the business
or assets of the Company, Parent or any of their respective subsidiaries, or to
compel the Company, Parent or any of their respective subsidiaries to dispose of
or hold separate any material portion of the business or assets of the Company,
Parent or any of their respective subsidiaries as a result of the Offer or the
Merger or any of the other transactions contemplated by the Merger Agreement,
(iii) seeking to impose limitations on the ability of Parent or Purchaser to
acquire or hold, or exercise full rights of ownership of, any Shares or shares
of capital stock of the Company or the Surviving Corporation, including, without
limitation, the right to vote such capital stock on all matters properly
presented to the stockholders of the Surviving Corporation, (iv) seeking to
prohibit Parent from effectively controlling in any material respect the
business or operations of the Company or any of its subsidiaries or (v) which
otherwise is reasonably likely to have a Material Adverse Effect on the Company
or a Material Adverse Effect on Parent; (h) on or prior to the date of the
Merger Agreement, the Company will have caused (i) the Stock Option Plan and the
Stock Purchase Plan to be amended, and (ii) the Subordinated Debentures to be
amended, in each case effective not later than the Effective Time, in such
manner as to provide that after the Effective Time, the holders of the Equity
Purchase Rights (as defined in the Merger Agreement) evidenced thereby will only
be entitled to receive the consideration specified in the Merger Agreement.
The obligation of the Company to effect the Merger is subject to the
satisfaction of the following conditions, any or all of which may be waived in
whole or in part by the Company: (i) the representations and warranties of
Parent and Purchaser set forth in the Merger Agreement will be true and correct
as of the date of the Merger Agreement and (except to the extent such
representations and warranties expressly speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except as otherwise
contemplated by the Merger Agreement, and the Company will have received a
certificate signed on behalf of Parent by an officer of Parent to such effect,
(ii) Parent and Purchaser will have performed in all material respects all
obligations required to be performed by them under the Merger Agreement at or
prior to the Closing Date, and the Company will have received a certificate
signed on behalf of Parent by an officer of Parent to such effect and (iii)
other than the filing of the Certificate of Merger as provided for in the Merger
Agreement, all licenses, permits, authorizations, consents, orders,
qualifications or approvals of, or declarations or filings with, or expirations
of waiting periods imposed by, any Governmental Entity (including those in
connection with: (1) premerger notification under the HSR Act and the expiration
or termination of the applicable waiting period thereunder, (2) the proxy
statement, Schedule 14D-9 or other Commission reports, (3) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
(4) certain filings, consents and approvals, as may be required pursuant to the
Competition Act (Canada), the Federal Law on Economic Competition of Mexico, the
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Austrian Cartel Act of 1988, as amended, and the FCC) requisite to consummation
of the Merger and the transactions contemplated thereby, will have been filed,
occurred or been obtained, as the case may be.
FCC Matters. The Merger Agreement obligates the Company to restructure its
interests in two subsidiaries that own and operate radio stations serving Stowe,
Vermont and Waco, Texas in order that, subject to FCC approval, control of such
subsidiaries will be trusted to a group (the 'Control Group') comprised of not
less than a majority of the directors of the Company as of the date of the
Merger Agreement. The Company is further obligated to file with the FCC an
application (the 'Pro Forma Application') for consent to the pro forma transfer
of control of these subsidiaries from the Company to Control Group. The Control
Group is obligated to prepare and file with the FCC an application (the 'Long
Form Application') for consent to the transfer of control of such holding
company to the Company following the consummation of the Offer.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent by: (a) mutual written consent of the
Company and Parent; (b) either the Company or Parent (i) if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the other as set forth in the Merger Agreement which breach has not been
cured within five business days following receipt by the breaching party of
notice of such breach from the other party, or (ii) if any permanent injunction
or other order of a court or other competent authority preventing the
consummation of the Merger has become final and non-appealable; (c) either the
Company or Parent if the Merger shall not have been consummated on or before
December 20, 1996; provided, that the right to terminate the Merger Agreement
under this paragraph will not be available to any party whose failure to fulfill
any obligation under the Merger Agreement has been the cause of or resulted in
the failure of the Merger to occur on or before such date; (d) Parent if (i) the
Board of Directors or any committee thereof withdraws or modifies its approval
or recommendation of the Merger Agreement or the Merger or approves or
recommends an Acquisition Proposal or resolves to do any of the foregoing or
(ii) the Company enters into an agreement with respect to an Acquisition
Proposal; (e) the Company, if Purchaser fails to commence the Offer within five
business days following the date of the initial public announcement of the
Offer; (f) Parent, if the Offer terminates, is withdrawn, is abandoned or
expires by reason of the failure of any condition set forth in Exhibit A to the
Merger Agreement; (g) the Company, if the Offer expires or is withdrawn,
abandoned or terminated without any Shares being purchased by Purchaser
thereunder on or prior to the 120th day after the date of commencement of the
Offer pursuant to the Merger Agreement; (h) the Company if (i) the Board of
Directors withdraws or modifies its approval or recommendation of the Merger
Agreement or the Merger pursuant to an Acquisition Proposal as stipulated in the
Merger Agreement and (ii) the Company simultaneously with terminating the Merger
Agreement pays Parent all Expenses and the Termination Fee in cash and otherwise
complies with the Merger Agreement; (i) Parent or the Company if the Company
Stockholder Approval has not been obtained by reason of the failure to obtain
the required vote upon a vote held at a duly held meeting of shareholders or at
any adjournment thereof; (j) the Company if (i) the Company enters into a
definitive agreement pursuant to an Acquisition Proposal as stipulated in the
Merger Agreement and (ii) the Company simultaneously with terminating the Merger
Agreement pays Parent all Expenses and the Termination Fee in cash and otherwise
complies with the Merger Agreement; (k) Parent if any of the conditions
precedent with respect to each party or with respect to the Parent and the
Purchaser shall become impossible to fulfill (other than as a result of any
breach by Parent of the terms of the Merger Agreement) and have not been waived
in accordance with the terms of the Merger Agreement; or (l) the Company, if any
of the conditions precedent with respect to each party or with respect to the
Company shall become impossible to fulfill (other than as a result of any breach
by the Company of the terms of the Merger Agreement) and have not been waived in
accordance with the terms of the Merger Agreement.
Indemnification. The Merger Agreement provides that the indemnification
obligations set forth in the Company's Certificate of Incorporation and by-laws,
as amended to the date of the Merger Agreement, will survive the Merger and will
not be amended, repealed or otherwise modified for a period of six years after
the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who on or prior to the Effective Time were directors
(including any members of the Company's Compensation Committee), officers,
employees or agents of the Company (the 'Indemnified Parties'). Parent will
cause Company to fulfill its indemnification obligations as set forth in this
paragraph.
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For a period of two years after the Effective Time, Surviving Corporation
will maintain in effect the employed lawyers' errors and omissions liability
policy maintained by the Company and its subsidiaries (provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous in any material respect to the Indemnified Parties covered thereby)
with respect to matters arising before the Effective Time, provided that
Surviving Corporation will not be required to pay an annual premium for such
insurance in excess of $60,000, but in such case will purchase as much coverage
as possible for such amount.
Amendment. Subject to applicable law, the Merger Agreement may be amended,
modified or supplemented only by written agreement of Parent, Purchaser and the
Company at any time prior to the Effective Time with respect to any of the terms
contained in the Merger Agreement; provided, however, that after the Merger
Agreement is approved by the Company's stockholders, no such amendment or
modification will reduce the amount or change the form of consideration to be
delivered to the stockholders of the Company.
Timing. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Purchaser has agreed to
cause the Merger to be consummated on the terms set forth above, there can be no
assurance as to the timing of the Merger.
(b)(3) Stockholders Agreement. As an inducement and a condition to
entering into the Merger Agreement, Parent required that certain of the
Company's stockholders (the 'Selling Stockholders') agree, and the Selling
Stockholders agreed, to enter into the Stockholders Agreement. The following is
a summary of the material provisions of the Stockholders Agreement, a copy of
which is filed hereto as Exhibit E and is incorporated herein by reference.
Tender of Shares. Upon the terms and subject to the conditions of the
Stockholders Agreement, each Selling Stockholder has agreed to validly tender
(and not to withdraw) pursuant to and in accordance with the terms of the Offer,
not later than the fifth business day after commencement of the Offer, the
number of Shares set forth opposite such stockholder's name on Schedule I to the
Stockholders Agreement, as well as any Shares acquired by such Stockholder after
the date of the Stockholders Agreement and prior to the termination of the
Stockholders Agreement, whether upon the exercise of options, warrants or
rights, the conversion or exchange of convertible or exchangeable securities, or
by means of purchase, dividend, distribution or otherwise.
Voting. Each Selling Stockholder has agreed that during the period
commencing on the date of the Stockholders Agreement and continuing until the
first to occur of the Effective Time or termination of the Merger Agreement in
accordance with its terms, at any meeting of the stockholders, however called,
or in connection with any written consent of the stockholders, the Selling
Stockholders will vote (or cause to be voted) the Shares held of record or
beneficially owned by the Selling Stockholder whether now owned or hereafter
acquired, (i) in favor of the Merger, the execution and delivery by the Company
of the Merger Agreement and the approval of the terms thereof and each of the
other actions contemplated by the Merger Agreement and the Stockholders
Agreement and any actions required in furtherance thereof; (ii) against any
action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or the Stockholders Agreement (before giving
effect to any materiality or similar qualifications contained therein); and
(iii) except as otherwise agreed to in writing in advance by Parent, against the
following actions (other than the Merger and the transactions contemplated by
the Merger Agreement): (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or its
subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (C) (1) any
change in a majority of the persons who constitute the Company's Board of
Directors; (2) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or By-Laws; (3) any
other material change in the Company's corporate structure or business; or (4)
any other action involving the Company or its subsidiaries which is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by the
Stockholders Agreement and the Merger Agreement. Each Selling Stockholder has
further agreed not to enter into any agreement or understanding with any person
or entity the effect of which would be inconsistent or violative of the
provisions and agreements described above.
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Representations and Warranties, Covenants and Other Agreements. Each
Selling Stockholder has made certain representations, warranties and covenants,
including with respect to (i) ownership of Shares, (ii) legal capacity, power
and authority to enter into and perform its obligations under the Stockholders
Agreement, (iii) absence of conflicts, (iv) absence of liens and encumbrances
with respect to the Shares, (v) absence of fees other than those arising from
existing financial advisory and investment banking agreements, (vi) prohibition
on solicitation, (vii) restrictions on the transfer of the Shares, and (viii)
waiver of appraisal rights.
(b)(4) Preferred Securities. The Company entered into the First
Supplemental Indenture dated May 17, 1996 (the 'Supplemental Indenture') between
the Company and Continental Stock Transfer & Trust Company (the 'Trustee') with
respect to the Company's outstanding 8% Convertible Subordinated Debentures due
2003 (the 'Subordinated Debentures'), which Subordinated Debentures were issued
in connection with the issuance of the Preferred Securities. The description of
the Indenture between the Company and the Trustee dated June 5, 1995 (the
'Indenture'), relating to the issuance and sale by the Company of the
Subordinated Indentures, contained in the Offering Memorandum for the Preferred
Securities stated, in substance, that in the event that the Company is a party
to a merger, each Preferred Security shall thereafter be convertible solely into
the kind and amount of securities, cash, and other property receivable upon the
consummation of the merger by a holder of that number of shares of Common Stock
of the Company into which such Preferred Security was convertible immediately
prior to the merger. A copy of the Supplemental Indenture is filed herewith as
Exhibit R, and incorporated herein by reference.
(b)(5) General Electric Pension Trust. Since the mid-1980's, General
Electric Pension Trust ('GEPT'), a master trust which is the funding vehicle for
certain qualified defined benefit pension plans of General Electric Company and
certain subsidiaries, has owned securities of the Company and its predecessors.
As of December 31, 1995, GEPT owned 9.7% of the oustanding Shares.
(b)(6) American Computer Rental, Inc. During October 1994, the
Company acquired the business of American Computer Rental, Inc. ('ACR'), a
provider of short-term computer rental equipment to commercial and governmental
users, and that in connection with such acquisition the Company assumed certain
obligations of ACR owed to Parent relating to the financing of rental equipment.
At December 31, 1995, such obligations aggregated approximately $4.3 million and
bear interest at the prime rate plus 1.5%.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board. At the May 19, 1996 meeting of the Board
of Directors, the Board of Directors, based upon and subject to the terms and
conditions set forth in the Merger Agreement, unanimously approved the Merger
Agreement, the Merger and the Offer; and, subject to the fiduciary duties of the
Board of Directors, recommended that the stockholders of the Company tender
their Shares pursuant to the Offer.
THEREFORE, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY TENDER THEIR SHARES PURSUANT TO THE TERMS OF THE
OFFER.
A copy of a letter to all stockholders of the Company communicating the
recommendation of the members of the Board of Directors is filed as Exhibit F
hereto and is incorporated herein by reference.
(b) Background; Reasons for Board's Recommendation.
In early 1995, representatives of the Company contacted representatives of
Parent with respect to the possible acquisition by the Company of Parent's third
party computer maintenance business. The parties subsequently engaged in several
additional discussions concerning the possible acquisition, which discussions
ceased in early 1995.
In the first quarter of 1996, the Company became aware, through Am-Tech
Corporation, an unaffiliated third party ('Am-Tech'), that Parent might have an
interest in a transaction involving the Company's industry. Although the Company
was not then considering a sale or other extraordinary corporate transaction,
the Company nevertheless authorized Am-Tech to contact Parent. Both parties
agreed that it would be mutually beneficial to meet and have preliminary
discussions.
On February 6, 1996, Messrs. Poch and Fassler, two of the three Co-Chairmen
of the Company, had dinner with Mr. Michael Ford, President and Chief Executive
Officer of Parent's Technology Management Services
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business (the 'Technology Management Business'), and Mr. Michael Upton, Senior
Vice President of the Technology Management Business, to explore whether the
parties had an interest in entering into discussions relating to a possible
business relationship or business combination between the parties. The parties
determined to continue discussions and on February 15, 1996, a Confidentiality
Agreement was entered into.
On February 21, 1996, Messrs. Poch and Upton met again. At that meeting,
Mr. Poch and Mr. Upton discussed a possible sale of the Company to Parent and
Mr. Poch described the Company's structure and capabilities.
On March 6, 1996, Messrs. Poch, Fassler and McDevitt (the Company's chief
accounting officer) met with representatives of Parent, including Mr. Upton,
informally. The next day Messrs. Poch and McDevitt made formal presentations to
Parent on the Company's business, financial condition and results of operations,
and the Company's information technology director, made a presentation on the
Company's new management information system. Representatives of Lazard Freres &
Co. LLC ('Lazard'), Parent's financial advisor, were also present at this
meeting.
During mid to late March of 1996, representatives of the Company and Parent
continued to hold discussions regarding a possible sale of the Company to
Parent. During this period, Mr. Poch indicated to Mr. Upton that the Company's
Board of Directors was likely to require a price per Share somewhat in excess of
$15.00 in order to approve any transaction. Parent's representatives, however,
did not engage in negotiations relating to price at that time.
On April 1, 1996, representatives of the Company and Parent and a
representative of Lazard met. At this meeting, a representative of the Company
indicated that he believed that, based on his informal discussions with the
members of the Board of Directors of the Company, a price somewhat in excess of
$15.00 per Share would be required to approve any transaction. On that date, the
closing price of the Shares was $9.50.
During March, April and early May of 1996, representatives of Parent,
Lazard, Arthur Andersen & Co. ('Arthur Andersen'), a consultant to Parent, and
Weil, Gotshal & Manges LLP ('Weil Gotshal'), counsel to Parent, requested and
received non-public information with respect to the Company. In connection with
Parent's due diligence of the Company during this period, representatives of
Parent, Lazard, Arthur Andersen, and Weil Gotshal and representatives of the
Company and Dewey Ballantine ('Dewey Ballantine'), legal counsel to the Company,
contacted each other from time to time to discuss issues relating to due
diligence.
On April 6, 1996, Messrs. Poch and McDevitt met with the Vice Chairman of a
competitor of the Company, at the request of such competitor made to Mr. Richard
Williams, a non-employee member of the Company's Board of Directors. At that
meeting, the competitor's Vice Chairman raised the possibility of a business
combination between the two companies. On April 23, 1996, Messrs. Poch, Fassler
and Williams met with the Chairman and the Vice Chairman of such competitor. The
Chairman of the competitor discussed his view of the benefits of the combination
of the companies and the resulting synergy. Valuation details were not
discussed. In light of the ongoing discussions with Parent, the Board of
Directors of the Company, at its May 17, 1996 meeting, instructed Mr. Poch to
discontinue these discussions.
Also during this period, the Company's third Co-Chairman, Mr. McCleary,
made certain preliminary and informal inquiries with certain of his contacts
regarding a possible interest in the Company. None of these inquiries led to
discussions.
On April 15, 1996, the Company's Board of Directors met. Mr. Poch brought
the Board of Directors up to date on developments with Parent. The Board of
Directors authorized Messrs. Poch and Fassler to continue discussions at the
price levels being considered. At this meeting, Dewey Ballantine discussed in
depth with the Board of Directors the legal obligations of the Board in this
setting, and answered questions in this regard raised by various Board members.
In early May of 1996, Parent's legal counsel furnished the Company and
Dewey Ballatine with a draft merger agreement. During the first three weeks of
May of 1996, representatives of Parent, Lazard and Weil Gotshal negotiated the
terms of a merger agreement with representatives of the Company and Dewey
Ballantine. During these negotiations, representatives of Parent indicated to
representatives of the Company and Dewey Ballatine that it was a condition to
Parent's willingness to enter into a merger agreement that certain Stockholders
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enter into a stockholders agreement pursuant to which such stockholders would
agree, among other things, to tender their Shares in the Offer. Also during the
first three weeks of May 1996, the Amended Employment Agreements of each of the
three Co-Chairmen were negotiated with the Company and Parent.
From Thursday, May 16 through the morning of Monday, May 20, 1996,
representatives of the Company and Dewey Ballantine continued to meet with
representatives of Parent, Lazard and Parent's legal counsel and to negotiate
the terms of the merger agreement. During this same period, representatives of
Parent and its legal counsel negotiated the terms of the Stockholders Agreement
with such stockholders and representatives of Dewey Ballantine, and the terms of
the Amendment Agreements with Messrs. Poch, Fassler and McCleary and
representatives of Dewey Ballantine. The negotiations from Thursday, May 16,
1996 through Monday, May 20, 1996 culminated in the Company and Parent agreeing
upon a form the definitive Merger Agreement, certain stockholders and Parent
agreeing upon a form of a definitive Stockholders Agreement and the three
Co-Chairmen of the Company, the Company and Parent agreeing upon the form of
definitive Amended Employment Agreements.
On May 17, 1996, the Company's Board of Directors met. At that meeting,
Alex. Brown & Sons, Incorporated ('Alex. Brown') presented its financial
analysis of the transaction. Also at that meeting, Dewey Ballantine described in
depth for the Board of Directors the terms of the Merger Agreement as it then
stood. Alex. Brown has provided certain investment banking services to the
Company from time to time.
On May 17, 1996, Mr. Poch spoke with a representative of Lazard and
indicated that the Company's Board of Directors would not be prepared to accept
an offer from Parent for the sale of the Company at a price below $16.00 per
Share. Later that day, a representative of Alex. Brown spoke with a
representative of Lazard and discussed Alex. Brown's valuation analysis of the
Company.
On May 19, 1996, a representative of Parent's Board of Directors informed
the Company that such Board had approved the Merger Agreement and the
Stockholders Agreement and the transactions contemplated therein subject to
satisfactory negotiation of the remaining open points. Parent's representatives
informed the Company's representatives later that evening that Parent was
prepared to pay $16.00 per Share.
On May 19, 1996, the Board of Directors of the Company met again. At this
meeting, the Board of Directors was informed that Alex. Brown was prepared to
render its written fairness opinion that the consideration to be received by the
holders of the Shares pursuant to the Offer and the Merger as contemplated in
the Merger Agreement is fair, from a financial point of view, to such holders.
(That written opinion was delivered May 20, 1996). The Board of Directors then
voted and unanimously approved the Merger Agreement, the Merger and the Offer,
and, subject to the fiduciary duties of the Board of Directors, recommended that
the stockholders of the Company tender their Shares pursuant to the Offer.
On May 19, 1996, the Company's representatives informed Parent's
representatives that the Company's Board of Directors had approved the Merger
Agreement and the transactions contemplated therein and representatives of Dewey
Ballantine informed representatives of Parent that certain stockholders had
agreed to the terms of the Stockholders Agreement and the transactions
contemplated therein.
On May 20, 1996, the Merger Agreement, the Stockholders Agreement and the
Amended Employment Agreements were executed and the transaction was publicly
announced.
In approving the Merger Agreement and the transactions contemplated
thereby, and recommending that all stockholders tender their Shares pursuant to
the Offer, the Board of Directors considered a number of factors, including:
(i) the financial and other terms of the Offer, the Merger and the
Merger Agreement;
(ii) that the $16.00 per Share tender offer price represents (A) a
premium of 4.4% over the closing price of the Shares on the New York Stock
Exchange ('NYSE') on May 17, 1996, the last full trading day prior to the
public announcement of the execution of the Merger Agreement and (B) a
premium of 47.1% over the closing price of the Shares on the NYSE on April
19, 1996, thirty-one days prior to the public announcement of the execution
of the Merger Agreement;
(iii) the volatility of the price of the Shares on the NYSE over the
last three months;
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(iv) recent trading prices on the NYSE of the Shares, including the
fact that the Shares have not traded at or above the $16.00 tender offer
price since the third quarter of 1994;
(v) the written opinion of Alex. Brown delivered to the Board on May
20, 1996 to the effect that, as of that date, the consideration to be
received by the holders of the Shares pursuant to the Offer and the Merger
as contemplated in the Merger Agreement is fair, from a financial point of
view, to such holders. The full text of Alex. Brown's written opinion,
which sets forth, among other things, assumptions made, matters considered
and limitations on the review undertaken, is attached hereto as Exhibit F
and is incorporated herein by reference. Stockholders are urged to read the
opinion in its entirety. Alex. Brown's opinion is directed to the Board,
addresses only the fairness of the consideration to be received by holders
of the Shares from a financial point of view and does not constitute a
recommendation to any stockholder as to whether such stockholder should
accept the Offer and tender its Shares;
(vi) the view of the Board of Directors, based in part upon the
presentation of Alex. Brown to the Board of Directors on May 17, 1996,
regarding the likelihood of a superior offer arising;
(vii) the continuing consolidation in the Company's industry,
requiring continually growing capital to compete effectively;
(viii) the Company's long-term and short-term capital needs,
especially in light of the above-described industry consolidation;
(ix) the provisions of the Merger Agreement, including the provision
allowing the Company to respond to unsolicited inquiries concerning an
acquisition of the Company, and the provisions which permit the Company to
terminate the Merger Agreement upon payment to Purchaser of a break-up fee
in the amount set forth in the description of the Merger Agreement set
forth in Item 3(b)(2), in the event that the Board of Directors determines
to withdraw its recommendation that stockholders accept the Offer based on
the Board of Directors' determination that such action is necessary to
comply with its fiduciary duties under applicable law;
(x) the fact that Parent's and Purchaser's obligations under the
Offer were not subject to any financing condition;
(xi) Parent's financial condition and ability to cause Purchaser to
meet its obligations under the Merger Agreement;
(xii) Parent's ability to provide a greater number of customer
financing options, which is, and will continue to be, an important element
of the business of the Company;
(xiii) the familiarity of the Board of Directors with the business,
results of operations, properties and financial condition of the Company
and the nature of the industry in which it operates; and
(xiv) the Board of Directors' belief that the transactions
contemplated by the Merger Agreement would offer growth and opportunities
to the Company's employees.
The foregoing discussion of the information and factors considered and
given weight by the Board of Directors is not intended to be exhaustive. In view
of the variety of factors considered in connection with its evaluation of the
Merger Agreement and the Offer, the Board of Directors did not find it
practicable to, and did not, quantify or otherwise assign relative weights to
the specific factors considered in reaching its determination. In addition,
individual members of the Board of Directors may have given different weights to
different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to an engagement letter dated May 1, 1996 between the Company and
Alex. Brown (the 'Engagement Letter'), a copy of which is attached hereto as
Exhibit H, the Company retained Alex. Brown solely to deliver an opinion, at the
request of the Board of Directors of the Company, with respect to the fairness,
from a financial point of view, of the consideration payable to the Company's
stockholders in connection with the proposed sale of the Company to Parent.
Pursuant to the Engagement Letter, the Company paid Alex. Brown a non-contingent
retainer fee (the 'Retainer Fee') of $50,000 upon execution of the Engagement
Letter, and a fee (the 'Opinion Fee') of $600,000 upon delivery of its fairness
opinion. The Retainer Fee was credited against
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the Opinion Fee. In addition, the Company agreed to reimburse Alex. Brown for
reasonable travel, legal and other out-of-pocket expenses incurred in performing
its services under the Engagement Letter, as well as reasonable travel, legal
and other out-of-pocket expenses in assisting the Company to prepare for, or
defend against, actions brought arising out of Alex. Brown's services under the
Engagement Letter. In addition, the Company has agreed to indemnify Alex. Brown
and certain related persons against certain liabilities related to or arising
out of Alex. Brown's engagement under the Engagement Letter.
Alex. Brown has provided certain investment banking services to the Company
from time to time for which it has received customary compensation and has
provided certain investment banking services to an affiliate of Parent, for
which it received customary compensation. In the ordinary course of its
business, Alex. Brown may actively trade the securities of the Company, Parent
and the ultimate parent of Parent for its own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
For its services as a finder to the Company in connection with the Offer
and Merger, Am-Tech will receive a fee of $500,000 from the Company.
Triumph Capital Group, Inc., an investment management and investment
banking firm ('Triumph'), will also receive from the Company a financial
advisory fee of $500,000 for its services in connection with the Offer and
Merger. Triumph was engaged by the Company's non-employee directors as a
financial advisor to the Company. Mr. Williams, a Managing Director of Triumph,
is a member of the Board of Directors of the Company. As of December 31, 1995,
Triumph-Connecticut Limited Partnership, an affiliate of Triumph for which
Triumph acts as general partner, owned 658,750 Shares and also owned warrants to
purchase 550,000 Shares, and held a note in the principal amount of
approximately $7.5 million due June 30, 1996.
Except as disclosed herein or in the Offer to Purchase, neither the Company
nor any person acting on its behalf currently intends to employ, retain or
compensate any other person to make solicitations or recommendations to security
holders on its behalf concerning the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Share Transactions in Last 60 Days. Except for exercises of
outstanding options, during the past 60 days, no transactions in Shares have
been effected by the Company or, to the best of the Company's knowledge, by any
of its executive officers, directors, affiliates or subsidiaries.
(b) Intent to Tender. To the best of the Company's knowledge, all of the
Company's executive officers and directors (except those individuals who would
be subject to liability therefor pursuant to the short-swing profit recapture
provisions of Section 16(b) of the Exchange Act) have agreed to tender in the
Offer all Shares that they now own. As described above, Messrs. Poch, Fassler
and McCleary have entered into a Stockholders Agreement pursuant to which such
stockholders agreed, among other things, to validly tender (and not to withdraw)
pursuant to and in accordance with the terms of the Offer, all Shares owned by
them on the date of the Stockholders Agreement as well as any Shares acquired
after such date and prior to the termination of such agreement.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Certain Negotiations. Except as described in this Schedule 14D-9,
including as set forth in the Offer to Purchase, to the knowledge of the
Company, no negotiation is being undertaken or is under way by the Company in
response to the Offer which relates to or would result in (i) any extraordinary
transaction, such as a merger or reorganization, involving the Company or any
affiliate or subsidiary of the Company, (ii) a purchase, sale or transfer of a
material amount of assets by the Company or any subsidiary of the Company, (iii)
a tender offer for or other acquisition of securities by or of the Company or
(iv) any material change in the present capitalization or dividend policy of the
Company. Pursuant to the Merger Agreement, however, and as described under 'No
Solicitation, Etc.' in Item 3(b)(2) above, the Company may, subject to certain
limitations, take certain actions in respect of proposed transactions necessary
for the directors of the Company to discharge their fiduciary duties to
stockholders under applicable law.
19
<PAGE>
(b) Certain Transactions. Except as described in this Schedule 14D-9,
there are no transactions, board resolutions, agreements in principle or signed
contracts in response to the Offer which relate to or would result in one or
more of the matters referred to in Item 7(a).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(a) Information Statement. The Information Statement attached as Schedule
I hereto is being furnished in connection with the possible designation by the
Purchaser, pursuant to the Merger Agreement, of certain persons to be appointed
to the Board of Directors of the Company other than at a meeting of the
Company's stockholders.
(b) Certain Litigation. On May 20, 1996, a purported class action was
commenced in the Court of Chancery of the State of Delaware, New Castle County,
on behalf of common stockholders of the Company. The defendants are Leonard J.
Faisler, Edward A. Kerbs, Gerald M. LeBow, Gerald A. Poch, Anthony T. Towell,
James K. McCleary, Richard J. Williams (all of whom are directors of the
Company), the Company and GE Capital Services, Inc. ('GE Services'). The
complaint alleges that the individual defendants breached a fiduciary duty, and
that the Company and GE Services aided and abetted a breach of fiduciary duty,
by, among other things, failing to implement 'procedures for the maximization of
shareholder value' and arranging for the payment of 'an unreasonably low and
unfair price' in connection with GE Services's proposed purchase of the
outstanding Shares. Damages in an unspecified amount and injunctive relief
including an order enjoining GE Services's proposed purchase of the outstanding
Shares are sought. The Company understands that the defendants intend to
vigorously defend this lawsuit, including the request for a preliminary
injunction. The absence of an injunction, among other things, is a condition to
Purchaser's obligation to purchase the Shares tendered pursuant to the Offer.
See 'Conditions to the Merger' and 'Termination' in Item 3(b)(2) above. The
foregoing description of the complaint is qualified in its entirety by reference
to such complaint filed as Exhibit S hereto and incorporated herein by
reference.
20
<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------------- ------------------------------------------------------------
<S> <C>
Exhibit A Offer to Purchase dated May 24, 1996.*
Exhibit B Letter of Transmittal.*
Exhibit C Agreement and Plan of Merger, dated May 20, 1996, by and
among General Electric Capital Corporation, GAC Acquisition
I Corp. and AmeriData Technologies, Inc.
Exhibit D Portions of the Company's Proxy Statement dated April 4,
1996, for the AmeriData Technologies, Inc. 1996 Annual
Meeting of Stockholders.
Exhibit E Stockholders Agreement, dated May 20, 1996, by and among
General Electric Capital Corporation, GAC Acquisition I
Corp. and the parties identified on Schedule I thereto.
Exhibit F Fairness opinion of Alex. Brown & Sons Incorporated dated
May 20, 1996.*
Exhibit G Letter to AmeriData Technologies, Inc. Stockholders, dated
May 24, 1996.*
Exhibit H Engagement Letter dated May 1, 1996 between Alex. Brown and
Sons, Incorporated and AmeriData Technologies, Inc.
Exhibit I 1991 Stock Option Plan.
Exhibit J Employee Savings Plan.
Exhibit K Form of Amended and Restated Employment Agreement for Gerald
A. Poch, dated March 16, 1995.
Exhibit L Form of Side Letter Agreement, dated May 20, 1996, amending
Amended and Restated Employment Agreement for Gerald A.
Poch.
Exhibit M Form of Amended and Restated Employment Agreement for James
K. McCleary, dated March 16, 1995.
Exhibit N Form of Side Letter Agreement, dated May 20, 1996, amending
Amended and Restated Employment Agreement for James K.
McCleary.
Exhibit O Form of Advisory Agreement, dated May 20, 1996, by and
between AmeriData Technologies, Inc. and Leonard J. Fassler.
Exhibit P Form of Employment Agreement for David F. Mitchell, dated
September 9, 1994.
Exhibit Q Form of Letter to All Holders of Convertible Fixed Life
Aggregated Securities of AmeriData Delaware, L.L.C. dated
May 24, 1996.
Exhibit R Supplemental Indenture dated May 17, 1996 between AmeriData
Technologies, Inc. and Continental Stock Transfer & Trust
Company, as Trustee.
Exhibit S Complaint filed in Steiner v. AmeriData Technologies, Inc.
et al.
</TABLE>
- ------------------
*Included in the materials sent to stockholders of AmeriData Technologies, Inc.
21
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 24, 1996
AMERIDATA TECHNOLOGIES, INC.
By: /s/ GERALD A. POCH
Name: Gerald A. Poch
Title: Co-President
22
<PAGE>
SCHEDULE I
AMERIDATA TECHNOLOGIES, INC.
700 CANAL STREET
STAMFORD, CT 06902
INFORMATION STATEMENT PURSUANT TO SECTION 14(F) OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED, AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about May 24, 1996 as a
part of AmeriData Technologies, Inc.'s (the 'Company')
Solicitation/Recommendation Statement on Schedule 14D-9 (the 'Schedule 14D-9')
to the holders of record of shares of Common Stock, par value $.01 per share, of
the Company (the 'Shares') at the close of business on or about May 20, 1996.
You are receiving this Information Statement in connection with the possible
election of persons designated by Parent (as defined below) to a majority of the
seats of the Board of the Company.
On May 20, 1996, the Company, GAC Acquisition I Corp., a Delaware
corporation ('Purchaser'), and General Electric Capital Corporation, a New York
corporation ('Parent') entered into an Agreement and Plan of Merger, dated as of
May 20, 1996 (the 'Merger Agreement') in accordance with and subject to the
conditions of which (i) Parent will cause Purchaser to commence a tender offer
(the 'Offer') for all outstanding Shares at a price of $16.00 per Share net to
the seller in cash and (ii) Purchaser will be merged with and into the Company
(the 'Merger'). In addition, on May 20, 1996, the Purchaser and certain
stockholders of the Company entered into a Stockholders Agreement (the
'Stockholders Agreement') pursuant to which such stockholders agreed, among
other things, to validly tender (and not to withdraw) pursuant to and in
accordance with the terms of the Offer, all Shares owned by them on the date of
the Stockholders Agreement as well as any Shares acquired after such date and
prior to the termination of such agreement. As a result of the Offer and the
Merger, the Company will become a wholly-owned subsidiary of Parent.
The Merger Agreement provides that promptly upon the purchase by Parent or
Purchaser of at least a majority of the outstanding Shares of Common Stock, and
from time to time thereafter, Parent shall be entitled to designate, subject to
compliance with Section 14(f) of the Securities Exchange Act of 1934, as amended
(the 'Exchange Act'), such number of Directors (the 'Parent's Designees')
rounded up to the next whole number as will give Parent representation on the
Board of Directors of the Company equal to the product of (x) the number of
directors on the Board of Directors of the Company and (y) the percentage that
such number of Shares so purchased bears to the aggregate number of Shares
outstanding (the 'Board Percentage'). The Merger Agreement further provides that
the Company shall, subject to Section 14(f) of the Exchange Act, as promptly as
practicable, satisfy the Board Percentage by (i) increasing the size of the
Board of Directors of the Company or (ii) securing the resignations of such
number of directors as is necessary to enable Parent's Designees to be elected
to the Board of Directors of the Company.
Following the election or appointment of the Parent's Designees pursuant to
the Merger Agreement and prior to the Effective Time (as defined in the Merger
Agreement) any amendment or termination of the Merger Agreement, extension for
the performance or waiver of the obligations or other acts of Parent or
Purchaser or waiver of the Company's rights thereunder shall require the
concurrence of a majority of directors of the Company then in office who are
directors on the date of the Merger Agreement and who voted to approve the
Merger Agreement; provided that if there shall be no such directors, such
actions may be effected by majority vote of the entire Board of Directors of the
Company.
This Information Statement is required by Section 14(f) of the Exchange Act
and Rule 14f-1 thereunder. YOU ARE URGED TO READ THIS INFORMATION STATEMENT
CAREFULLY. YOU ARE NOT, HOWEVER, REQUIRED TO TAKE ANY ACTION. Capitalized terms
used herein and not otherwise defined shall have the meaning set forth in the
Schedule 14D-9.
Pursuant to the Merger Agreement, Purchaser commenced the Offer on May 24,
1996. The Offer is scheduled to expire at 12:00 midnight, New York City time, on
Friday, June 21, 1996 unless the Offer is extended.
I-1
<PAGE>
The following information contained in this Information Statement
concerning Parent, Purchaser and the Parent Designees has been furnished to the
Company by either Parent or Purchaser, and the Company assumes no responsibility
for the accuracy or completeness of such information.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The Board of Directors currently consists of one class with seven
directors. At each annual meeting of stockholders, all seven directors are
elected for one-year terms. The officers serve at the discretion of the Board.
Pursuant to the Merger Agreement, promptly upon the purchase by Parent or
Purchaser of at least a majority of the outstanding Shares of Common Stock, and
from time to time thereafter, Parent shall be entitled to designate, subject to
compliance with Section 14(f) of the Exchange Act, such number of the Parent's
Designees equal to the Board Percentage and the Company shall, subject to
Section 14(f) of the Exchange Act, as promptly as practicable, satisfy the Board
Percentage by (i) increasing the size of the Board of Directors of the Company
or (ii) securing the resignations of such number of directors as is necessary to
enable Parent's Designees to be elected to the Board of Directors of the
Company.
Parent has informed the Company that the Parent's Designees shall be the
persons set forth in the following table. The following table sets forth the
name, age, present principal occupation or employment and five year employment
history for each of the persons whom the Parent has designated pursuant to
Section 1.4 of the Merger Agreement as the Parent's Designees. The business
address for Ms. Barton and Messrs. Nayden and Parke is 260 Long Ridge Road,
Stamford, CT 06927. The business address for Messrs. Ford, Lidstone and Upton is
6875 Jimmy Carter Boulevard, Suite 3200, Norcross, GA 30071. Each of the persons
listed below is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME AGE FIVE YEAR EMPLOYMENT HISTORY
- ----------------- --- --------------------------------------------------
<S> <C> <C>
Nancy E. Barton 45 Senior Vice President, General Counsel of Parent
and General Electric Capital Services Corp.
('GE Services') (1995-present); Vice President
and Senior Litigation Counsel of Parent and
GE Services (1991-1995); Partner, Weil, Gotshal
& Manges LLP (1991); Director of Parent.
Michael S. Ford 47 President and Chief Executive Officer of GE
Capital Technology Management Services
(1994-present); President and Chief Executive
Officer of GE Capital Computer Leasing
(1990-1994); Director and President of Purchaser
and GAC Acquisition II Corp. ('GAC II').
David J. Lidstone 41 Senior Vice President and General Counsel, GE
Capital Technology Management Services
(1994-1996); Vice President and General Counsel,
GE Capital Computer Leasing (1991-1994);
Director, Vice President and Secretary of
Purchaser and GAC II.
Denis J. Nayden 42 President and Chief Operating Officer of Parent
and Executive Vice President of GE Services;
President and Chief Operating Officer, Kidder
Peabody (1994-1995); Executive Vice President,
Parent (1991-1994); Director of Parent and
GE Capital Services.
James A. Parke 51 Senior Vice President, Finance of Parent and Executive
Vice President of GE Services (1989-present);
Director of Parent; Director of Montgomery Ward.
D. Michael Upton 48 Senior Vice President, Business Development, GE
Capital Technology Management Services
(1993-present); Manager, Rental/Lease Operations
(1991-1993); Director, Vice President and
Treasurer of Purchaser and GAC II.
</TABLE>
Parent has informed the Company that each of the Parent's Designees has
consented to act as a director of the Company. None of the Parent's Designees
(i) is currently a director of, or holds any position with, the Company, (ii)
has a familial relationship with any of the directors or officers of the Company
or (iii) to the best knowledge of Parent, beneficially owns any securities (or
rights to acquire any securities) of the Company. The Company has been advised
by Parent that, to the best of Parent's knowledge, none of the Parent's
Designees has been involved in any transaction with the Company or any of its
directors, executive officers or affiliates which
I-2
<PAGE>
are required to be disclosed pursuant to the rules and regulations of the
Commission, except as may be disclosed herein or in the Schedule 14D-9.
It is expected that the Parent's Designees may assume office at any time
following the purchase by the Purchaser of a majority of outstanding Shares, and
that upon assuming office, the Parent's Designees will thereafter constitute at
least a majority of the Board of Directors.
CURRENT DIRECTORS AND EXECUTIVE OFFICERS
Biographical information concerning each of the Company's current directors
and executive officers as of March 31, 1996 is presented on the following pages.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ --- -------------------------------------------
<S> <C> <C>
Gerald A. Poch 49 Co-Chairman of the Board, Co-President and
Principal Executive Officer
Leonard J. Fassler 64 Co-Chairman of the Board
James K. McCleary 54 Co-Chairman of the Board, Co-President and
Chief Executive Officer of AmeriData,
Inc.
Gerald M. LeBow 50 Director, President of Sage Alerting
Systems, Inc.
Edward A. Kerbs (1) 45 Director
Anthony T. Towell (1) 64 Director
Richard J. Williams (1) 35 Director
John L. Harvatine 45 Vice President and Chief Financial Officer
</TABLE>
- ------------------
(1) Member of the Audit Committee and Compensation Committee
Gerald A. Poch has served as Principal Executive Officer since May 1990. He
became Co-President in May 1995 and has been Co-Chairman of the Board of the
Company since its inception in March 1990. Previously he was President of the
Company from January 1993.
Leonard J. Fassler has been Co-Chairman of the Board of the Company since
January 1991. Mr. Fassler has been President of Sage Equities, Inc., a private
investment company, since January 1985.
James K. McCleary has been a director of the Company since July 1993 and
since 1979 has been President and Chief Executive Officer of AmeriData, Inc.
('AmeriData'), the principal operating subsidiary of the Company, which was
acquired by the Company in July 1993. Mr. McCleary was elected Co-Chairman of
the Company's Board of Directors on October 28, 1993 and became Co-President in
May 1995.
Gerald M. LeBow is President of Sage Alerting Systems, Inc., a subsidiary
of the Company. He has been a director of the Company since January 1991 and had
served as an officer of the Company from 1990 to 1993.
Edward A. Kerbs has been a director of the Company since January 1991. Mr.
Kerbs is a Managing Director of Spear, Leeds & Kellogg, a broker-dealer.
Anthony P. Towell has been a director of the Company since July 1991. He is
a director and Vice President of Nytest Environmental, Inc. and he also serves
as Executive Vice President, Chief Financial Officer and a director of Eastco
Industrial Safety Corp., a manufacturer and distributor of disposable clothing,
industrial protective clothing and protective products.
Richard J. Williams has been a director of the Company since February 1994.
Since 1990, he has been a Managing Director of Triumph Capital Group, Inc., an
investment management and investment banking firm, an affiliate of which acts as
general partner of Triumph Connecticut Limited Partnership ('TCLP'). In 1993 and
1994, TCLP made certain investments in the Company's debt and equity, including
without limitation $7.5 million of two-year notes and warrants to purchase
555,000 shares of Common Stock of the Company. Pursuant to the note purchase
agreement, the Company has agreed to nominate Mr. Williams to the Board of
I-3
<PAGE>
Directors. He also currently serves as a director of Cornucopia Natural Foods,
Inc., a wholesaler and retailer of natural food products.
John L. Harvatine has been Vice President and Chief Financial Officer since
September 1995 and has been with AmeriData since 1987. Prior to joining the
Company, Mr. Harvatine was employed by Fisher Cheese Company and the Pillsbury
Company.
Directors serve until the next annual meeting or until their successors are
duly elected and qualified. Officers serve at the discretion of the Board of
Directors, subject to rights, if any, under contracts of employment.
The Board of Directors met in person, by written consent or telephonically
eight times during 1995. All of the directors attended at least 75 percent of
the meetings held during their terms.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors organized an Audit Committee and a Compensation
Committee effective July 7, 1994. The Board does not have any other committees.
Effective January 1995, Committee members have been compensated at a rate of
$500 per Committee Meeting attended.
The Audit Committee is composed of Messrs. Kerbs, Towell and Williams. The
Audit Committee annually reviews the services performed by both the independent
auditors and internal staff, and reviews the reports submitted by the
independent auditors and internal staff. The Audit Committee met in March 1995,
October 1995, February 1996 and March 1996.
The Compensation Committee is composed of Messrs. Kerbs, Towell and
Williams. The Compensation Committee establishes the compensation of executive
officers and administers the 1991 Stock Option Plan, the 1991 Employee Stock
Purchase Plan and the 1994 Restricted Stock Award Plan (collectively, the
'Plans'). The Compensation Committee formally met in March 1995, October 1995,
February 1995 and March 1996 in addition to taking prior action by written
statement.
I-4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share entitles the holder to one vote. As of March 31, 1996,
there were 22,287,435 Shares issued and outstanding.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information concerning stock
ownership of all persons known by the Company to own beneficially 5% or more of
the outstanding shares of the Company's Common Stock, each director, each
executive officer and all executive officers and directors of the Company as a
group, as of December 31, 1995. Except as disclosed in a footnote, each person
shown in the table has sole voting power and sole investment power with respect
to the shares shown on the table with respect to such shares.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OR BENEFICIAL COMMON
IDENTITY OF GROUP OWNERSHIP STOCK
- -------------------------------------------------- ------------- -------------
<S> <C> <C>
Leonard J. Fassler (1)(2) ........................ 638,537 2.9%
Gerald A. Poch (1)(3) ............................ 653,098 3.0%
Edward A. Kerbs (4) .............................. 75,475 *
c/o Spear, Leeds & Kellogg
120 Broadway
New York, NY 10271
John L. Harvatine (7) ............................ 72,433 *
5121 Winnetka Avenue
Minneapolis, MN 55428
Gerald M. LeBow (1)(5) ........................... 349,903 1.6%
James K. McCleary (6) ............................ 533,136 2.5%
5121 Winnetka Avenue
Minneapolis, MN 55428
Richard H. McDevitt (1)(8) ....................... 160,792 *
Anthony P. Towell (9) ............................ 128,728 *
1468 Ridge Road
Syossett, NY 11791
Richard J. Williams (10) ......................... 30,000 *
c/o Triumph Capital Group, Inc.
Triumph-Connecticut Limited ...................... 1,208,750 5.5%
Partnership (TCLP) (12)
City Place I
35th Floor
Hartford, CT 06103
Dawson-Samberg
Capital Management, Inc. (11) .................. 1,168,150 5.4%
354 Pequot Avenue
Southport, CT 06490
General Electric Pension Trust (GEPT) (13) ....... 2,101,404 9.7%
3001 Summer Street
Stamford, CT 06902
All officers and directors as a group (14) ....... 2,642,100 11.8%
</TABLE>
(Footnotes on next page)
I-5
<PAGE>
(Footnotes from previous page)
- ------------------
* Less than 1%
(1) c/o AmeriData Technologies, Inc., 700 Canal Street, Stamford, CT 06902.
(2) Includes 202,500 shares subject to options. Does not include 31,041 shares
which are owned by Bernice Fassler, Mr. Fassler's wife, as to which Mr.
Fassler disclaims beneficial ownership.
(3) Includes 202,500 shares subject to options. Does not include 57,835 shares
owned by the Poch Children Trust (Mr. Poch is neither the settler nor
beneficiary of this trust) as to which Mr. Poch disclaims beneficial
ownership.
(4) Includes 67,500 shares subject to options. (Also includes 832 shares
subject to currently exercisable warrants issued to Mr. Kerbs in connection
with the purchase and subsequent exchange of the Company's Floating Rate
Promissory Notes.) Does not include 34,875 shares held by SLK-1987 and
2,625 shares held by SLK-1987(A), general partnerships, certain partners of
which are members of Spear, Leeds & Kellogg, an entity for which Mr. Kerbs
serves as Managing Director. Mr. Kerbs disclaims beneficial ownership of
these shares.
(5) Includes 67,500 shares subject to options. Also includes 1,667 shares
subject to currently exercisable warrants and 14,288 shares issued to the
TMC Pension Trust (the beneficiary of which is Mr. LeBow).
(6) Includes 105,000 shares subject to options. Does not include 182,250 shares
owned by the JCM Charitable Remainder Trust as to which Mr. McCleary
disclaims beneficial ownership.
(7) Includes 60,100 shares subject to options. Also includes 333 shares owned
by Mr. Harvatine's wife as to which Mr. Harvatine disclaims beneficial
ownership.
(8) Includes 63,125 shares subject to options. Also includes 230 shares held by
Mr. McDevitt's wife as to which Mr. McDevitt disclaims beneficial
ownership.
(9) Includes 50,625 shares subject to options. Also includes 48,620 shares held
by Mr. Towell's wife as to which Mr. Towell disclaims beneficial ownership.
(10) Includes 30,000 shares subject to options. Does not include 1,208,750
shares held by TCLP.
(11) Based solely on information on a Schedule 13D dated November 9, 1995
furnished to the Company by Dawson-Samberg Capital Management
('Dawson-Samberg'), Pequot General Partners ('Pequot') DS International and
Pequot Endowment Partners ('DS International') and Pequot Endowment Fund LP
(Pequot Endowment). The Schedule 13D indicates that Dawson-Samberg, Pequot
DS International and Pequot Endowment beneficially own 117,350, 404,600,
373,300 and 267,900 shares, respectively, which represents approximately
.5%, 1.9%, 1.7% and 1.3% of the outstanding Common Stock, respectively.
(12) Includes 550,000 warrants which are exercisable.
(13) Based solely on information in Amendment No. 2 to Schedule 13G dated
February 10, 1995 furnished to the Company by GEPT, GEPT now beneficially
owns 2,101,404 shares of Common Stock of the Company representing
approximately 9.7 percent of the outstanding Common Stock.
(14) Includes 848,850 shares subject to options. Also includes 2,499 shares
subject to currently exercisable warrants issued in connection with the
purchase and subsequent exchange of the Company's Floating Rate Promissory
Notes. Does not include 88,876 shares issued to Mr. Fassler's wife and the
Poch Children Trust.
I-6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company to the Principal Executive Officer
and the four other most highly compensated executive officers (collectively, the
'named executive officers') for services rendered during the fiscal years ended
December 31, 1993, 1994 and 1995.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------- SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) UNDERLYING OPTIONS
- ------------------------------ ---- --------- -------- ----------------------
<S> <C> <C> <C> <C>
Gerald A. Poch ............... 1995 311,700 0 150,000(1)
Co-Chairman of the Board, 1994 300,000 470,000 15,000
Co-President and 1993 211,153 100,000 90,000
Principal Executive Officer
Leonard J. Fassler ........... 1995 311,700 0 150,000(1)
Co-Chairman of the Board 1994 300,000 470,000 15,000
1993 221,153 0 90,000
James K. McCleary ............ 1995 300,000 0 75,000
Co-Chairman of the Board, 1994 300,000 470,000 15,000
Co-President and 1993 100,000(2) 0 15,000
Chief Executive Officer of
AmeriData, Inc.
John L. Harvatine ............ 1995 154,800 38,519 57,500
Vice President and Chief 1994 147,692 63,998 0
Financial Officer 1993 88,286 25,953 2,600
David F. Mitchell ............ 1995 167,300 0 5,625
President--AmeriData 1994 63,786(3) 0 46,000
Consulting, Inc.
</TABLE>
- ------------------
(1) Includes 75,000 options regranted upon cancellation of option originally
granted in 1993.
(2) Salary from July 1993 upon commencement of his employment with the Company.
(3) Salary from September 1994 upon commencement of his employment with the
Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to
individual grants of stock options made during the fiscal year ended December
31, 1995 to each of the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
------------------------------------------------------- ASSUMED ANNUAL RATES
NUMBER OF % OF TOTAL OF STOCK PRICE APPRECIATION
SECURITIES OPTIONS FOR OPTION TERMS (1)
UNDERLYING GRANTED TO EXERCISE OR --------------------------------------
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION 5% APPRECIATION 10% APPRECIATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE ($) ($)
- ----------------------- ---------- ------------ ----------- ---------- --------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Gerald A. Poch......... 15,000(2) 1.5 9.625 3/1/05 $ 102,555 $ 267,544
60,000(3) 5.9 7.625 5/22/05 287,719 729,137
75,000(4) 7.5 7.625 8/4/04 359,649 911,421
Leonard J. Fassler..... 15,000(2) 1.5 9.625 3/1/05 102,555 267,544
60,000(3) 5.9 7.625 5/22/05 287,719 729,137
75,000(4) 7.5 7.625 8/4/04 359,649 911,421
James K. McCleary...... 15,000(2) 1.5 9.625 3/1/05 102,555 267,544
60,000(3) 5.9 7.625 5/22/05 287,719 729,137
John L. Harvatine...... 50,000(2) 5.0 10.500 10/30/05 330,170 836,715
7,500(5) .7 7.625 5/22/05 40,284 104,875
David F. Mitchell...... 5,625(5) .6 7.625 5/22/05 30,213 78,656
</TABLE>
(Footnotes on next page)
I-7
<PAGE>
(Footnotes from previous page)
- ------------------
(1) The indicated dollar amounts are the result of calculations based on the
exercise price of each option and assume five and ten percent annual
appreciation rates set by the Securities and Exchange Commission over the
ten-year option period, and, therefore, are not intended to forecast
possible future appreciation, if any, of the Company's stock price.
(2) Each of these stock options vest and become exercisable in equal annual
installments of 25% each on the first through the fourth anniversaries of
the date of grant and expire ten years from the date of grant.
(3) Vest and are exercisable 50% per year on December 31, 1995 and December 31,
1996.
(4) Reflects options cancelled and regranted. Such options vested in full on
December 31, 1995.
(5) 50% of the options shall vest in 25% increments over four years, the other
50% are performance-based and vest on March 31, 1996 if certain objectives
are met. Should optionee fail to meet objectives, the performance-based
option shares will vest in 16.66% increments over six years commencing March
31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
The following table sets forth certain information with respect to the
outstanding stock options as of December 31, 1995 for each of the named
executive officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY
SHARES 12/31/95($) OPTIONS AT 12/31/95($)
ACQUIRED ON VALUE ------------------------------ ------------------------------
NAME EXERCISE(1)(#) REALIZED(2)($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------- -------------- -------------- ------------------------------ ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gerald A. Poch............. 120,000 1,189,669 110,625 91,875 $ 224,831 $ 281,925
Leonard J. Fassler......... 120,000 1,189,669 110,625 91,875 224,831 281,925
James K. McCleary.......... 0 41,250 63,750 60,150 60,225
John L. Harvatine.......... 0 1,300 58,800 5,369 20,406
David F. Mitchell.......... 0 11,500 40,125 0 11,128
</TABLE>
- ------------------
(1) These shares were acquired upon the exercise of options granted from 1991
through 1993.
(2) Market value of underlying securities at exercise date or year-end, as the
case may be, minus the exercise price.
EMPLOYMENT AGREEMENTS
Effective August 1, 1993, the Company entered into employment agreements
with each of Gerald A. Poch, Co-Chairman of the Board, Co-President and
Principal Executive Officer of the Company and Leonard J. Fassler, Co-Chairman
of the Board of the Company, which agreements expire in December 1998. The
agreements, which were amended in January 1994 and amended and restated in March
1995, provide for a base salary at the rate of $250,000 per year through
December 31, 1993, and provide for a base salary at the rate of $300,000 per
year thereafter, subject to cost of living increases and an automobile allowance
not to exceed $500 per month. In January 1994, AmeriData entered into an
employment agreement with James K. McCleary, Co-President and Co-Chairman of the
Board of the Company and Chief Executive Officer of AmeriData, which was amended
in March 1995, and expires in December 1998. The agreement provides for a base
salary at the rate of $300,000 per year, subject to cost of living increases and
an automobile allowance not to exceed $500 per month. In 1996, the base salary
of each of Messrs. Poch, Fassler and McCleary was increased to $322,000 pursuant
to the cost of living adjustment. The agreements of Messrs. Poch, Fassler and
McCleary also provide that an annual bonus pool may be established of up to 10%
of the Company's pre-tax income for the awarding of bonuses to senior management
and that Messrs. Poch, Fassler and McCleary are each entitled to an annual bonus
equal to 2.5% of such income; provided, however, that the annual bonus and
salary for each of Messrs. Poch, Fassler and McCleary for any year shall not
exceed an aggregate of $1 million each. The employment agreements provide for
the employees to devote substantially all of their business time to the Company,
are automatically renewable for successive one-year terms unless terminated by
either party upon three months' prior written notice and contain provisions that
the employees will not compete with the Company during the term of their
employment or for a
I-8
<PAGE>
period of two years following termination. Each agreement also contains
provisions that in the event the employee's employment is terminated, except by
reason of termination for cause, the Company will pay severance equal to the
base salary and bonus through the end of the term of the agreement.
The foregoing employment agreements have been amended and restated in
certain respects as described in Item 3(b)(1) of the Solicitation/Recommendation
Statement to which this Schedule I is attached.
In connection with the acquisition of David Mitchell & Associates, Inc.,
AmeriData Consulting, Inc. entered into an employment agreement dated September
9, 1994 with David F. Mitchell, President of AmeriData Consulting, Inc., a
wholly-owned subsidiary of the Company. The agreement expires on December 31,
1999 and provides for a base salary of up to $250,000 per year, subject to
annual increases at the discretion of the Board of Directors, and an automobile
allowance not to exceed $500 per month. The agreement provides that Mr. Mitchell
is entitled to an annual bonus equal to 10% of the pre-tax income of AmeriData
Consulting, Inc. and its subsidiaries commencing in 1996. The agreement also
provides that in the event Mr. Mitchell's employment is terminated, except by
reason of termination for cause, the Company will pay Mr. Mitchell his base
salary and bonus for the remainder of the employment term. Pursuant to the
acquisition agreements, the Company also agreed to pay Mr. Mitchell additional
purchase price upon the achievement of certain earnings in 1994 and 1995.
Accordingly, in February 1995, Mr. Mitchell received $500,000. In addition, in
April 1996, Mr. Mitchell received an additional $1.5 million.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
INTRODUCTION
This report discusses the Company's 1995 compensation policies and the
manner in which compensation was determined for the Company's executive
officers, including the Principal Executive Officer and the other named
executive officers.
The Compensation Committee consists of Messrs. Kerbs, Towell and Williams,
each a non-employee director. The Compensation Committee was formed to conduct
annual reviews of the compensation of the Company's senior executives and to
administer the Plans. During 1995, the Compensation Committee approved certain
amendments to the 1991 Stock Option Plan. Such amendments will be submitted to
the Company's stockholders for approval at the Annual Meeting of Stockholders
scheduled to be held on May 21, 1996. The Compensation Committee reviews and
approves the annual incentive bonus payments to executive officers, the
employment arrangement with executive officers and the grant of options to
executive officers and employee directors. The Compensation Committee has
engaged Towers Perrin, an Executive Compensation consulting firm, to assist in
such review.
The Company's compensation policy for executive officers is designed to
provide competitive compensation based on individual contributions and
achievements and overall corporate performance in order to attract and retain
qualified executives. The performance of each senior executive is examined
annually by the Compensation Committee based on a review of such officer's
achievements, including financial and strategic management, performance of key
responsibilities, development of shareholder equity, and other characteristics
critical to the overall success and competitiveness of the Company. The Company
attempts to align each executive's compensation with the interests of the
Company's shareholders by linking executive compensation to Company performance
with a compensation package consisting of a base salary, bonuses and stock
options, in each case to reward individual contributions to the Company's
success.
BASE SALARY
Base salary is established at a level sufficient to attract and retain
highly qualified executives in a competitive environment and within the
Company's internal salary structure. Messrs. Poch's, Fassler's and McCleary's
salaries are subject to the terms of individual employment agreements that were
effective with respect to Messrs. Poch and Fassler on August 1, 1993, as amended
in January 1994, and Mr. McCleary on January 1, 1994, and each as amended and
restated in March 1995 and each of which expire in December 1998. See the
information under the heading 'Employment Agreements'. Such employment
agreements do not
I-9
<PAGE>
provide for future increases in base salary through 1998 other than annual cost
of living adjustments. In 1993 and 1994, there was no such adjustment and the
initial cost of living adjustment of $11,700 was effective in 1995 for Messrs.
Poch and Fassler. The average increase in base salaries for executive officers
of the Company from 1994 to 1995 was 3.9%. The base salary of the Principal
Executive Officer, Mr. Poch, was increased from $300,000 in 1994 to $311,700 in
1995 pursuant to the terms of his employment agreement, which provides for a
cost of living adjustment.
INCENTIVE BONUS
Pursuant to their individual employment agreements, Messrs. Poch, Fassler
and McCleary were each entitled to an annual bonus equal to 2.5% of the
Company's pre-tax income. However, Messrs. Poch, Fassler and McCleary elected
not to receive a bonus for their 1995 performance. Mr. Harvatine received a
bonus of $38,519 prior to his appointment as Chief Financial Officer pursuant to
the AmeriData Technologies, Inc. employee bonus plan.
STOCK OPTION GRANTS
The most significant form of long-term incentive compensation for
executives of the Company is grants of stock options under the Company's 1991
Stock Option Plan. The Company believes that such grants reinforce an
executive's long-term perspective on the Company's performance since such
compensation most directly reflects the financial performance of the Company and
increases in shareholder value.
Stock Options under the 1991 Stock Option Plan are granted to executive
officers at the fair market value of the Company's Common Stock on the date of
grant, and the majority of which grants do not vest more than 25 percent each
year and are exercisable for periods ranging from five to ten years. The grant
of appropriate levels of stock options exercisable over time is expected to
encourage equity appreciation by providing a direct incentive to executives to
achieve long-term success for the Company. As set forth on the table entitled
'Option Grants in Last Fiscal Year', the named executive officers received
grants of options to purchase an aggregate of 288,125 shares of Common Stock in
1995 under the Company's 1991 Stock Option Plan. In addition, 157,500 options
granted in 1993 to Messrs. Fassler, McDevitt and Poch were canceled and
regranted as described under the heading 'Compensation Committee Report on 1995
Cancellation and Regrant of Options'. Mr. Mitchell received a grant of 5,625
options and Mr. Harvatine received a grant of 7,500 options in May 1995 and a
grant of 50,000 options at the commencement of his role as Chief Financial
Officer with the Company. Exercise prices of options granted to directors and
executive officers range from $7.62 to $10.50 per share, in each case
representing the fair market value of the Company's Common Stock on the date of
grant. The options are generally exercisable for ten years from their respective
dates of grant. Options granted to named executive officers with respect to
275,300 shares were vested on December 31, 1995. The balance generally vest in
equal annual installments of 25 percent each on the first through the fourth
anniversaries of the date of grant other than 180,000 options granted in May
1995, which options vest in 50 percent installments on the anniversary of the
last day of the calendar year in which they were granted, and 13,125 options, as
to which 50 percent vest in 25 percent increments over four years and 50 percent
vest on March 31, 1996 if certain objectives are met and, if such objectives are
not met, these options vest in 16.6 percent increments over six years. In 1995,
the Principal Executive Officer received options for 15,000 shares, none of
which were vested on December 31, 1995 and options for 60,000 shares, 50 percent
of which vested on December 31, 1995, in addition to the 75,000 options
cancelled and regranted as discussed below. The determination of the amounts and
vesting of the options granted to executives of the Company in 1995 was approved
by the Compensation Committee based on its subjective judgment as to the
respective contributions of each executive to the Company during 1995 and the
expected future contribution of each executive during the term of the option. In
making such grants in 1995, the Compensation Committee considered the number of
options previously granted to each executive. On March 1 of each year commencing
in 1995, the Stock Option Plan provides for an automatic grant of 15,000 options
to each non-employee director. The formula grant to the non-employee directors
was approved by the Company's shareholders at the Annual Meeting held in May
1994. Similar grants to the inside directors were approved by the Compensation
Committee in March 1996. Any similar grants to employee directors or other
grants of options under the Stock Option Plan is subject to the approval of the
Compensation Committee.
I-10
<PAGE>
COMPENSATION COMMITTEE REPORT ON 1995 CANCELLATION AND
REGRANT OF OPTIONS
During the 1995 fiscal year, the Compensation Committee felt that
circumstances had made it necessary for the Company to implement an option
cancellation/regrant program pursuant to which outstanding options in an
aggregate amount of 157,500 held by certain of the Company's long-standing
executive officers under the Option Plan were canceled, and new options for the
same number of shares were granted with a lower exercise price per share equal
to the market price of the Company's Common Stock on the date of grant.
The Compensation Committee determined that this program was necessary
because equity incentives are a significant component of the total compensation
package of executive employees and play a substantial role in the Company's
ability to retain the services of individuals essential to the Company's
long-term financial success. Prior to the implementation of the program, the
market price of the Company's Common Stock had fluctuated as a result of market
factors which affected stock prices throughout the industry and which the
Compensation Committee believed did not necessarily reflect the market's
particular assessment of the Company's progress in revenue growth, customer
satisfaction and marketing. The Compensation Committee felt that the Company's
ability to retain such key employees would be significantly improved by
restoring the value to their options in the form of regranted options at the
market price of the Company's Common Stock on the date of grant. Accordingly, on
May 19, 1995, the Compensation Committee approved the cancellation of stock
options granted to certain of the Company's founding executive officers, Messrs.
Fassler, Poch and McDevitt with an exercise price of $13.17, together with a
regrant of a new option for the same number of shares with an exercise price of
$7.625, which exercise price was equal to the market price of the Company's
Common Stock on such date. Each regranted option covered the same number of
shares subject to the higher-priced option at the time of cancellation and is on
substantially similar terms to the old grant, which was fully vested as of
December 31,1993 except that the regranted options vested in full on December
31, 1995. The lower exercise prices in effect under the regranted options make
those options valuable once again to the executive officers critical to the
Company's financial performance. No other option grants, including without
limitation the automatic option grants to the non-employee directors, were
eligible for participation in the cancellation and regrant program.
TEN-YEAR INFORMATION REGARDING REPRICING,
REPLACEMENT OR CANCELLATION
AND REGRANT OF OPTIONS
As discussed in the Compensation Committee Report on 1995 Cancellation and
Regrant of Options, the Company implemented an option cancellation/regrant
program with respect to stock options granted in 1993 to certain of the founding
key executive officers for a total of 157,500 shares effective on May 19,1995
and options held by those employees with an exercise price of $13.17 were
canceled in exchange for new options for the same number of shares with an
exercise price of $7.625 per share.
The following table sets forth information with respect to each of the
Company's executive officers concerning his participation in the option
cancellation/regrant program which was effected on May 19, 1995.
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
OPTION
TERM
NUMBER OF REMAINING
SECURITIES MARKET PRICE EXERCISE AT DATE
UNDERLYING OF STOCK AT PRICE AT OF
OPTIONS TIME OF TIME OF NEW REPRICING
REPRICED REPRICING OR REPRICING OR EXERCISE OR
NAME AND PRINCIPAL POSITION DATE OR AMENDED AMENDMENT($) AMENDMENT($) PRICE($) AMENDMENT
- ----------------------------------- -------- ---------- ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Gerald A. Poch--Co-Chairman of the
Board, Co-President and Principal
Executive Officer................ 5/19/95 75,000 7.625 13.17 7.625 9 years
Leonard J. Fassler--Co-Chairman of
the Board........................ 5/19/95 75,000 7.625 13.17 7.625 9 years
Richard H. McDevitt--Vice
President, Treasurer and
Principal Accounting Officer..... 5/19/95 7,500 7.625 13.17 7.625 9 years
</TABLE>
I-11
<PAGE>
DEDUCTIBILITY CAP ON EXECUTIVE COMPENSATION
Beginning in 1994, a new federal tax law disallows corporate deductibility
for certain compensation paid in excess of $1 million to the Principal Executive
Officer and the four other most highly paid executive officers of publicly held
companies. 'Performance-based compensation,' as defined in the tax law, is not
subject to the deductibility limitation provided shareholder approval and other
requirements are met. Prior to the election of the Compensation Committee,
executive option grants were determined by the entire Board of Directors. Some
of the options previously granted to such executives by the entire Board of
Directors may be subject to the deductibility limitation to the extent that
exercises of options (or sales of shares received upon the exercise of incentive
stock options), together with other disqualified compensation, exceeds $1
million in any year for such executive officers. It is the Company's general
intention to make efforts to maximize the deductibility of compensation paid to
its officers under the new law. At the Company's Annual Meeting held in May
1995, the shareholders approved amendments to the Company's 1991 Stock Option
plan to allow grants of stock options, of up to 75,000 shares per year to any
person, that are exempt from the deductibility limits imposed by the new law.
During 1995, the Company did not exceed the $1 million deductibility cap with
respect to any officer covered by the new law.
The Compensation Committee hereby submits this report.
EDWARD A. KERBS
ANTHONY P. TOWELL
RICHARD J. WILLIAMS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each member of the Company's Compensation Committee participated in
deliberations concerning executive officer compensation.
Mr. McCleary currently serves as Co-Chairman of the Board of Directors and
Co-President of the Company and has an employment agreement with the Company as
described under the heading 'Employment Agreements'. Additionally, the Company
leases AmeriData's headquarters and warehouse facilities from Mr. McCleary and
his wife, Carol A. E. McCleary, pursuant to a sixteen-year lease providing for a
base monthly rent of approximately $44,000.
STOCK PERFORMANCE GRAPH
The following graph summarizes the cumulative return experience by the
Company's shareholders from October 29, 1991 through December 31, 1995, compared
to the Standard & Poor's 500 index; a composite peer group index consisting of
the Hambrecht & Quist indexes for Computer Software-Information Technology
Companies, Computer Hardware-Personal Computer Manufacturers, and
Communications-Networking Companies. The returns set forth are based on the
Company's Common Stock price beginning on October 29, 1991, at which date the
stock was at its initial public offering price, and the two composite indices at
October 29, 1991. The comparison assumes $100 was invested on October 29, 1991
in the Company's Common Stock and in each of the foregoing indices. The Company
has not paid dividends on its Common Stock since October 29, 1991.
I-12
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG AMERIDATA TECHNOLOGIES, INC., THE S&P 500 INDEX AND A PEER GROUP
54584--AMERIDATA TECHNOLOGIES-Notice & Proxy Statement
Scott Printing Corporation-(212)962-4405 (212)943-8970
File Last changed Tuesday, April 9, 1996 3:58 pm
Ameridata Peer Group S&P 500
--------- ----------- ---------
1991 100 1991 100 1991 100
1992 126 1992 108 1992 104
1993 289 1993 148 1993 117
1994 1216 1994 165 1994 128
1995 632 1995 206 1995 130
1996 608 1996 319 1996 179
- ------------------
* $100 INVESTED ON 10/29/91 IN STOCK OR INDEX--INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
DIRECTORS' COMPENSATION
In 1995, all of the members of the Company's Board of Directors received
stock options to purchase 15,000 shares of the Company's Common Stock under the
Company's 1991 Stock Option Plan. Commencing in 1995, non-employee directors
received $500 per each Compensation or Audit Committee meeting attended. On
March 1st of each year, non-employee directors receive automatic grants of
options to purchase 15,000 shares of the Company's Common Stock. Such options
vest at a rate of 25 percent per year and may be exercised at a price equal to
the fair market value of the Common Stock on the date of grant. Similar grants
of options to the inside directors were approved in March 1996 by the
Compensation Committee. The options are generally exercisable for a period of
ten years and expire three months after retirement (or resignation) or one year
following death or disability. In addition, Mr. Towell received approximately
$15,000 in connection with services rendered to the Company's United Kingdom
subsidiary.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
All of the executive officers and directors of the Company filed the
required forms pursuant to Section 16 of the Exchange Act for the year ended
December 31, 1995. However, each of Messrs. Poch, Fassler, McCleary and
Harvatine filed a late Form 5, and Messrs. Poch and Fassler reported the
repricing discussed under the heading 'Compensation Committee Report on 1995
Cancellation and Regrant of Options' on such form and Mr. Harvatine filed a late
Form 3.
For a description of certain other relationships and transactions, see the
heading 'Compensation Committee Interlocks and Insider Participation'.
I-13
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
AMERIDATA TECHNOLOGIES, INC.
at
$16 NET PER SHARE
by
GAC ACQUISITION I CORP.
an indirect wholly-owned subsidiary
of
GENERAL ELECTRIC CAPITAL CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 21, 1996, UNLESS THE OFFER IS EXTENDED
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND
ITS STOCKHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE STOCKHOLDERS AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND THE STOCKHOLDERS
AGREEMENT, INCLUDING THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER ALL OF THEIR SHARES PURSUANT THERETO.
PARENT AND PURCHASER HAVE ENTERED INTO A STOCKHOLDERS AGREEMENT WITH CERTAIN
STOCKHOLDERS PURSUANT TO WHICH, AMONG OTHER THINGS, SUCH STOCKHOLDERS HAVE
AGREED TO TENDER IN THE OFFER, UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF
THE STOCKHOLDERS AGREEMENT, APPROXIMATELY 8% OF THE COMPANY'S OUTSTANDING SHARES
(ASSUMING THE EXERCISE OF SUCH STOCKHOLDERS' OPTIONS SUBJECT TO THE STOCKHOLDERS
AGREEMENT).
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) A NUMBER OF THE
COMPANY'S SHARES REPRESENTING A MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY
DILUTED BASIS BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION
OF THE OFFER, (2) PREFERRED SECURITIES OUTSTANDING ON MAY 20, 1996 HAVING AN
AGGREGRATE LIQUIDATION PREFERENCE OF MORE THAN 50% OF THE AGGREGATE LIQUIDATION
PREFERENCE OF ALL PREFERRED SECURITIES OUTSTANDING ON MAY 20, 1996 HAVING BEEN
CONVERTED BY THE HOLDERS THEREOF INTO SHARES PRIOR TO THE EXPIRATION OF THE
OFFER AND (3) THE RECEIPT OF CERTAIN REGULATORY CONSENTS AND APPROVALS. SEE
INTRODUCTION AND SECTIONS 1, 14 AND 15 OF THIS OFFER TO PURCHASE.
------------------------
IMPORTANT
Any stockholder desiring to tender all or a portion of that stockholder's
shares of common stock, par value $.01 per share, of the Company (the 'Shares')
should either (1) complete and sign the Letter of Transmittal (or a manually
signed facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, mail or deliver it and any other required documents to the
Depositary and either deliver the certificates for those Shares to the
Depositary along with the Letter of Transmittal or tender those Shares pursuant
to the procedures for book-entry transfer set forth in Section 3 hereof, or (2)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for the stockholder. Any stockholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact that broker, dealer, commercial
bank, trust company or other nominee, if the stockholder wishes to tender such
Shares.
Any stockholder who wishes to tender Shares and whose certificates
representing those Shares are not immediately available or who cannot comply
with the procedure for book-entry transfer on a timely basis should tender those
Shares by following the procedures for guaranteed delivery set forth in Section
3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other related materials may be directed to the
Information Agent or to brokers, dealers, commercial banks and trust companies.
------------------------
The Dealer Manager for the Offer is:
LAZARD FRERES & CO. LLC
May 24, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.......................................................... 1
1. Terms of the Offer.......................................... 2
2. Acceptance for Payment and Payment for Shares............... 4
3. Procedure for Tendering Shares.............................. 5
4. Withdrawal Rights........................................... 7
5. Certain Federal Income Tax Consequences of the Offer and the
Merger...................................................... 8
6. Price Range of the Shares; Dividends on the Shares.......... 9
7. Effect of the Offer on the Market for the Shares, Stock
Exchange Listing and Exchange Act Registration and Margin
Securities.................................................. 9
8. Certain Information Concerning the Company.................. 10
9. Certain Information Concerning Purchaser, Parent, GE Capital
Services and GE............................................. 12
10. Source and Amount of Funds.................................. 13
11. Background.................................................. 14
12. Purpose of the Offer and the Merger; Plans for the Company;
the Merger Agreement; the Stockholders Agreement; Other
Agreements.................................................. 15
13. Dividends and Distributions................................. 26
14. Certain Conditions of the Offer............................. 27
15. Certain Legal Matters....................................... 29
16. Fees and Expenses........................................... 35
17. Miscellaneous............................................... 35
</TABLE>
i
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF
AMERIDATA TECHNOLOGIES, INC.:
INTRODUCTION
GAC Acquisition I Corp., a Delaware corporation ('Purchaser'), hereby
offers to purchase all the outstanding shares of common stock, $.01 par value
(the 'Shares'), of AmeriData Technologies, Inc., a Delaware corporation (the
'Company'), at a purchase price of $16 per Share (the 'Offer Price'), net to the
seller in cash, upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements hereto or thereto, collectively constitute the
'Offer'). Purchaser is an indirect, wholly-owned subsidiary of General Electric
Capital Corporation, a New York corporation ('Parent'). Parent is an indirect
wholly-owned subsidiary of General Electric Company, a New York corporation
('GE').
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
May 20, 1996 (the 'Merger Agreement'), among Parent, Purchaser and the Company.
The Merger Agreement provides, among other things, for the commencement of the
Offer by Purchaser and further provides that, after the purchase of Shares
pursuant to the Offer and subject to the satisfaction or waiver of certain
conditions set forth therein, Purchaser will be merged with and into the Company
(the 'Merger'), with the Company surviving the Merger as an indirect
wholly-owned subsidiary of Parent (the 'Surviving Corporation'), which shall
continue under the name 'AmeriData Technologies, Inc.' In the Merger, each Share
issued and outstanding (excluding Shares owned, directly or indirectly, by the
Company or any wholly-owned subsidiary of the Company or by Parent, Purchaser or
any other wholly-owned subsidiary of Parent and excluding Shares owned by
stockholders of the Company who shall have properly perfected their appraisal
rights under Delaware law) immediately prior to the effective time of the Merger
(the 'Effective Time') will be converted at the Effective Time into the right to
receive the Offer Price in cash, without any interest thereon (the 'Merger
Consideration'). It is currently contemplated that following the consummation of
the Merger, Parent will cause to be effected the merger (the 'Second-Step
Merger') of the Surviving Corporation with and into a direct wholly-owned
subsidiary of Parent, with such subsidiary being the surviving corporation in
the Second-Step Merger. See Section 12 for a discussion of the Second-Step
Merger.
THE BOARD OF DIRECTORS OF THE COMPANY (THE 'BOARD') HAS UNANIMOUSLY
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE COMPANY AND THE COMPANY'S STOCKHOLDERS (THE 'STOCKHOLDERS'); HAS
APPROVED THE MERGER AGREEMENT, THE STOCKHOLDERS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT AND THE STOCKHOLDERS AGREEMENT, INCLUDING
THE OFFER AND THE MERGER; AND RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER
AND TENDER ALL OF THEIR SHARES PURSUANT THERETO.
ALEX. BROWN & SONS, INC., THE COMPANY'S FINANCIAL ADVISOR ('ALEX BROWN'),
HAS DELIVERED TO THE COMPANY ITS WRITTEN OPINION THAT THE CONSIDERATION TO BE
RECEIVED BY HOLDERS OF THE SHARES IN THE OFFER AND THE MERGER AS CONTEMPLATED BY
THE MERGER AGREEMENT IS FAIR, FROM A FINANCIAL POINT OF VIEW, TO SUCH
STOCKHOLDERS. A COPY OF THE WRITTEN OPINION OF ALEX BROWN IS CONTAINED IN THE
COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 ('SCHEDULE
14D-9') FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE 'COMMISSION') IN
CONNECTION WITH THE OFFER, A COPY OF WHICH IS BEING FURNISHED TO STOCKHOLDERS
CONCURRENTLY WITH THIS OFFER TO PURCHASE.
The Offer is conditioned upon, among other things, (i) a number of the
Shares representing a majority of all outstanding Shares on a fully diluted
basis being validly tendered and not withdrawn prior to the Expiration Date (as
defined in Section 1 hereof) (the 'Minimum Tender Condition'); (ii) Preferred
Securities (as defined below) outstanding on May 20, 1996 having an aggregate
liquidation preference of more than 50% of the aggregate liquidation preference
of all Preferred Securities outstanding on May 20, 1996 having been converted by
the holders thereof into Shares prior to the expiration of the Offer (the
'Preferred Securities Condition'); and (3) the receipt of certain regulatory
consents and approvals. See Sections 1 and 14, which set forth the conditions of
the Offer, and Section 15, which discusses certain legal matters and regulatory
consents and approvals.
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The Company has represented and warranted to Purchaser that, as of May 20,
1996, 22,281,302 Shares (excluding (i) 64,550 Shares to be issued pursuant to
the Company's restricted stock award plan (the 'Restricted Stock Award Plan')
and (ii) 113,732 Shares to be issued pursuant to an acquisition agreement
previously entered into by the Company) were issued and outstanding, 2,310,512
Shares were reserved for issuance pursuant to outstanding stock options granted
by the Company ('Company Options'), 1,458,041 Shares were reserved for issuance
pursuant to the Company's stock purchase plan, 3,521,576 Shares were reserved
for issuance upon conversion of the Company's 8% convertible subordinated
debentures held by Delaware LLC (as defined below) (the 'Subordinated
Debentures') and 2,418,737 Shares were reserved for issuance pursuant to certain
warrants to purchase Shares issued by the Company (the 'Company Warrants').
According to the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1996 (the 'Company 10-Q'), AmeriData Delaware, L.L.C., a special
purpose limited liability company of which the Company, directly or indirectly,
owns all of the outstanding equity interests other than the Preferred Securities
('Delaware LLC'), has outstanding, as of March 31, 1996, 8% Convertibile Fixed
Life Aggregated Securities ('Preferred Securities') having a liquidation
preference of $25 per security and an aggregate liquidation preference of
$30,880,000. The Company 10-Q also indicates that the Preferred Securities are
guaranteed in certain respects by the Company and are convertible into Shares at
2.851 shares for each Preferred Security.
The consummation of the Merger is subject to the satisfaction or waiver of
a number of conditions, including, if required, the approval of the Merger by
the requisite vote or consent of the Stockholders. Under the Delaware General
Corporation Law (the 'DGCL'), the stockholder vote necessary to approve the
Merger will be the affirmative vote of at least a majority of the outstanding
Shares, including Shares held by Purchaser and its affiliates. If the Minimum
Tender Condition is satisfied and Purchaser purchases at least a majority of the
outstanding Shares in the Offer, Purchaser will be able to effect the Merger
without the affirmative vote of any other Stockholders. If Purchaser acquires at
least 90% of the outstanding Shares pursuant to the Offer or otherwise,
Purchaser will be able to effect the Merger pursuant to the 'short-form' merger
provisions of Section 253 of the DGCL, without prior notice to, or any action
by, any other Stockholder. In that event, Purchaser intends to effect the Merger
as promptly as practicable following the purchase of Shares in the Offer. See
Section 12.
The Merger Agreement is more fully described in Section 12. Certain federal
income tax consequences of the sale of Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
Tendering Stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer or
the Merger. Purchaser will pay all charges and expenses of Lazard Freres & Co.
LLC ('Lazard Freres'), as the dealer manager (the 'Dealer Manager'), The Chase
Manhattan Bank (National Association), as the depositary (the 'Depositary'), and
Georgeson & Company Inc., as the information agent (the 'Information Agent'), in
connection with the Offer. See Section 16.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) all
Shares that are validly tendered and not withdrawn in accordance with Section 4
below prior to the Expiration Date. As used in the Offer, the term 'Expiration
Date' means 12:00 midnight, New York City time, on Friday, June 21, 1996, unless
and until Purchaser, in accordance with the terms of the Offer and the Merger
Agreement, shall have extended the period of time during which the Offer is
open, in which event the term 'Expiration Date' means the latest time and date
at which the Offer, as so extended, expires. As used in this Offer to Purchase,
'business day' has the meaning set forth in Rule 14d-1(c)(6) under the
Securities Exchange Act of 1934, as amended (the 'Exchange Act').
In the event that the Offer is not consummated, Purchaser may seek to
acquire additional Shares through open market purchases, privately negotiated
transactions or otherwise, upon such terms and conditions and at
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such prices as it shall determine, which may be more or less than the Offer
Price and could be for cash or other consideration.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Tender Condition, the Preferred Securities Condition, the expiration or
termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended (the 'HSR Act') and the receipt of all
required regulatory consents and approvals, including the consent of the Federal
Communications Commission (the 'FCC') and certain foreign regulatory consents
and approvals. See Section 15 for a full discussion of required regulatory
consents and approvals. The Offer is also subject to certain other conditions
that are set forth in Section 14 below. Pursuant to the terms of the Merger
Agreement, Purchaser expressly reserves the right (but will not be obligated) to
waive any or all of the conditions of the Offer. Subject to the terms of the
Merger Agreement, if any condition to the Offer is not satisfied, Purchaser may
extend the Offer (x) for up to twenty (20) business days after the initial
expiration date or (y) for longer periods (not to exceed 120 calendar days from
the date of the Offer to Purchase). Purchaser may also extend the Offer as
required by law or the applicable rules and regulations of the Commission.
Subject to the terms of the Merger Agreement, Purchaser expressly reserves
the right, subject to applicable law, to extend the period of time during which
the Offer is open by giving oral or written notice of such extension to the
Depositary and by making a public announcement of such extension. There can be
no assurance that Purchaser will exercise its right to extend the Offer.
Purchaser also expressly reserves the right, subject to applicable law
(including applicable rules and regulations of the Commission promulgated under
the Exchange Act) and the terms of the Merger Agreement, at any time or from
time to time, to (i) delay acceptance for payment of, or payment for, any
Shares, regardless of whether the Shares were theretofore accepted for payment,
or to terminate the Offer and not accept for payment or pay for any Shares not
theretofore accepted for payment or paid for, upon the occurrence of any of the
conditions specified in Section 14 below, by giving oral or written notice of
such delay in payment or termination to the Depositary, and (ii) waive any
conditions or otherwise amend the Offer in any respect, by giving oral or
written notice to the Depositary. Any extension, delay in payment, termination
or amendment will be followed as promptly as practicable by public announcement,
the announcement in the case of an extension to be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which Purchaser may
choose to make any public announcement, Purchaser will have no obligation to
publish, advertise or otherwise communicate any such announcement, other than by
issuing a release to the Dow Jones News Service or as otherwise required by law.
The reservation by Purchaser of the right to delay acceptance for payment of or
payment for Shares is subject to the provisions of Rule 14e-1(c) under the
Exchange Act, which requires that Purchaser pay the consideration offered or
return the Shares deposited by or on behalf of Stockholders promptly after the
termination or withdrawal of the Offer.
Subject to the terms of the Merger Agreement, Purchaser expressly reserves
the right to increase the price per Share payable in the Offer or to make any
other changes in the terms and conditions of the Offer, except that without the
prior written consent of the Company, Purchaser shall not (i) decrease or change
the form of the Offer Price or decrease the number of Shares sought pursuant to
the Offer, (ii) impose additional conditions to the Offer, or (iii) amend any
term of the Offer in any manner adverse to Stockholders. Assuming the prior
satisfaction or waiver of the conditions to the Offer, Purchaser shall accept
for payment, and pay for, in accordance with the terms of the Offer, all Shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the Expiration Date.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. If Purchaser
decides to increase or, subject to the consent of the Company, to decrease the
consideration in the Offer, or to change or waive the Minimum Tender Condition
and if, at the time that notice of any such change or waiver is first published,
sent or given to Stockholders, the Offer is scheduled to expire at any
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time earlier than the tenth business day after (and including) the date of that
notice, the Offer will be extended at least until the expiration of that period
of ten business days.
The Company has provided Purchaser with its stockholder list and security
position listings for the purpose of disseminating the Offer to Stockholders.
This Offer to Purchase, the related Letter of Transmittal and other relevant
materials will be mailed to record holders of Shares and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the Company's stockholder list
or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Merger Agreement and
the Offer (including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), Purchaser will accept for
payment, and will pay for, all Shares that are validly tendered on or prior to
the Expiration Date, and not properly withdrawn in accordance with Section 4
below, as soon as practicable after the Expiration Date. All questions as to the
satisfaction of such terms and conditions will be determined by Purchaser in its
sole discretion, which determination will be final and binding. Subject to the
applicable rules of the Commission, Purchaser expressly reserves the right to
delay acceptance for payment of or payment for Shares in order to comply, in
whole or in part, with any applicable law or government regulation. Any such
delays will be effected in compliance with Rule 14e-1(c) under the Exchange Act
(relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer). See
Section 15 below.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) certificates evidencing
(or a timely Book-Entry Confirmation (as defined in Section 3 below) with
respect to) such Shares, (ii) a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message (as defined below), and (iii) any other documents required by the Letter
of Transmittal. See Section 3 below.
The term 'Agent's Message' means a message, transmitted by a Book-Entry
Transfer Facility (as defined in Section 3 below) to, and received by, the
Depositary and forming part of a Book-Entry Confirmation, which states that (i)
such Book-Entry Transfer Facility has received an express acknowledgment from
the participant in such Book-Entry Transfer Facility tendering Shares that are
the subject of such Book-Entry Confirmation, (ii) such participant has received
and agrees to be bound by the terms of the Letter of Transmittal, and (iii)
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares properly tendered to Purchaser and not
withdrawn, if and when Purchaser gives oral or written notice to the Depositary
of Purchaser's acceptance of such Shares. In all cases, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering Stockholders for the purpose of receiving payment from Purchaser and
transmitting payment to tendering Stockholders.
If, for any reason, acceptance for payment of any Shares tendered pursuant
to the Offer is delayed, or Purchaser is unable to accept for payment Shares
tendered pursuant to the Offer, then, without prejudice to Purchaser's rights
under the Offer (but subject to Rule 14e-1(c) under the Exchange Act), the
Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares,
and such Shares may not be withdrawn, except to the extent that the tendering
Stockholders are entitled to exercise, and do exercise, withdrawal rights as
described in Section 4 below. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON
THE OFFER PRICE BY PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason or if certificates are submitted for more Shares than are tendered,
certificates for Shares not purchased or tendered will be returned pursuant to
the instructions of the tendering Stockholder without expense to the tendering
Stockholder (or, in the case of Shares delivered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant
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to the procedures set forth in Section 3 below, the Shares will be credited to
an account maintained at the appropriate Book-Entry Transfer Facility) as
promptly as practicable following the expiration or termination of the Offer.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per Share pursuant to the Offer, Purchaser will pay the increased
consideration for all Shares purchased pursuant to the Offer, whether or not the
Shares were tendered prior to the increase in consideration.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to Parent or to one or more of its affiliates, the right to
purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering Stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES
Valid Tenders. For a Stockholder to tender validly pursuant to the Offer,
either (i) a Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either (a) certificates evidencing Shares must be received
by the Depositary at any such address prior to the Expiration Date or (b) the
Shares must be delivered pursuant to the procedures for book-entry transfer set
forth below and a Book-Entry Confirmation (as defined below) must be received by
the Depositary prior to the Expiration Date; or (ii) the tendering Stockholder
must comply with the guaranteed delivery procedures set forth below. No
alternative, conditional or contingent tenders will be accepted.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at The Depository Trust Company, Midwest Securities Trust Company
and Philadelphia Depository Trust Company (each, a 'Book-Entry Transfer
Facility' and, collectively, the 'Book-Entry Transfer Facilities') for purposes
of the Offer within two business days after the date of this Offer to Purchase.
Any financial institution that is a participant in any of the Book-Entry
Transfer Facilities' systems may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer the Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with that Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
the Shares may be effected through book-entry transfer into the Depositary's
account at a Book-Entry Transfer Facility, the Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message, and any other required
documents, must, in any case, be transmitted to, and received by, the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, or the tendering Stockholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at a Book-Entry Transfer
Facility as described above is referred to as a 'Book-Entry Confirmation.'
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE
BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
THE METHOD OF DELIVERY OF CERTIFICATES FOR SHARES, THE LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE
TENDERING STOCKHOLDER. IF DELIVERY IS MADE BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
'Special Delivery Instructions' or the box entitled 'Special Payment
Instructions' on the Letter of Transmittal; or (ii) if such Shares are tendered
for the account of a financial institution (including most
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commercial banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an 'Eligible Institution'). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 1 of the Letter of Transmittal. If the certificates
evidencing Shares are registered in the name of a person other than the signer
of the Letter of Transmittal or if payment is to be made or certificates for
Shares not tendered or not accepted for payment are to be returned to a person
other than the registered holder of the certificates surrendered, then the
tendered certificates evidencing Shares must be endorsed or accompanied by
appropriate stock powers, in each case signed exactly as the name (or names) of
the registered holder or owners appears on the certificates, with the signatures
on the certificates or stock powers guaranteed as described above and as
provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a Stockholder wishes to tender Shares pursuant to
the Offer and the Stockholder's certificates are not immediately available or
the procedures for book-entry transfer cannot be completed on a timely basis or
time will not permit all required documents to reach the Depositary prior to the
Expiration Date, such Stockholder's tender may be effected if all of the
following conditions are met:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser, is received by
the Depositary (as provided below) prior to the Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer (or a Book-Entry Confirmation with respect to all such tendered
Shares), together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and any other documents, are received by the Depositary within
three trading days after the date of execution of the Notice of Guaranteed
Delivery. A 'trading day' is any day on which the New York Stock Exchange,
Inc. (the 'NYSE') is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mailed to the Depositary and must include
a guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
IN ALL CASES, SHARES SHALL NOT BE DEEMED VALIDLY TENDERED UNLESS A PROPERLY
COMPLETED AND DULY EXECUTED LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED
FACSIMILE THEREOF) IS RECEIVED BY THE DEPOSITARY.
Notwithstanding any other provision of this Offer to Purchase, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, a Letter of Transmittal
(or a manually signed facsimile), properly completed and duly executed, with any
required signature guarantees and any other documents required by the Letter of
Transmittal (or in the case of a book-entry transfer, an Agent's Message).
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of Shares pursuant to any of the procedures described above will
be determined by Purchaser in its sole discretion, which determination shall be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of Shares determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of Purchaser's counsel,
be unlawful. Purchaser also reserves the absolute right to waive any defect or
irregularity in any tender of any Shares of any particular Stockholder whether
or not similar defects or irregularities are waived in the case of other
Stockholders. Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and its instructions) will be final
and binding on all parties. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived.
None of Parent, Purchaser, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification.
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Backup Federal Income Tax Withholding. To prevent backup federal income
tax withholding of 31% of the payments made to Stockholders with respect to the
purchase price of Shares purchased pursuant to the Offer or the Merger, a
Stockholder must provide the Depositary with his or her correct taxpayer
identification number ('TIN') and certify that he or she is not subject to
backup federal income tax withholding by completing the substitute Form W-9
included in the Letter of Transmittal. See Instruction 10 of the Letter of
Transmittal; see Section 5 below.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering Stockholder's acceptance of the terms and conditions of
the Offer, as well as the tendering Stockholder's representation and warranty to
Purchaser that (i) the Stockholder has a net long position in the Shares being
tendered, within the meaning of Rule 14e-4 under the Exchange Act, and (ii) the
tender of the Shares complies with Rule 14e-4. It is a violation of Rule 14e-4
for a person, directly or indirectly, to tender Shares for his or her own
account, unless, at the time of tender, the person so tendering (i) has a net
long position equal to or greater than the amount of (a) Shares tendered or (b)
other securities immediately convertible into or exchangeable or exercisable for
the Shares tendered and that person will acquire the Shares for tender by
conversion, exchange or exercise and (ii) will cause Shares to be delivered in
accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. Purchaser's acceptance for payment of Shares tendered pursuant
to the Offer will constitute a binding agreement between the tendering
Stockholder and Purchaser upon the terms and conditions of the Offer.
Appointment as Proxy. By executing a Letter of Transmittal, a tendering
Stockholder irrevocably appoints designees of Purchaser as his or her
attorneys-in-fact and proxies, with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of the Stockholder's
rights with respect to the Shares tendered by the Stockholder and purchased by
Purchaser and with respect to any and all other Shares or other securities
issued or issuable in respect of those Shares, on or after the date of the
Offer. All such powers of attorney and proxies will be considered coupled with
an interest in the tendered Shares. Such appointment will be effective when, and
only to the extent that, Purchaser accepts the Shares for payment. Upon
acceptance for payment, all prior powers of attorney and proxies given by the
Stockholder with respect to the Shares (and any other Shares or other securities
so issued in respect of such purchased Shares) will be revoked, without further
action, and no subsequent powers of attorney and proxies may be given (and, if
given, will not be deemed effective) by the Stockholder. The designees of
Purchaser will be empowered to exercise all voting and other rights of the
Stockholder with respect to such Shares (and any other Shares or securities so
issued in respect of such purchased Shares) as they in their sole discretion may
deem proper, including, without limitation, in respect of any annual or special
meeting of the Stockholders, or any adjournment or postponement of any such
meeting, or in connection with any action by written consent in lieu of any such
meeting or otherwise (including any such meeting or action by written consent to
approve the Merger). Purchaser reserves the absolute right to require that, in
order for Shares to be validly tendered, immediately upon Purchaser's acceptance
for payment of the Shares, Purchaser must be able to exercise full voting and
other rights with respect to the Shares, including voting at any meeting of
Stockholders then scheduled.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer may
be withdrawn pursuant to the procedures set forth below at any time prior to the
Expiration Date and, unless theretofore accepted for payment and paid for by
Purchaser pursuant to the Offer, may also be withdrawn at any time after Monday,
July 22, 1996. If Purchaser extends the Offer, is delayed in its purchase of or
payment for Shares or is unable to purchase or pay for Shares for any reason,
then, without prejudice to the rights of Purchaser, tendered Shares may be
retained by the Depositary on behalf of Purchaser and may not be withdrawn,
except to the extent that tendering Stockholders are entitled to withdrawal
rights as set forth in this Section 4. The reservation by Purchaser of the right
to delay the acceptance or purchase of or payment for Shares is subject to the
provisions of Rule 14e-1(c) under the Exchange Act, which requires Purchaser to
pay the consideration offered or return Shares deposited by or on behalf of
Stockholders promptly after the termination or withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase.
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Any such notice of withdrawal must specify the name of the persons who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder, if different from that of the person who tendered the
Shares. If certificates evidencing Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of the
certificates, the tendering Stockholder must also submit to the Depositary the
serial numbers shown on the particular certificates that evidence the Shares to
be withdrawn, and the signature on the notice of withdrawal must be guaranteed
by an Eligible Institution (except in the case of Shares tendered for the
account of an Eligible Institution). If Shares have been tendered pursuant to
the procedure for book-entry transfer set forth in Section 3 above, the notice
of withdrawal must also specify the name and number of the account at the
applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares
and otherwise comply with such Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding on all parties. No withdrawal of
Shares will be deemed to have been properly made until all defects and
irregularities have been cured or waived. None of Parent, Purchaser, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failing to give such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3 above.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER AND THE MERGER
The following is a summary of the principal federal income tax consequences
of the Offer and the Merger to Stockholders whose Shares are purchased pursuant
to the Offer or whose Shares are converted into the right to receive the Merger
Consideration in the Merger (including any cash amounts received by dissenting
Stockholders pursuant to the exercise of appraisal rights). This discussion is
based upon the provisions of the Internal Revenue Code of 1986, as amended (the
'Code'), the applicable Treasury Regulations promulgated and proposed
thereunder, judicial authority and administrative rulings and practice.
Legislative, judicial or administrative changes or interpretations are subject
to change, possibly on a retroactive basis, at any time and therefore could
alter or modify the statements and conclusions set forth below. This discussion
assumes that the Stockholders hold the Shares as 'capital assets' within the
meaning of Section 1221 of the Code (i.e., property held for investment). This
discussion does not address all aspects of federal income taxation that may be
relevant to a particular Stockholder in light of such Stockholder's personal
investment circumstances, or those Stockholders subject to special treatment
under the federal income tax laws (for example, life insurance companies,
tax-exempt organizations, foreign corporations and nonresident alien
individuals) or to Stockholders who acquired their Shares through the exercise
of employee stock options or other compensation arrangements. In addition, the
discussion does not address any aspect of foreign, state, local or estate and
gift taxation that may be applicable to a Stockholder.
Consequences of the Offer and the Merger to Stockholders. The receipt of
the Offer Price and the Merger Consideration (including any cash amounts
received by dissenting Stockholders pursuant to the exercise of appraisal
rights) will be a taxable transaction for federal income tax purposes (and also
may be a taxable transaction under applicable state, local and other income tax
laws). In general, for federal income tax purposes, a Stockholder will recognize
gain or loss equal to the difference between his or her adjusted tax basis in
the Shares sold pursuant to the Offer or converted to cash in the Merger and the
amount of cash received therefor. Gain or loss must be determined separately for
each block of Shares (i.e., Shares acquired at the same cost in a single
transaction) sold pursuant to the Offer or converted to cash in the Merger. Such
gain or loss will be capital gain or loss and will be long-term gain or loss if,
on the date of sale (or, if applicable, the date of the Merger), the Shares were
held for more than one year.
Backup Tax Withholding. Under the Code, a Stockholder may be subject,
under certain circumstances, to 'backup withholding' at a 31% rate with respect
to payments made in connection with the Offer or the Merger. Backup withholding
generally applies if the Stockholder (i) fails to furnish his or her Social
Security Number or employer identification number ('TIN'), (ii) furnishes an
incorrect TIN, (iii) fails properly to report interest or dividends or (iv)
under certain circumstances, fails to provide a certified statement, signed
under penalties of
8
<PAGE>
perjury, that the TIN provided is his or her correct number and that he or she
is not subject to backup withholding. Backup withholding is not an additional
tax but merely an advance payment, which may be refunded to the extent it
results in an overpayment of tax. Certain persons generally are exempt from
backup withholding, including corporations and financial institutions. Certain
penalties apply for failure to furnish correct information and for failure to
include the reportable payments in income. Each Stockholder should consult with
his or her own tax advisor as to his or her qualifications for exemption from
withholding and the procedure for obtaining such exemption.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE OFFER
AND THE MERGER TO THEM IN VIEW OF THEIR OWN PARTICULAR CIRCUMSTANCES.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
According to the Company 10-K, the principal trading market for the Shares
is the NYSE, where the trading symbol is 'ADA'. Prior to October 3, 1994, the
Company's common stock traded in the Nasdaq National Market ('NNM') under the
symbol 'SASZ'. The following table sets forth, for the periods indicated, the
high and low sales prices per Share, as reported by the NNM (prior to October 3,
1994) and the NYSE Composite Tape (since October 3, 1994):
High and low sale prices per Share as reported by the NNM for the periods
indicated:
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1994:
First Quarter.......................................... $23.25 $11.00
Second Quarter......................................... 17.25 11.00
Third Quarter (through September 30, 1994)............. 17.25 11.50
</TABLE>
High and low sale prices per Share as reported by the NYSE Composite Tape:
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1994:
Fourth Quarter (October 3, 1994 through December 31,
1994)............................................... $15.50 $ 9.50
1995:
First Quarter.......................................... 10.75 7.00
Second Quarter......................................... 9.50 6.875
Third Quarter.......................................... 14.00 9.125
Fourth Quarter......................................... 11.75 9.00
1996:
First Quarter.......................................... 11.75 8.375
Second Quarter (through May 23, 1996).................. 15.375 9.125
</TABLE>
On May 17, 1996, the last full trading day before the public announcement
by Parent and the Company of the execution of the Merger Agreement and
Purchaser's intention to commence the Offer, the last reported sale price on the
NYSE was $15.375 per Share. On May 23, 1996, the last full trading day before
the commencement of the Offer, the last reported sale price on the NYSE was
$15.875 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES.
According to published financial sources, the Company has not paid any
dividends on the Shares for the periods presented above.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION AND MARGIN SECURITIES
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of holders
of Shares, which could adversely affect the liquidity and market value of the
remaining Shares held by Stockholders other than Purchaser. Purchaser cannot
predict whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect
9
<PAGE>
on the market price for, or marketability of, the Shares or whether such
reduction would cause future market prices to be greater or less than the Offer
Price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the NYSE for continued listing and
may, therefore, be delisted from such exchange. According to the NYSE's
published guidelines, the NYSE would consider delisting the Shares if, among
other things, the number of publicly held Shares (excluding Shares held by
officers, directors, their immediate families and other concentrated holdings of
10% or more) were less than 600,000, there were less than 1,200 holders of at
least 100 Shares or the aggregate market value of the publicly held Shares were
less than $5 million. The Company has represented that, as of May 20, 1996,
there were 22,281,302 Shares outstanding and 23,074 Shares held in the Company's
treasury. If, as a result of the purchase of Shares pursuant to the Offer, the
Shares no longer meet the requirements of the NYSE for continued listing and the
listing of Shares is discontinued, the market for the Shares could be adversely
affected.
If the NYSE were to delist the Shares (which Purchaser intends to cause the
Company to seek if it acquires control of the Company and the Shares no longer
meet the NYSE listing requirements), it is possible that the Shares would trade
on another securities exchange or in the over-the-counter market and that price
quotations for the Shares would be reported by such exchange or through the
National Association of Securities Dealers Automated Quotation System ('NASDAQ')
or other sources. The extent of the public market for the Shares and
availability of such quotations would, however, depend upon such factors as the
number of holders and/or the aggregate market value of the publicly held Shares
at such time, the interest in maintaining a market in the Shares on the part of
securities firms, the possible termination of registration of the Shares under
the Exchange Act and other factors.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application of the Company to the Commission
if the Shares are neither listed on a national securities exchange nor held by
300 or more holders of record. Termination of the registration of the Shares
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of Shares and to the Commission and would
make certain of the provisions of the Exchange Act, such as the short-swing
profit recovery provisions of Section 16(b), the requirement of furnishing a
proxy statement pursuant to Section 14(a) in connection with a shareholders'
meeting and the related requirement of an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to 'going
private' transactions, no longer applicable to the Company. Furthermore,
'affiliates' of the Company and persons holding 'restricted securities' of the
Company may be deprived of the ability to dispose of such securities pursuant to
Rule 144 promulgated under the Securities Act of 1933, as amended (the
'Securities Act'). If registration of the Shares under the Exchange Act were
terminated, the Shares would no longer be 'margin securities' or eligible for
listing or NASDAQ reporting. Purchaser intends to seek to cause the Company to
terminate registration of the Shares under the Exchange Act as soon after
consummation of the Offer as the requirements for termination of registration of
the Shares are met.
The Shares are currently 'margin securities' under the regulations of the
Board of Governors of the Federal Reserve System (the 'Federal Reserve Board'),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of such Shares. Depending upon factors similar to those
described above regarding listing and market quotations, the Shares might no
longer constitute 'margin securities' for the purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive offices
located at 700 Canal Street, Stamford, Connecticut 06902. According to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995
(the 'Company 10-K'), the Company is an international provider of computing and
networking products and services to commercial, governmental and educational
users. The Company provides additional services, including network design and
support, maintenance, facilities management and outsourcing through its sales
offices nationwide. Through its subsidiaries, the Company also provides advance
systems consulting, application-specific systems development services and
personal computer equipment and networks.
10
<PAGE>
Set forth below is certain selected consolidated financial data, with
respect to the Company and its subsidiaries excerpted from the Company 10-K and
the Company 10-Q. More comprehensive financial information is included in such
reports and other documents filed by the Company with the Commission, and the
following summary is qualified in its entirety by reference to such reports and
other documents and all the financial information (including any related notes)
contained therein. Such reports and other documents are available for inspection
and copies are obtainable in the manner set forth below under 'Available
Information.'
SELECTED CONSOLIDATED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED MARCH ------------------------------------
INCOME STATEMENT DATA 31, 1996 1995 1994 1993
- --------------------------- ------------ ---------- ---------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Total net revenues......... $ 452,799 $1,515,557 $1,018,545 $219,663
Total cost of revenues..... 390,055 1,311,445 895,094 187,959
Selling, general and
administrative
expenses................. 47,857 145,618 86,211 22,492
Operating income (loss).... 13,571 53,352 34,638 8,473
Interest income
(expense)................ (8,007) (24,951) (11,611) (1,648)
Net income (loss).......... $ 3,451 $ 17,268 $ 13,931 $ 4,257
Net income (loss) per
common share:
Primary............... $ .15 $ .79 $ .78 $ .36
Fully diluted......... $ .15 $ .77 $ .78 $ .35
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
AT MARCH 31, --------------------------------
BALANCE SHEET DATA 1996 1995 1994 1993
- --------------------------- ------------ -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Total assets............... $ 713,327 $710,384 $438,085 $153,382
Total current
liabilities.............. 495,411 502,026 278,583 87,111
Long-term debt............. 12,206 11,605 36,221 1,119
Company-obligated,
mandatorily redeemable
preferred securities of
AmeriData Delaware,
L.L.C.................... 30,880 30,880
Stockholders' equity....... 164,983 156,951 121,494 65,002
</TABLE>
General Electric Pension Trust (the 'Pension Trust') is a master trust
which is tax exempt pursuant to Section 501(a) of the Code, and is the funding
vehicle for certain of the qualified defined benefit pension plans of GE and
those trades or businesses which are under common control as set forth in
Sections 414(b) and (c) of the Code and Section 4001(b)(1) of the Employee
Retirement Income Security Act of 1974, as amended ('ERISA'), including Parent.
As indicated in the Company's proxy statement dated April 4, 1996, as of
December 31, 1995, the Pension Trust owned 2,101,404 Shares (or approximately
9.7% of the outstanding Shares as of such date).
Certain Company Projections. During the course of discussions between
Parent and the Company that led to the execution of the Merger Agreement (see
Section 11 below), in a telephone call, the Company discussed with Lazard Freres
certain limited non-public business and financial information about the Company.
Subsequently, the Company provided Parent with more detailed written, non-public
business and financial information. The written information provided to Parent
included (i) a preliminary plan projecting profit for 1996 of approximately $30
million based on projected total revenue of approximately $2.1 billion, (ii)
balance sheet information that projected for 1996 (A) total assets of between
approximately $650 million and $763 million for each quarter of 1996, (B) total
liabilities of between approximately $461 million and $547 million for each
11
<PAGE>
quarter of 1996, and (C) total stockholders' equity of between approximately
$189 million and $216 million, and (iii) cash flow information projecting cash
from operations of approximately $36 million for 1996.
The Company does not as a matter of course make public any projections as
to future performance or earnings, and the projections set forth above are
included in this Offer to Purchase only because the information was provided to
Purchaser and Parent. The projections were not prepared with a view to public
disclosure or for compliance with the published guidelines of the Commission or
the guidelines established by the American Institute of Certified Public
Accountants regarding projections or forecasts. The Company has advised
Purchaser and Parent that its internal financial forecasts (upon which the
projections provided to Parent were based in part) are, in general, prepared
solely for internal use and capital budgeting and other management decisions,
and are subjective in many respects and thus susceptible to interpretation and
periodic revision based on actual experience and business developments. None of
the Company, Purchaser or Parent or their respective financial advisors or any
of their respective directors or officers assumes any responsibility for the
accuracy of any of the projections. Because the estimates and assumptions
underlying the projections are inherently subject to significant economic and
competitive uncertainties and contingencies that are difficult or impossible to
predict accurately and are beyond the Company's, Purchaser's and Parent's
control, there can be no assurance that the projections will be realized.
Accordingly, it is expected that there will be differences between actual and
projected results, and actual results may be materially higher or lower than
those projected.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act. In accordance with the Exchange Act, the
Company files periodic reports, proxy statements and other information with the
Commission that relates to its business, financial condition and other matters.
The Company is required to disclose in such proxy statements certain
information, as of particular dates, concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of those persons
in transactions with the Company. Such reports, proxy statements and other
information may be inspected at the Commission's office at 450 Fifth Street,
N.W., Washington, D.C. 20549, and also are available for inspection and copying
at the regional offices of the Commission located at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies may be obtained upon
payment of the Commission's prescribed fees by writing to its principal office
at 450 Fifth Street, N.W., Washington, D.C. 20549. Such material can also be
obtained at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained in this Offer to Purchase has been taken from
or based upon publicly available documents on file with the Commission and other
publicly available information. Although Purchaser and Parent do not have any
knowledge that any such information is untrue, neither Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING PURCHASER, PARENT, GE CAPITAL SERVICES AND GE
Purchaser, a Delaware corporation, was organized to acquire all of the
outstanding Shares pursuant to the Offer and has not conducted any unrelated
activities since its organization. GAC Acquisition II Corp., a Delaware
corporation ('GAC II'), was organized for the purpose of effecting the
Second-Step Merger; and has not conducted any unrelated activities since its
organization. All of the outstanding capital stock of Purchaser is owned
directly by GAC II. GAC II is a direct wholly-owned subsidiary of Parent. The
principal executive offices of Purchaser and GAC II are located at 6875 Jimmy
Carter Boulevard, Suite 3200, Norcross, Georgia 30071.
Parent is a New York corporation and a direct, wholly-owned subsidiary of
General Electric Capital Services, Inc. ('GE Capital Services') which, in turn,
is a wholly-owned subsidiary of GE. Parent, together with its subsidiaries,
engages in financing services that include lending, equipment management
services and annuities. The principal executive offices of Parent are located at
260 Long Ridge Road, Stamford, Connecticut 06927.
GE Capital Services is a Delaware corporation and a direct, wholly-owned
subsidiary of GE. The business of GE Capital Services consists of the ownership
of two principal subsidiaries which, together with their
12
<PAGE>
affiliates, constitute GE's principal financial services businesses. The
principal executive offices of GE Capital Services are located at 260 Long Ridge
Road, Stamford, Connecticut 06927.
GE, a New York corporation, engages in providing a wide variety of
industrial, commercial and consumer products and services. The National
Broadcasting Company, Inc. ('NBC'), a wholly-owned subsidiary of GE, is engaged
principally in furnishing network television services, in operating television
stations and in providing cable programming and distribution services. The
principal executive offices of GE are located at 3135 Easton Turnpike,
Fairfield, Connecticut 06431.
Except as described in this Offer to Purchase, during the last five years,
none of Purchaser, Parent, GE, GE Capital Services and GAC II or, to the best
knowledge of Purchaser and Parent, any of the persons listed in Schedule I
hereto (i) has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or (ii) was a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal or
state securities laws or finding any violation of such laws. The name, business
address, present principal occupation or employment, five-year employment
history and citizenship of each director and executive officer of Purchaser,
Parent, GE, GE Capital Services and GAC II are set forth in Schedule I.
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries excerpted from Parent's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995 and Parent's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 1996, in each case
filed with the Commission by Parent. More comprehensive financial information is
included in such reports and other documents filed with the Commission by
Parent, and the following summary is qualified in its entirety by reference to
such reports and other documents and all financial information (including any
related notes) contained therein. Such reports and other documents should be
available for inspection and copies should be obtainable in the manner set forth
with respect to information about the Company in Section 8 (except that they
will not be available at the regional offices of the Commission).
SELECTED CONSOLIDATED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED --------------------------------
MARCH 31, 1996 1995 1994 1993
-------------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Statement of Current &
Retained Earnings:
Earned income.......... $ 5,620 $ 21,179 $ 16,923 $ 14,444
Net earnings........... 605 2,261 1,918 1,478
Financing Receivables--
net.................. 92,208 93,272 76,357 63,948
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED --------------------------------
MARCH 31, 1996 1995 1994 1993
-------------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Statement of Financial
Position:
Total assets............ $ 160,975 $160,825 $130,904 $117,939
Short-term borrowings... 59,891 59,264 54,579 52,903
Long-term senior
notes................. 48,508 47,794 33,615 25,112
Long-term subordinated
notes................. 697 697 697 697
Minority interest....... 696 703 615 426
Equity.................. 14,249 14,202 10,540 10,370
</TABLE>
Except as described in this Offer to Purchase, (i) none of Purchaser,
Parent, GAC II, GE or GE Capital Services or, to the best knowledge of Purchaser
and Parent, any of the persons listed in Schedule I or any associate or
majority-owned subsidiary of any such person, beneficially owns or has a right
to acquire any equity security of the Company and (ii) none of Purchaser,
Parent, GAC II, GE or GE Capital Services or, to the best knowledge of Parent
and Purchaser, any of the other persons referred to above, or any of the
respective directors,
13
<PAGE>
executive officers or subsidiaries of any of the foregoing, has effected any
transaction in any equity security of the Company during the past 60 days.
10. SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned upon any financing arrangements. Purchaser
estimates that the total amount of funds required to consummate the Offer and
the Merger, to pay related fees and expenses and to pay outstanding indebtedness
of the Company that may become due as a result of the Offer and the Merger is
approximately $825 million. Purchaser expects to obtain these funds in the form
of capital contributions from GAC II. GAC II expects to obtain these funds from
capital contributions and/or loans from Parent. Parent expects to fund the
capital contributions and/or loans provided to GAC II from existing available
working capital and/or from existing commercial paper programs.
11. BACKGROUND
Background of the Offer
In early 1995, representatives of the Company contacted representatives of
Parent with respect to the possible acquisition by the Company of Parent's third
party computer maintenance business. The parties subsequently engaged in several
additional discussions concerning the possible acquisition, which discussions
ceased in early 1995.
In early 1996, a representative of Parent was contacted by a third party to
inquire whether Parent was interested in discussing a possible business
relationship between Parent and the Company. Parent's representative then
contacted a representative of the Company and arranged for an informal meeting
between representatives of each of the Company and Parent, which meeting was
held thereafter.
On February 6, 1996, Mr. Gerald Poch and Mr. Leonard Fassler, two of the
three Co-Chairmen of the Company, had dinner with Mr. Michael Ford, President
and Chief Executive Officer of Parent's Technology Management Services business
(the 'Technology Management Business'), and Mr. Michael Upton, Senior Vice
President of the Technology Management Business, to explore whether the parties
had an interest in entering into discussions relating to a possible business
relationship or business combination between Parent and the Company. The parties
determined to continue discussions and on February 15, 1996, the Company and
Parent entered into a Confidentiality Agreement.
On February 21, 1996, Mr. Poch met again with Mr. Upton. At that meeting,
Mr. Poch and Mr. Upton discussed a possible sale of the Company to Parent and
Mr. Poch described the Company's structure and capabilities.
On March 6, 1996, representatives of the Company including Messrs. Poch and
Fassler and the Company's chief accounting officer met with representatives of
Parent, including Mr. Upton, to further discuss the possibility of a sale of the
Company. On March 7, 1996, Mr. Poch met with representatives of Parent and
Lazard Freres, Parent's financial advisor, and made a formal presentation
relating to the Company's business, financial condition and results of
operations, as well as the Company's new computer system.
During mid to late March of 1996, representatives of the Company and Parent
continued to hold discussions regarding a possible sale of the Company to
Parent. In these discussions, the Company's representatives indicated that the
Company's board of directors was likely to require a price somewhat in excess of
$15 per Share. Parent's representatives, however, did not engage in negotiations
relating to price at that time.
On April 1, 1996, a representative of the Company met with a representative
of Parent and a representative of Lazard Freres. At this meeting, the Company's
representative indicated that he believed, based on his informal discussions
with the Company's board of directors, that a price somewhat in excess of $15
per Share would be required in order for the Company's board of directors to
approve a transaction.
During March, April and early May of 1996, representatives of Parent,
Lazard Freres, Weil, Gotshal & Manges LLP ('Weil Gotshal'), counsel to Parent,
and a consultant to Parent requested and received non-public information with
respect to the Company. In connection with Parent's due diligence of the Company
during this
14
<PAGE>
period, representatives of Parent, Lazard Freres, Weil Gotshal and
representatives of Parent's consultant and representatives of the Company and
Dewey Ballantine ('Dewey Ballantine'), legal counsel to the Company, contacted
each other from time to time to discuss issues relating to due diligence.
In early May of 1996, Parent's legal counsel furnished the Company and the
Company's legal counsel with a draft merger agreement. During the first three
weeks of May of 1996, representatives of Parent, Lazard Freres and Weil Gotshal
negotiated the terms of a merger agreement with representatives of the Company
and Dewey Ballantine. During these negotiations, representatives of Parent
indicated to representatives of the Company and the Company's legal counsel that
it was a condition to Parent's willingness to enter into a merger agreement that
certain Stockholders enter into a stockholders agreement pursuant to which such
Stockholders would agree, among other things, to tender their Shares in the
Offer. Also during the first three weeks of May of 1996, amendments to the
employment agreements of each of the three Co-Chairmen were negotiated with the
Company and Parent (the 'Amendment Agreements').
From Thursday, May 16 through the morning of Monday, May 20, 1996,
representatives of the Company and its legal counsel continued to meet with
representatives of Parent, Lazard Freres and Parent's legal counsel to negotiate
the terms of the merger agreement. During this same period, representatives of
Parent and its legal counsel negotiated the terms of the Stockholders Agreement
with the Selling Stockholders and representatives of Dewey Ballantine, and the
terms of the Amendment Agreements with the Company's three Co-Chairmen and
representatives of Dewey Ballantine. On May 17, 1996, Mr. Poch spoke with a
representative of Lazard Freres and indicated that the Company's board of
directors would not be prepared to accept an offer from Parent for the sale of
the Company at a price below $16 per Share. Later that day, a representative of
Alex Brown spoke with a representative of Lazard Freres and discussed Alex
Brown's valuation analysis of the Company. The negotiations from Thursday, May
16, 1996 through Monday, May 20, 1996 culminated in the Company and Parent
agreeing upon the form of definitive Merger Agreement, the Selling Stockholders
and Parent agreeing upon the form of definitive Stockholders Agreement and the
three Co-Chairmen of the Company, the Company and Parent agreeing upon the form
of definitive Amendment Agreements.
During the evening of May 19, 1996, Parent's board of directors approved
the Merger Agreement and the Stockholders Agreement and the transactions
contemplated therein, subject to satisfactory negotiation of the remaining
unresolved issues, including price. Later that evening, Parent's representatives
informed the Company's representatives that Parent was prepared to pay $16 per
Share to acquire the Company. During that same evening, the Company's
representatives informed Parent's representatives that the Company's board of
directors had approved the Merger Agreement and the transactions contemplated
therein and representatives of Dewey Ballantine informed representatives of
Parent that the Selling Stockholders had agreed to the terms of the Stockholders
Agreement and the transactions contemplated therein and that the Company's three
Co-Chairmen had agreed to the terms of the Amendment Agreements.
On May 20, 1996, the Merger Agreement, the Stockholders Agreement and the
Amendment Agreements were executed and the transaction was publicly announced.
Other
The Company 10-K indicates that during October 1994, the Company acquired
the business of American Computer Rental, Inc. ('ACR'), a provider of short-term
computer rental equipment to commercial and governmental users, and that in
connection with such acquisition the Company assumed certain obligations of ACR
to Parent related to the financing of rental equipment. As indicated in the
Company 10-K, at December 31, 1995, such obligations aggregated approximately
$4.3 million and bear interest at the prime rate plus 1.5%.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; THE MERGER
AGREEMENT; THE STOCKHOLDERS AGREEMENT; OTHER AGREEMENTS
Purpose of the Offer and the Merger
The purpose of the Offer and the Merger is to enable Purchaser to acquire,
in one or more transactions, control of the Company and the entire equity
interest in the Company. The Offer is intended to increase the likelihood that
the Merger will be completed promptly.
15
<PAGE>
Parent believes that the Company's business will strengthen Parent's
capabilities as a global desktop systems integrater by geographically expanding
the markets in which Parent's desktop systems integrater business operates.
Plans for the Company
It is currently contemplated that following the consummation of the Merger,
Parent will cause the Second-Step Merger to be effected. As a result of the
Second-Step Merger, certain options to purchase Shares granted by the Company
will thereafter represent the right to receive for each Share subject to such
option, upon exercise thereof in accordance with their terms, an amount in cash
equal to the difference between (i) the Offer Price, and (ii) the exercise price
with respect to such option.
Parent intends, from time to time after completion of the Offer, to
evaluate and review the Company's operations and consider what, if any, changes
would be desirable in light of circumstances that then exist. Except as noted in
this Offer to Purchase, Purchaser and Parent have no present plans or proposals
that would result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation or sale or transfer of a material amount of assets
involving the Company or any subsidiary or any other material changes in the
Company's capitalization, dividend policy, corporate structure, business or
composition of its management or Board.
The Merger Agreement
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement, which is incorporated by reference and a copy of which
has been filed with the Commission as an exhibit to the Schedule 14D-1. The
Merger Agreement may be examined, and copies obtained, as set forth in Section 8
above.
The Offer. The Merger Agreement provides for the commencement of the
Offer. Purchaser has expressly reserved the right to increase the price per
Share payable in the Offer or to make any other changes in the terms and
conditions of the Offer, except that without the prior written consent of the
Company, Purchaser has agreed that it will not (i) decrease or change the form
of the Offer Consideration or decrease the number of Shares sought pursuant to
the Offer, (ii) impose additional conditions to the Offer, (iii) extend the
Expiration Date of the Offer (except as required by law or the applicable rules
and regulations of the Commission and except that Purchaser may extend the
Expiration Date of the Offer (x) for up to twenty (20) business days after the
initial Expiration Date or (y) for longer periods (not to exceed 120 calendar
days from the date of commencement) in the event that any condition to the Offer
is not satisfied), or (iv) amend any term of the Offer in any manner adverse to
Stockholders; provided, however, that, except as set forth above, Purchaser may
waive any condition to the Offer in its sole discretion; and provided further,
that the Offer may be extended in connection with an increase in the
consideration to be paid pursuant to the Offer so as to comply with applicable
rules and regulations of the Commission. Assuming the prior satisfaction or
waiver of the conditions to the Offer, Purchaser will accept for payment, and
pay for, in accordance with the terms of the Offer, all Shares validly tendered
and not withdrawn pursuant to the Offer as soon as practical after the
Expiration Date thereof.
Payment for Shares. Prior to the Effective Time, Parent will deposit or
shall cause to be deposited with the Paying Agent (as defined in the Merger
Agreement) in a separate fund established for the benefit of the holders of
Shares, for payment in accordance with the Merger Agreement (the 'Payment
Fund'), immediately available funds in amounts necessary to make the payments
pursuant to the Merger Agreement to holders of Shares (other than the Company or
any wholly-owned subsidiary of the Company or Parent, Purchaser or any other
wholly-owned Subsidiary of Parent, or holders of Dissenting Shares (as defined
below)). The Paying Agent shall, pursuant to irrevocable instructions, pay the
Merger Consideration out of the Payment Fund.
Any portion of the Payment Fund which remains undistributed to the holders
of Shares for six months after the Effective Time shall be delivered to the
Company, upon demand, and any holders of Shares who have not theretofore
complied with the Merger Agreement and the Instructions set forth in the Letter
of Transmittal mailed to such holder after the Effective Time shall thereafter
look only to the Company for payment of the Merger Consideration to which they
are entitled; provided that if, but only if, the Company shall have defaulted in
its obligation to make such payment within a reasonable period of time after
receipt of written request therefor from
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any such holder, such holder may thereafter look to Parent for payment of the
Merger Consideration to which they are entitled. All interest accrued in respect
of the Payment Fund shall inure to the benefit of and be paid to Parent.
Board Representation. The Merger Agreement provides that promptly upon the
purchase pursuant to the Offer by Parent or any of its subsidiaries (including
Purchaser) of such number of Shares that represents at least a majority of the
Shares outstanding, and from time to time thereafter, Parent will be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board that equals the product of (x) the number of directors (the 'Parent
Designees') on the Board (giving effect to any increase in the number of
directors pursuant to the Merger Agreement) and (y) the percentage that such
number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being the 'Board Percentage'), and the Company will,
subject to Parent's having theretofore provided the Company with the information
with respect to Parent's Designees required pursuant to compliance with Section
14(f) of the Exchange Act, promptly satisfy the Board Percentage by (i)
increasing the size of the Board or (ii) securing the resignations of such
number of directors as is necessary to enable Parent's Designees to be elected
to the Board (and the Company shall use its best efforts to cause the then
remaining members of the Board to promptly so elect Parent's Designees). At the
request of Parent, the Company will take, at the Company's expense, all lawful
action necessary to effect any such election, including, without limitation,
mailing to the Stockholders the information required by Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, unless such information has
previously been provided to the Company's Stockholders in the Schedule 14D-9.
Following the election or appointment of Parent's Designees pursuant to the
Merger Agreement and prior to the Effective Time, any amendment or termination
of the Merger Agreement, extension for the performance or waiver of the
obligations or other acts of Parent or Purchaser, or waiver of the Company's
rights under the Merger Agreement will require the concurrence of a majority of
directors of the Company then in office who are directors on the date of the
Merger Agreement and who voted to approve the Merger Agreement; provided that if
there are no such directors, such actions may be effected by majority vote of
the entire Board.
Consideration to be Paid in the Merger. The Merger Agreement provides
that, upon the terms and subject to the conditions set forth in the Merger
Agreement, and in accordance with the DGCL, Purchaser will be merged with and
into the Company at the Effective Time. At the Effective Time, the separate
corporate existence of Purchaser will cease, and the Company will continue as
the Surviving Corporation. At the Effective Time, by virtue of the Merger, each
Share issued and outstanding immediately prior to the Effective Time (excluding
Shares owned, directly or indirectly, by the Company or any wholly-owned
subsidiary of the Company or by Parent, Purchaser or any other wholly-owned
subsidiary of Parent and excluding Dissenting Shares (as defined below)) will be
converted into the right to receive the Merger Consideration, without any
interest thereon, upon surrender and exchange of a certificate which immediately
prior to the Effective Time represented such Shares (each, a 'Certificate').
Each share of the capital stock of Purchaser issued and outstanding immediately
prior to the Effective Time will be converted into one fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation, which will thereupon become an indirect, wholly-owned subsidiary of
Parent. Each Share and all other shares of capital stock of the Company that are
owned by the Company and all Shares and other shares of capital stock of the
Company owned by Parent, Purchaser or any other wholly-owned subsidiary of
Parent or the Company will be cancelled and retired and will cease to exist and
no consideration will be delivered or deliverable in exchange therefor. The
Merger will become effective upon the filing of a Certificate of Merger with the
Secretary of State of the State of Delaware or at such time thereafter as is
provided in the Certificate of Merger.
Options, Warrants and Other Purchase Rights. After the Effective Time,
each holder of (i) a then outstanding option (collectively, the 'Employee
Options') to purchase Shares under the Company's 1991 Stock Option Plan and the
Option Agreements between the Company and certain of its officers, directors,
employees and consultants (the 'Stock Option Plans'), (ii) a Warrant (as defined
in the Merger Agreement ), and (iii) except as provided in the Merger Agreement,
any other option, warrant or other right to acquire (upon purchase, exchange,
conversion or otherwise) Shares (collectively, the 'Other Options' and, together
with the Employee Options, the 'Options'), shall upon exercise of such Option or
Warrant in accordance with its terms, be entitled to receive for each Share
subject to such Option or Warrant, in settlement and cancellation thereof, an
amount (subject to any applicable withholding tax) in cash equal to the
difference between the Offer Price and the per
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Share exercise price of such Option or Warrant, as the case may be, to the
extent such difference is a positive number; provided, however, that with
respect to any person subject to Section 16(a) of the Exchange Act, any such
amount shall be paid as soon as practicable after the first date payment can be
made without liability to such person under Section 16(b) of the Exchange Act.
The surrender of an Option or Warrant to the Company in exchange for the
Option/Warrant Consideration shall be deemed a release of any and all rights the
holder had or may have in respect of such Option or Warrant.
At the Effective Time, each holder of a right to purchase Shares under the
Company's 1991 Stock Purchase Plan (the 'Stock Purchase Plan') pursuant to any
offering under the Stock Purchase Plan (a 'Right'), whether or not then
exercisable, shall, in settlement and cancellation thereof, receive for such
Right an amount (subject to any applicable withholding tax) in cash (such amount
being hereinafter referred to as the 'Rights Consideration') equal to the sum of
(i) the product of such holder's Accrued Shares (as defined below) with respect
to such offering times the difference between (A) the Offer Price and (B) the
lower of (I) 85% of the fair market value of the Shares on the effective date of
the related offering under the Stock Purchase Plan (determined in accordance
with the Stock Purchase Plan) and (II) 85% of the fair market value of the
Shares on the date immediately prior to the public announcement of the Offer
(such lower amount with respect to an offering, the 'Applicable Per Share
Price'), to the extent such difference is a positive number, plus (ii) an amount
equal to the aggregate amount in such holder's payroll deduction account with
the Company with respect to such offering at the Effective Time (the 'Related
Deduction Account Amount'); provided, however, that with respect to any person
subject to Section 16(a) of the Exchange Act, any such amount shall be paid as
soon as practicable after the first date payment can be made without liability
to such person under Section 16(b) of the Exchange Act. Upon receipt of the
related Rights Consideration, the Right shall be canceled and such receipt shall
be deemed a release of any and all rights the holder had or may have had in
respect of such Right. The 'Accrued Shares' of a holder of a Right with respect
to any offering under the Stock Purchase Plan shall mean the amount obtained by
dividing (I) the Related Deduction Account Amount with respect to such offering
by (II) the Applicable Per Share Price with respect to such offering, rounded up
to the next whole share.
After the Effective Time, each holder of a Subordinated Debenture shall be
entitled to receive, upon conversion thereof in accordance with the terms
thereof, in settlement and cancellation thereof, solely an amount (subject to
any applicable withholding tax) in cash equal to the amount receivable upon the
consummation of the Merger by a holder of that number of Shares into which the
Subordinated Debentures of such holder were convertible immediately prior to the
Merger. The foregoing will apply whether such conversion of the Subordinated
Debenture occurs upon conversion of any of the Preferred Securities in
accordance with the terms thereof or otherwise.
Prior to the Effective Time, the Company will use its commercially
reasonable efforts to obtain all necessary consents or releases from holders of
Options, Warrants, Rights, Preferred Securities and Subordinated Debentures
(collectively, the 'Equity Purchase Rights') and shall take all such other
lawful action as may be necessary to give effect to the transactions described
above. Prior to the Effective Time, the Company will (i) terminate the Stock
Option Plans and Stock Purchase Plan without liability to the Company or the
Surviving Corporation (other than as contemplated by the Merger Agreement) as of
the Effective Time and terminate or cancel as of the Effective Time the
provisions in any other plan, program or arrangement providing for the issuance
or grant of any other interest in respect of the capital stock of the Company or
any subsidiary thereof and (ii) take all action reasonably necessary to ensure
that following the Effective Time no holder of any Equity Purchase Right or
participant in any other plan, program or arrangement shall have any right
thereunder to acquire equity securities of the Company, the Surviving
Corporation or any subsidiary thereof.
Dissenting Shares. Shares that are outstanding immediately prior to the
Effective Time and which are held by Stockholders who shall have not voted in
favor of the Merger or consented thereto in writing and who shall have demanded
properly in writing appraisal for such shares in accordance with Section 262 of
the DGCL (collectively, the 'Dissenting Shares') will not be converted into or
represent the right to receive the Merger Consideration. Such Shares instead
will, from and after the Effective Time, represent only the right to receive
payment of the appraised value of such Shares held by them in accordance with
the provisions of such Section 262, except that all Dissenting Shares held by
Stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to
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receive, without any interest thereon, the Merger Consideration upon surrender,
in the manner provided in the Merger Agreement, of the Certificate or
Certificates that, immediately prior to the Effective Time, evidenced such
Shares.
Stockholders' Meeting. The Merger Agreement provides that the Company
will, as soon as practicable following the acceptance for payment of and payment
for Shares by Purchaser in the Offer, duly call, give notice of, convene and
hold a stockholders' meeting (the 'Company Stockholders' Meeting') for the
purpose of approving the Merger Agreement and the transactions contemplated
thereby. At the Company Stockholders' Meeting, the Board will recommend to its
stockholders the adoption and approval of the Merger Agreement and the
transactions contemplated thereby. As soon as practicable following the
acceptance for payment of and payment for Shares by Purchaser in the Offer, the
Company and Parent will prepare and file with the Commission a proxy statement,
if necessary. The Company shall use its best efforts to respond to all
Commission comments with respect to the proxy statement and to cause the proxy
statement and the form of proxy, which will comply as to form with all
applicable laws, to be mailed to the Stockholders at the earliest practicable
date.
Notwithstanding the preceding paragraph, in the event that Purchaser or any
other subsidiary of Parent acquires at least 90% of the outstanding Shares in
the Offer, the parties to the Merger Agreement have agreed, at the request of
Purchaser, to take all necessary and appropriate action to cause the Merger to
become effective, as soon as practicable after the expiration of the Offer,
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL. Subject to the foregoing sentence, Parent will cause Purchaser to
take all actions necessary to approve the Merger Agreement and the transactions
contemplated thereby.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties. These include representations and
warranties by the Company to the Parent and Purchaser with respect to (i)
organization; standing and power, (ii) capital structure, (iii) authority; no
violations; consents and approvals, (iv) Commission documents; financial
statements, (v) information supplied, (vi) compliance with applicable laws,
(vii) litigation, (viii) taxes, (ix) pension and benefit plans; ERISA, (x)
absence of certain changes or events, (xi) no undisclosed material liabilities,
(xii) opinion of financial advisor, (xiii) vote required, (xiv) labor matters,
(xv) intangible property, (xvi) environmental matters, (xvii) real property;
other assets, (xviii) insurance, (xix) material contracts, (xx) related party
transactions, (xxi) liens, (xxii) brokerage fees and commissions other fees,
(xxiii) no excess parachute payments, (xxiv) state takeover statutes, (xxv)
pending and proposed transactions and (xxvi) media interests.
Parent and Purchaser also have made certain representations and warranties
to the Company with respect to (i) organization; standing and power, (ii)
authority; no violations; consents and approvals; (iii) interim operations of
Purchaser, (iv) information supplied, (v) brokerage fees and commissions and
(vi) financial capability.
Conduct of Business Pending the Merger. The Company has agreed that during
the period from the date of the Merger Agreement and continuing until the
Effective Time (except as Parent otherwise consents to in writing), the Company
and its subsidiaries will carry on their businesses in the ordinary course in
substantially the same manner as previously conducted, and will use all
reasonable efforts to preserve intact its present business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business will not be impaired in any
material respect at the Effective Time. Except as provided in the Merger
Agreement, the Company has further agreed that neither it, nor any of its
subsidiaries will: (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, except for cash dividends
or distributions paid on or with respect to the capital stock of a wholly-owned
subsidiary and except for cash distributions payable with respect to the
Preferred Securities in accordance with their present terms; (ii) split, combine
or reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock; (iii) redeem, repurchase or otherwise acquire,
or propose to redeem, repurchase or otherwise acquire, or permit any subsidiary
to purchase or otherwise acquire, any shares of its capital stock; (iv) grant
any options, warrants or rights to purchase Shares; (v) amend or reprice any
Option or Warrant or the Stock Option Plans or the Rights or the Stock Purchase
Plan; (vi) issue, deliver or sell, or pledge or otherwise encumber, or authorize
or propose to issue, deliver or sell, or pledge or otherwise encumber, any
shares of its capital stock of any class or series, any Company Voting Debt (as
defined in the Merger Agreement) or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire, any such
shares, Company Voting Debt or convertible or exchangeable securities,
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other than the issuance of Shares upon (A) the exercise of Options outstanding
on the date of the Merger Agreement in accordance with their present terms, (B)
the exercise of the Warrants outstanding on the date of the Merger Agreement in
accordance with their present terms, (C) the exercise of Rights pursuant to the
Stock Purchase Plan in accordance with their present terms, and (D) the
conversion of the Subordinated Debentures by the holders thereof in accordance
with their present terms; (vii) amend or propose to amend its Certificate of
Incorporation or Bylaws or other comparable constituent documents; (viii)
acquire or agree to acquire by merger or consolidation or purchase of a
substantial equity interest in or substantial portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof or any assets that are material,
individually or in the aggregate, to the Company and its subsidiaries as a
whole; (ix) sell, lease, encumber or otherwise dispose of or agree to sell,
lease (whether such lease is an operating or capital lease), encumber or
otherwise dispose of any asset (except for dispositions in the ordinary course
of business consistent with past practice which are not (other than sales of
inventory) material, individually or in the aggregate to the Company and its
subsidiaries); (x) authorize, recommend, propose, adopt or announce an intention
to adopt a plan of complete or partial liquidation or dissolution of the Company
or any of its subsidiaries other than the dissolution of Dormant Subsidiaries
(as defined in the Merger Agreement); (xi) take or agree or commit to take any
action that is reasonably likely to result in any of the Company's
representations or warranties pursuant to the Merger Agreement being untrue in
any material respect, or in any of the conditions to the Merger Agreement not
being satisfied; (xii) grant any increases in the compensation of any of its
directors, officers or key employees other than regularly scheduled increases
representing (in the case of all directors and officers, and all key employees
whose annual compensation (including salary and bonus) exceeds $100,000) an
aggregate increase of not more than 5%; pay or agree to pay any pension,
retirement allowance or other employee benefit not required or contemplated by
any of the existing Company Benefit Plans or Company Pension Plans (each as
defined in the Merger Agreement) as in effect on the date of the Merger
Agreement to any such director, officer or key employee, whether past or
present; enter into any new, or materially amend any existing, employment or
severance or termination agreement with any such director, officer or key
employee other than At-Will Employment Agreements providing for total annual
compensation (including salary and bonus) of less than $100,000; terminate or
amend the employment agreements of Messrs. Poch and McCleary or the employment
or advisory agreements with Mr. Fassler; or, except as may be required to comply
with applicable law, become obligated under any new Company Employee Benefit
Plan or Company Pension Plan, which was not in existence on the date of the
Merger Agreement, or amend any such plan or arrangement in existence on the date
of the Merger Agreement if such amendment would have the effect of materially
enhancing any benefits thereunder; (xiii) except as permitted by the Merger
Agreement, assume or incur any Indebtedness (as defined in the Merger Agreement)
for borrowed money (other than pursuant to credit facilities existing on the
date of the Merger Agreement in accordance with their present terms) or
guarantee any such Indebtedness or issue or sell any debt securities or warrants
or rights to acquire any debt securities of the Company or any of its
subsidiaries or guarantee any debt securities of others or enter into any lease
(whether such lease is an operating or capital lease) or create any mortgages,
liens, security interests or other encumbrances on the assets or property of the
Company or any of its subsidiaries in connection with any Indebtedness thereof
(other than security interests arising pursuant to mortgages or other security
agreements in effect on the date of the Merger Agreement covering credit
facilities existing on the date of the Merger Agreement), or enter into any
'keep well' or other agreement or arrangement to maintain the financial
condition of another Person (as defined in the Merger Agreement) or make any
loans, advances or capital contributions to, or investments in, any other
person, other than to the Company or any direct or indirect wholly owned
subsidiary of the Company and other than loans or advances to customers and
employees in the ordinary course of business consistent with past practice;
(xiv) enter into, modify, rescind, terminate, waive, release or otherwise amend
in any material respect any of the terms or provisions of any contract
agreement, commitment, arrangement or right specified on a certain schedule to
the Merger Agreement or which, if such contract, agreement, arrangement or right
had existed as of the date of the Merger Agreement, would have been required to
be so specified; provided, however, that the foregoing does not limit the right
of the Company or any of its subsidiaries to enter into certain contracts in the
ordinary course of business consistent with past practice and involving annual
payments of not more than $5,000,000; (xv) permit a material change in any of
its financial reporting, tax, or accounting practices or policies or in any
assumption underlying such practices or policies, or in any method of
calculating any bad debt, contingency, or other reserve for financial reporting
purposes or for other accounting purposes, except as may be required by GAAP;
(xvi) except as permitted by the Merger Agreement and except for capital
expenditures for MIS and rental inventory purchases,
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make or authorize any capital expenditures in excess of $100,000 individually
and $500,000 in the aggregate per month; (xvii) make any tax election or settle
or compromise any material tax liability; or (xviii) pay, discharge, settle or
satisfy any claims, liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, in the ordinary course of business consistent with
past practice or in accordance with their terms, of any of its liabilities or
obligations, or waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any of
its subsidiaries is a party. The Company has further agreed that it and its
subsidiaries will: (i) confer with Parent to the extent reasonably requested by
Parent, report on operational matters and promptly advise Parent orally and in
writing of any change or event having, or which, insofar as reasonably can be
foreseen, could have, a Material Adverse Effect (as defined in the Merger
Agreement) on the Company, and promptly provide Parent (or its counsel) with
copies of all filings made by the Company with the Commission or any other
state, federal or foreign Governmental Entity in connection with the Merger
Agreement and the transactions contemplated thereby; (ii) prepare and timely
file any income tax return of the Company or any subsidiary that has not yet
been filed and is required to be filed on or prior to the Effective Time, in a
manner consistent with prior years and all applicable laws and regulations (or
shall obtain a valid extension of time in which to make such filings); (iii)
inform Parent of any notice or other communication from any person alleging that
their consent is or may be required in connection with the transactions
contemplated by the Merger Agreement; (iv) provide Parent with copies of all
filings made by the Company with the Commission or other governmental authority
or instrumentality, domestic or foreign (a 'Governmental Entity') in connection
with the Merger Agreement; and (v) promptly notify Parent of any actions, suits,
claims, investigations or proceedings commenced or, to the best of its
knowledge, threatened against, relating to or involving or otherwise affecting
the Company or any subsidiary which, if pending on the date of the Merger
Agreement, would have been required to have been disclosed pursuant to the
Merger Agreement or which relate to the consummation of the transactions
contemplated by the Merger Agreement.
Other Agreements. The Company, Purchaser and Parent have agreed to take
all reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on such party with respect to the Offer, the Merger
(including furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
the Stockholders Agreement and to cooperate with and furnish information to each
other. Without limiting the generality or effect of the foregoing, the Company
will, and will cause its subsidiaries to, take all reasonable actions necessary
to obtain (and will cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity or other public or private third party, required to be obtained or made
by the Company, Parent or any of their subsidiaries in connection with the
Offer, the Merger, the Merger Agreement, or the taking of any action
contemplated hereby or thereby; provided, however, that Parent need not agree
with the Department of Justice or any other Governmental Entity to hold
separate, sell or otherwise dispose of any subsidiary of Parent or the Company
or assets or properties of any of the foregoing, or to agree to any conditions
deemed by Parent to be adverse to it or the Company (or any of their respective
subsidiaries).
No Solicitation. The Merger Agreement provides that from and after the
date of the Merger Agreement until the termination of the Merger Agreement, the
Company will not, and will not permit any of its subsidiaries, or any of its or
their officers, directors, employees, representatives, agents or affiliates
(including, without limitation, any investment banker, financial advisor,
attorney, accountant or other representative retained by the Company or any of
its subsidiaries) to, directly or indirectly, initiate, solicit or encourage
(including by way of furnishing non-public information or assistance), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
(as defined below), or enter into or maintain or continue discussions or
negotiate with any person in furtherance of such inquiries or to obtain or with
respect to an Acquisition Proposal or agree to or endorse any Acquisition
Proposal, provided, however, that prior to the Company Stockholders Meeting, if
in the good faith opinion of the Board, based on the advice of outside legal
counsel, the failure to proceed in accordance with clause (A) and/or (B) below
of this paragraph would violate its fiduciary duties to the Stockholders under
applicable law, the Company may, subject to compliance with certain notice
requirements to Parent concerning any inquiry with respect to or which could
lead to any Acquisition Proposal as specified in the Merger Agreement, in
response to an unsolicited written bona fide Acquisition Proposal that in the
good faith opinion of the Board, based on the advice of an independent
nationally recognized financial advisor and outside legal counsel, would
reasonably be
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expected to result in a Superior Proposal (as defined below), (A) furnish
information with respect to the Company to such person making such proposal
pursuant to a customary confidentiality agreement with such person and (B)
participate in negotiations regarding such Acquisition Proposal; provided that,
in the case of clauses (A) and (B) above, the Company has provided a written
notice to Parent of its intention to proceed under such clause (A) or (B) above.
The Merger Agreement further provides that without limiting the foregoing, any
violation of the restrictions set forth in the preceding sentence by any
director or executive officer of the Company or any of its subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative of the Company or any of its subsidiaries, acting on behalf or
under authority of the Company or any subsidiary of the Company, would be deemed
to be a breach of this paragraph by the Company. For purposes of the Merger
Agreement, 'Acquisition Proposal' means an inquiry, offer or proposal regarding
any of the following (other than the transactions between the Company, Parent
and Purchaser contemplated under the Merger Agreement) involving the Company or
any of its subsidiaries: (w) any merger, consolidation, share exchange,
recapitalization, business combination, or other similar transaction; (x) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 20% or
more of the assets of the Company and its subsidiaries, taken as a whole, in a
single transaction or series of transactions; (y) any tender offer or exchange
offer for or other purchase of 20% or more of the outstanding shares of capital
stock of the Company or the filing of a registration statement under the
Securities Act in connection therewith; or (z) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
The Company has also agreed that, except as set forth in the Merger
Agreement, the Board and any committee thereof will not (A) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent or Purchaser,
the approval or recommendation by such Board or any such committee of the Merger
or the Merger Agreement, (B) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal or (C) enter into any agreement with respect
to any Acquisition Proposal. Notwithstanding the preceding sentence, in the
event that prior to the Company Stockholders' Meeting the Board determines in
good faith, based on the advice of outside counsel, that the failure to proceed
in accordance with clause (x), (y) and/or (z) below of this paragraph would
violate its fiduciary duties to the Company's stockholders under applicable law,
the Board may (subject to the terms of this sentence and the following sentence)
(x) withdraw or modify its recommendation of the Merger or the Merger Agreement,
(y) approve or recommend a Superior Proposal, and (z) cause the Company to enter
into an agreement with respect to a Superior Proposal, in each case at any time
following Parent's receipt of a written notice advising Parent that the Board
has received a Superior Proposal, specifying the material terms and conditions
of such Superior Proposal and identifying the person making such Superior
Proposal; provided that the Company will not take any of the actions specified
in such clauses (x), (y) or (z) unless the Company has furnished Parent with
written notice (defined in the Merger Agreement) specifying such actions to be
taken no later than 12:00 noon New York City time four business days prior to
the date such actions are proposed to be taken and will not take any of the
actions set forth in clauses (y) or (z) above if, after taking into account
modifications to the Merger Agreement proposed by Parent, such Acquisition
Proposal would not be a Superior Proposal. In addition, if the Board or the
Company proposes to take any of the actions permitted by the preceding sentence
with respect to any Acquisition Proposal, then the Company will, prior to taking
such action, pay, or cause to be paid, to Parent the Termination Payment (as
defined below), and, in the case of clauses (y) and (z), cause the person making
the Superior Proposal to acknowledge such obligations.
Under the Merger Agreement, the term 'Superior Proposal' means any bona
fide Acquisition Proposal that has the following characteristics: (x) it is a
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or readily marketable securities, (A) Shares representing 100% of the
voting power of (I) the outstanding Shares, (II) the Shares issuable upon (aa)
the conversion of the Subordinated Debentures, (bb) the exercise of the options
outstanding and (cc) the exercise of the warrants outstanding, or (B) all or
substantially all the assets of the Company, (y) the terms of such proposal in
the good faith judgment of the Board (based on the written opinion of an
independent financial advisor of nationally recognized reputation) provide a per
share consideration to the Stockholders which is higher than the per share
consideration provided by the Merger (after taking into account any
modifications to the Merger Agreement proposed by Parent) and (z) the
transactions envisioned by such proposal, in the good faith judgment of the
Board, based on the advice of an independent nationally recognized financial
advisor and outside legal counsel, is readily financeable and reasonably likely
to be consummated without unreasonable delay or unusual conditions compared to
the transactions contemplated by the Merger Agreement.
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In addition to the obligations set forth in the Merger Agreement with
respect to an Acquisition Proposal as stipulated in the Merger Agreement, the
Company will immediately advise Parent orally and in writing of any request for
information relating to an Acquisition Proposal or of any Acquisition Proposal,
or any inquiry with respect to or which could lead to any Acquisition Proposal,
the material terms and conditions of such request, Acquisition Proposal or
inquiry, and the identity of the person making any such request, Acquisition
Proposal or inquiry. The Company will keep Parent fully and timely informed of
the status and details (including amendments or proposed amendments) of any such
request, Acquisition Proposal or inquiry.
Fees and Expenses. The Merger Agreement provides that, except as described
below, all costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated by the Merger Agreement will be paid by the
party incurring the expense. The Company has agreed to immediately pay, or cause
to be paid, in same day funds to Parent the Termination Payment (as defined
below) upon demand if (a) Parent terminates the Merger Agreement in the event
that (i) the Board or any committee thereof withdraws or modifies its approval
or recommendation of the Merger Agreement or the Merger or approves or
recommends an Acquisition Proposal or resolves to do any of the foregoing or
(ii) the Company enters into an agreement with respect to an Acquisition
Proposal; (b) the Company terminates the Merger Agreement in the event that (x)
the Board withdraws or modifies its approval or recommendation of the Merger
Agreement or the Merger or (y) the Company enters into a definitive agreement
pursuant to an Acquisition Proposal as stipulated in the Merger Agreement; (c)
the Offer terminates, is withdrawn, is abandoned or expires by reason of the
failure of any condition set forth in Exhibit A to the Merger Agreement to be
satisfied and prior to such termination a bona fide Acquisition Proposal shall
have been made; (d) Parent or the Company terminates the Merger Agreement in the
event that Company Stockholder Approval has not been obtained by reason of the
failure to obtain the required vote upon a vote held at a duly held meeting of
shareholders or at any adjournment thereof and prior to such termination a bona
fide Acquisition Proposal shall have been made; or (e) the Company terminates
the Merger Agreement in the event that the Offer shall have expired or have been
withdrawn, abandoned or terminated without any Shares being purchased by
Purchaser thereunder on or prior to the 120th day after May 24, 1996 and, prior
to such termination, a bona fide Acquisition Proposal shall have been made.
'Termination Payment' means the sum of (i) all of Parent's out-of-pocket
expenses incurred in connection with the transactions contemplated by the Merger
Agreement (the 'Expenses') and (ii) $10,000,000 (the 'Termination Fee');
provided that if at or prior to the time the Termination Payment is payable the
Company has entered into a definitive agreement with a third party for such
third party to acquire the Company in a transaction which would qualify to be
accounted for, under applicable guidelines of the Commission, as a pooling of
interests transaction but for the size of the Termination Payment, then the
amount of the Termination Payment shall be reduced to the extent necessary to
enable such transaction to qualify as a pooling of interests (but in no event
will the Termination Payment be reduced below 1% of the transaction value). The
amount of Expenses so payable shall be the amount set forth in an estimate
delivered by Parent upon termination subject to upward or downward adjustment as
provided in the next sentence. In the event that Parent's actual out-of-pocket
expenses exceed such estimate, the amount of any such excess shall be payable
upon demand, and in the event that Parent's actual expenses are less than the
amount of such estimate, Parent shall promptly refund such lesser amount.
Brokers or Finders Fees. Pursuant to the Merger Agreement the Company
agrees to indemnify and hold Parent harmless from and against any and all
claims, liabilities or obligations with respect to any fees, commissions or
expenses asserted by any person to the extent such fee, commission or expense is
attributable to any action taken by or on behalf of the Company or any of its
subsidiaries or affiliates. Parent agrees to indemnify and hold Company harmless
from and against any and all claims, liabilities or obligations with respect to
any fees, commissions or expenses asserted by any person to the extent such fee,
commission or expense is attributable to any action taken by or on behalf of
Parent.
Conditions to the Merger. Pursuant to the Merger Agreement, the obligation
of each party to effect the Merger is subject to the satisfaction, prior to the
closing date of the Merger, of the following conditions: (i) the Merger
Agreement and the Merger will have been approved and adopted by the affirmative
vote of the holders of a majority of the Shares entitled to vote thereon if such
vote is required by applicable law, (ii) the waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act will
have expired or been terminated, and any formal investigations relating to the
Merger that may have been opened by the Department of Justice or the Federal
Trade Commission (by means of a written request for additional information or
otherwise) will have been terminated, (iii) no temporary restraining order,
preliminary or permanent injunction
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or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger will be in
effect; provided, however, that prior to invoking this condition, each party
will use all commercially reasonable efforts to have any such order, injunction,
restraint or prohibition vacated; and (iv) the FCC will have granted the Pro
Forma Application.
The obligations of Parent and Purchaser to effect the Merger are subject to
the satisfaction of the following conditions, any or all of which may be waived
in whole or in part by Parent and Purchaser: (a) Purchaser will have accepted
for payment and paid for all Shares tendered in the Offer such that, after such
acceptance and payment, Parent and its affiliates will own, at consummation of
the Offer, a sufficient number of outstanding Shares to satisfy the Minimum
Tender Condition, except if the failure of this condition to occur is caused by
the material breach of the Merger Agreement by Parent or Purchaser; (b) the
representations and warranties of the Company set forth in the Merger Agreement
will be true and correct as of the date of the Merger Agreement and (except to
the extent such representations and warranties expressly speak as of an earlier
date) as of the closing date of the Merger (the 'Closing Date') as though made
on and as of the Closing Date, and Parent will have received a certificate
signed on behalf of the Company by the chief executive officer and by the chief
accounting officer of the Company to such effect; (c) the Company will have
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants, required to be performed or
complied with by it under the Merger Agreement at or prior to the Effective
Time, and Parent will have received a certificate signed on behalf of the
Company by the chief executive officer and by the chief accounting officer of
the Company to such effect; (d) all consents and approvals (collectively,
'Consents') of third parties as are necessary to cure any violation of any
agreement arising out of the transactions contemplated by the Merger Agreement
will have been obtained, except with respect to those agreements listed or
referred to on a certain schedule of the Merger Agreement and such Consents the
failure to deliver which could not reasonably be expected to have a Material
Adverse Effect (as defined in the Merger Agreement) with respect to the Company;
(e) other than the filing of the Certificate of Merger as provided for in the
Merger Agreement, all licenses, permits, authorizations, consents, orders,
qualifications or approvals of, or declarations or filings with, or expirations
of waiting periods imposed by, any Governmental Entity (including those in
connection with: (1) premerger notification under the HSR Act and the expiration
or termination of the applicable waiting period thereunder, (2) the proxy
statement, Schedule 14D-9 or other reports required to be filed with the
Commission, (3) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and (4) certain filings, consents and approvals,
as may be required pursuant to the Competition Act (Canada), the Federal Law on
Economic Competition of Mexico, the Austrian Cartel Act of 1988, as amended, and
the FCC) requisite to consummation of the Merger and the transactions
contemplated thereby, will have been filed, occurred or been obtained, as the
case may be; (f) the transactions referred to in 'FCC Matters' below shall have
been consummated on terms reasonably satisfactory to Parent, and the Long-Form
Application (as defined below) shall have been filed; (g) there will not be
pending or threatened any suit, action or proceeding by any governmental entity
(i) challenging the acquisition by Parent of any Shares, seeking to restrain or
prohibit the consummation of the Offer or the Merger or any of the other
transactions contemplated by the Merger Agreement or seeking to obtain from the
Company, Parent, or any of their respective subsidiaries any damages that are
material in relation to the Company and its subsidiaries taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation by the Company, Parent,
or any of their respective subsidiaries of any material portion of the business
or assets of the Company, Parent or any of their respective subsidiaries, or to
compel the Company, Parent or any of their respective subsidiaries to dispose of
or hold separate any material portion of the business or assets of the Company,
Parent or any of their respective subsidiaries as a result of the Offer or the
Merger or any of the other transactions contemplated by the Merger Agreement,
(iii) seeking to impose limitations on the ability of Parent or Purchaser to
acquire or hold, or exercise full rights of ownership of, any Shares or shares
of capital stock of the Company or the Surviving Corporation, including, without
limitation, the right to vote such capital stock on all matters properly
presented to the stockholders of the Surviving Corporation, (iv) seeking to
prohibit Parent from effectively controlling in any material respect the
business or operations of the Company or any of its subsidiaries or (v) which
otherwise is reasonably likely to have a Material Adverse Effect on the Company
or a Material Adverse Effect on Parent; and (h) on or prior to the date of the
Merger Agreement, the Company will have caused (i) the Stock Option Plan and the
Stock Purchase Plan to be amended, and (ii) the Subordinated Debentures to be
amended, in each case effective not later than the Effective Time, in such
manner as to provide
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that after the Effective Time, the holders of the Equity Purchase Rights
evidenced thereby will only be entitled to receive the consideration specified
in the Merger Agreement.
The obligation of the Company to effect the Merger is subject to the
satisfaction of the following conditions, any or all of which may be waived in
whole or in part by the Company: (i) the representations and warranties of
Parent and Purchaser set forth in the Merger Agreement will be true and correct
as of the date of the Merger Agreement and (except to the extent such
representations and warranties expressly speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except as otherwise
contemplated by the Merger Agreement, and the Company will have received a
certificate signed on behalf of Parent by an officer of Parent to such effect,
(ii) Parent and Purchaser will have performed in all material respects all
obligations required to be performed by them under the Merger Agreement at or
prior to the Closing Date, and the Company will have received a certificate
signed on behalf of Parent by an officer of Parent to such effect and (iii)
other than the filing of the Certificate of Merger as provided for in the Merger
Agreement, all licenses, permits, authorizations, consents, orders,
qualifications or approvals of, or declarations or filings with, or expirations
of waiting periods imposed by, any Governmental Entity (including those in
connection with: (1) premerger notification under the HSR Act and the expiration
or termination of the applicable waiting period thereunder, (2) the proxy
statement, Schedule 14D-9 or other Commission reports, (3) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
(4) certain filings, consents and approvals, as may be required pursuant to the
Competition Act (Canada), the Federal Law on Economic Competition of Mexico, the
Austrian Cartel Act of 1988, as amended and the FCC) requisite to consummation
of the Merger and the transactions contemplated thereby, will have been filed,
occurred or been obtained, as the case may be.
FCC Matters. The Merger Agreement obligates the Company to restructure its
interests in two subsidiaries that own and operate radio stations serving Stowe,
Vermont and Waco, Texas in order that, subject to FCC approval, control of such
subsidiaries will be transferred to a group (the 'Control Group') comprised of
not less than a majority of the directors of the Company as of the date of the
Merger Agreement. The Company is further obligated to file with the FCC an
application (the 'Pro Forma Application') for consent to the pro forma transfer
of control of these subsidiaries from the Company to the Control Group. The
Control Group is obligated to prepare and file with the FCC an application (the
'Long-Form Application') for consent to the transfer of control of such
subsidiaries to the Company following the consummation of the Offer. See Section
15.
Termination. The Merger Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent by: (a) mutual written consent of the
Company and Parent; (b) either the Company or Parent (i) if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the other as set forth in the Merger Agreement which breach has not been
cured within five business days following receipt by the breaching party of
notice of such breach from the other party, or (ii) if any permanent injunction
or other order of a court or other competent authority preventing the
consummation of the Merger has become final and non-appealable; (c) either the
Company or Parent if the Merger shall not have been consummated on or before
December 20, 1996; provided, that the right to terminate the Merger Agreement
under this paragraph will not be available to any party whose failure to fulfill
any obligation under the Merger Agreement has been the cause of or resulted in
the failure of the Merger to occur on or before such date; (d) Parent if (i) the
Board or any committee thereof withdraws or modifies its approval or
recommendation of the Merger Agreement or the Merger or approves or recommends
an Acquisition Proposal or resolves to do any of the foregoing or (ii) the
Company enters into an agreement with respect to an Acquisition Proposal; (e)
the Company, if Purchaser fails to commence the Offer within five business days
following the date of the initial public announcement of the Offer; (f) Parent,
if the Offer terminates, is withdrawn, is abandoned or expires by reason of the
failure of any condition set forth in Exhibit A to the Merger Agreement; (g) the
Company, if the Offer expires or is withdrawn, abandoned or terminated without
any Shares being purchased by Purchaser thereunder on or prior to the 120th day
after the date of commencement of the Offer pursuant to the Merger Agreement;
(h) the Company if (i) the Board withdraws or modifies its approval or
recommendation of the Merger Agreement or the Merger pursuant to an Acquisition
Proposal as stipulated in the Merger Agreement and (ii) the Company
simultaneously with terminating the Merger Agreement pays Parent the Termination
Payment in cash and otherwise complies with the Merger Agreement; (i) Parent or
the Company if the Company Stockholder Approval has not been obtained by reason
of the failure to obtain the required vote upon a vote held at a duly held
meeting of shareholders or at any adjournment thereof; (j) the Company if (i)
the Company enters
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into a definitive agreement pursuant to an Acquisition Proposal as stipulated in
the Merger Agreement and (ii) the Company simultaneously with terminating the
Merger Agreement pays Parent the Termination Payment in cash and otherwise
complies with the Merger Agreement; (k) Parent if any of the conditions
precedent with respect to each party or with respect to the Parent and the
Purchaser shall become impossible to fulfill (other than as a result of any
breach by Parent of the terms of the Merger Agreement) and have not been waived
in accordance with the terms of the Merger Agreement; or (l) the Company, if any
of the conditions precedent with respect to each party or with respect to the
Company shall become impossible to fulfill (other than as a result of any breach
by the Company of the terms of the Merger Agreement) and have not been waived in
accordance with the terms of the Merger Agreement.
Indemnification. The Merger Agreement provides that the indemnification
obligations set forth in the Company's Certificate of Incorporation and By-laws,
as amended to the date of the Merger Agreement, will survive the Merger and will
not be amended, repealed or otherwise modified for a period of six years after
the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who on or prior to the Effective Time were directors
(including any members of the Company's Compensation Committee), officers,
employees or agents of the Company (the 'Indemnified Parties'). Parent will
cause Company to fulfill its indemnification obligations as set forth in this
paragraph.
For a period of two years after the Effective Time, the Surviving
Corporation will maintain in effect the employed lawyers' errors and omissions
liability policy maintained by the Company and its subsidiaries (provided that
the Surviving Corporation may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are no less
advantageous in any material respect to the Indemnified Parties covered thereby)
with respect to matters arising before the Effective Time, provided that
Surviving Corporation will not be required to pay an annual premium for such
insurance in excess of $60,000, but in such case will purchase as much coverage
as possible for such amount.
Amendment. Subject to applicable law, the Merger Agreement may be amended,
modified or supplemented only by written agreement of Parent, Purchaser and the
Company at any time prior to the Effective Time with respect to any of the terms
contained in the Merger Agreement; provided, however, that after the Company
Stockholder Approval (as defined in the Merger Agreement) is obtained, no such
amendment or modification will reduce the amount or change the form of
consideration to be delivered to the Stockholders of the Company.
Timing. The exact timing and details for the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by Purchaser pursuant to the Offer. Although Purchaser has agreed to
cause the Merger to be consummated on the terms and subject to the conditions
set forth above, there can be no assurance as to the timing of the Merger.
THE STOCKHOLDERS AGREEMENT
As an inducement and a condition to entering into the Merger Agreement,
Parent required that certain Stockholders (the 'Selling Stockholders') agree,
and the Selling Stockholders agreed, to enter into the Stockholders Agreement.
The following is a summary of the material terms of the Stockholders
Agreement. This summary is not a complete description of the terms and
conditions thereof and is qualified in its entirety by reference to the full
text thereof which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-1. The
Stockholders Agreement may be examined, and copies thereof may be obtained, as
set forth in Section 8 above.
Tender of Shares. Upon the terms and subject to the conditions of the
Stockholders Agreement, each Selling Stockholder has agreed to validly tender
(and not to withdraw) pursuant to and in accordance with the terms of the Offer,
not later than the fifth business day after commencement of the Offer, the
number of Shares set forth opposite such Stockholder's name on Schedule I to the
Stockholders Agreement (the 'Existing Shares'), as well as any Shares acquired
by such Stockholder after the date of the Stockholders Agreement and prior to
the termination of the Stockholders Agreement, whether upon the exercise of
options, warrants or rights, the conversion or exchange of convertible or
exchangeable securities, or by means of purchase, dividend, distribution or
otherwise (collectively with the Existing Shares, the 'Shares').
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Voting. Each Selling Stockholder has agreed that during the period
commencing on the date of the Stockholders Agreement and continuing until the
first to occur of the Effective Time or termination of the Merger Agreement in
accordance with its terms, at any meeting of the Stockholders, however called,
or in connection with any written consent of the Stockholders, the Selling
Stockholders will vote (or cause to be voted) the Shares held of record or
beneficially owned by the Selling Stockholder whether now owned or hereafter
acquired, (i) in favor of the Merger, the execution and delivery by the Company
of the Merger Agreement and the approval of the terms thereof and each of the
other actions contemplated by the Merger Agreement and the Stockholders
Agreement and any actions required in furtherance thereof; (ii) against any
action or agreement that would result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or the Stockholders Agreement (before giving
effect to any materiality or similar qualifications contained therein); and
(iii) except as otherwise agreed to in writing in advance by Parent, against the
following actions (other than the Merger and the transactions contemplated by
the Merger Agreement): (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or its
subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (C) (1) any
change in a majority of the persons who constitute the Board; (2) any change in
the present capitalization of the Company or any amendment of the Company's
Certificate of Incorporation or By-Laws; (3) any other material change in the
Company's corporate structure or business; or (4) any other action involving the
Company or its subsidiaries which is intended, or could reasonably be expected,
to impede, interfere with, delay, postpone, or materially adversely affect the
Merger and the transactions contemplated by the Stockholders Agreement and the
Merger Agreement. Each Selling Stockholder has further agreed not to enter into
any agreement or understanding with any person or entity the effect of which
would be inconsistent or violative of the provisions and agreements described
above.
Representations and Warranties, Covenants and Other Agreements. Each
Selling Stockholder has made certain representations, warranties and covenants,
including with respect to (i) ownership of Shares, (ii) legal capacity, power
and authority to enter into and perform its obligations under the Stockholders
Agreement, (iii) absence of conflicts, (iv) absence of liens and encumbrances
with respect to the Shares, (v) absence of fees other than those arising from
existing financial advisory and investment banking agreements, (vi) prohibition
on solicitation, (vii) restrictions on the transfer of the Shares, and (viii)
waiver of appraisal rights.
EMPLOYMENT AGREEMENTS
Messrs. Poch, Fassler and McCleary have each amended their respective
employment agreements with the Company pursuant to their respective Amendment
Agreements effective upon, and subject to, the acceptance by Purchaser of, or
payment by Purchaser for, Shares pursuant to the Offer. Upon effectiveness of
the Amendment Agreements for each of Messrs. Poch and McCleary, such Amendment
Agreements shall (i) modify and extend to 48 months following the executive's
termination of employment the provisions relating to such executive's
non-competition with the Company, non-solicitation of customers of the Company
and non-disclosure of Company information, (ii) provide that the Company can
terminate the executive at any time, (iii) provide that the executive's
employment with the Company shall be deemed terminated if there is an attempt to
change the executive's place of work to a location more than 15 miles from its
present location and, in the case of Mr. Poch, if there is a material diminution
in the executive's duties, (iv) provide for severance pay if the executive's
employment is terminated (other than for cause or on account of death or
disability) (A) in the amount of $1,000,000 if such termination occurs during
the 12-month period following the effective date of the Amendment Agreement and
(B) if such termination occurs subsequent to such 12-month period, in a lump-sum
amount equal to the compensation not yet paid under the terms of such Amendment
Agreement, (v) provide that the Company and the executive will negotiate to
amend the bonus provisions in the executive's employment agreement so as not to
result in an enlargement or diminution of the executive's right to bonus
compensation following the Merger (except as provided in clause (vi)) and (vi)
in the case of Mr. Poch, provide for a $100,000 increase in the amount of his
bonus in respect of each of the first two years following the effective date of
his Amendment Agreement.
Upon the effectiveness of Mr. Fassler's Amendment Agreement, Mr. Fassler
will serve, pursuant to such agreement, as an advisor to the Company for a
period of two and one-half years in connection with future mergers and
acquisitions by the Company. During the first two years of the term of his
Amendment Agreement,
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Mr. Fassler will be available to the Company for up to 50 days per year and,
during the last six months of such agreement, he will be available to the
Company for up to 25 days. Mr. Fassler will not be required to perform advisory
services on a regular basis at a location which is more than 15 miles from
Stamford, Connecticut, other than reasonable travel requirements. The Company
will pay Mr. Fassler (i) $500,000 at the effective date of his Amendment
Agreement, (ii) $275,000 per year for the first two years of the term of his
Amendment Agreement and (iii) $100,000 for the last six months of the term of
his Amendment Agreement, in each case irrespective of whether the Company uses
Mr. Fassler's advisory services. To the extent that the employee benefits which
Mr. Fassler received prior to the effective date of his Amendment Agreement
cannot reasonably be provided to him under the Company's benefit plans, he will
receive a cash payment economically equivalent to such benefits. In the event of
termination of Mr. Fassler's employment prior to the end of the term of his
Amendment Agreement (other than for cause), Mr. Fassler is entitled to receive a
lump sum payment equal to his compensation pursuant to such agreement,
discounted based on the prime rate of Chemical Bank then in effect. The
non-competition, non-solicitation and non-disclosure provisions of Mr. Fassler's
employment agreement have been amended by his Amendment Agreement in the same
manner described above concerning Messrs. Poch and McCleary. Mr. Fassler's
Amendment Agreement does not provide for the future bonuses that he would
otherwise have been entitled to under his employment agreement.
Copies of the Amendments and the Advisory Agreement have been filed as an
exhibit to the Schedule 14D-1 of the Purchaser filed pursuant to Rule 14d-1
under the Exchange Act, and copies thereof may be obtained from the principal
office of the Commission in the manner set forth in Section 8 above (except that
they will not be available at the regional offices of the Commission).
OTHER MATTERS
Appraisal Rights. No appraisal rights are available to Stockholders in
connection with the Offer. However, if the Merger is consummated, a Stockholder
will have certain rights under Section 262 of the DGCL to dissent and to demand
appraisal of, and payment in cash for the fair value of, that Stockholder's
Shares. Those rights, if the statutory procedures are complied with, could lead
to a judicial determination of the fair value (excluding any value arising from
the Merger) required to be paid in cash to dissenting Stockholders for their
Shares. Any judicial determination of the fair value of Shares could be based
upon considerations other than or in addition to the Offer Price and the market
value of the Shares, including asset values and the investment value of the
Shares. The value so determined could be more or less than the Offer Price or
the Merger Consideration.
If a Stockholder who demands appraisal under Section 262 of the DGCL fails
to perfect, or effectively withdraws or loses, his or her right to appraisal, as
provided in the DGCL, the Shares of that Stockholder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A Stockholder may
withdraw his or her demand for appraisal by delivering to Purchaser a written
withdrawal of such demand for appraisal and acceptance of the Merger.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of those rights.
Going Private Transactions. Rule 13e-3 under the Exchange Act is
applicable to certain 'going-private' transactions. Purchaser does not believe
that Rule 13e-3 will be applicable to the Merger unless, among other things, the
Merger is completed more than one year after termination of the Offer. If
applicable, Rule 13e-3 would require, among other things, that certain financial
information regarding the Company and certain information regarding the fairness
of the Merger and the consideration offered to minority Stockholders be filed
with the Commission and disclosed to minority Stockholders prior to consummation
of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of the Merger Agreement, the Company should (i)
split, combine or otherwise change the Shares or its capitalization, (ii)
acquire currently outstanding Shares or otherwise cause a reduction in the
number of outstanding Shares or (iii) issue or sell additional Shares, shares of
any other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, then, subject to the provisions of Section 14
below, Purchaser, in its sole discretion, may make such adjustments as it deems
appropriate in the Offer Price and other terms of the Offer, including, without
limitation, the number or type of securities offered to be purchased.
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If, on or after the date of the Merger Agreement, the Company declares or
pays any cash dividend on the Shares, makes other distributions on the Shares or
issues, with respect to the Shares, any additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible
into, or rights, warrants or options, conditional or otherwise, to acquire, any
of the foregoing, payable or distributable to Stockholders of record prior to
the transfer of the Shares purchased pursuant to the Offer to Purchaser or its
nominee or transferee on the Company's stock transfer records, then, subject to
Section 14 below, (i) the Offer Price may, in the sole discretion of Purchaser,
be reduced by the amount of any cash dividend or cash distribution and (ii) the
whole of any non-cash dividend, distribution or issuance to be received by the
tendering Stockholders will (a) be received and held by the tendering
Stockholders for the account of Purchaser and will be required to be remitted
promptly and transferred by each tendering Stockholder to the Depositary for the
account of Purchaser, accompanied by appropriate documentation of transfer or
(b) at the direction of Purchaser, exercised for the benefit of Purchaser, in
which case the proceeds of exercise promptly will be remitted to Purchaser.
Pending the remittance and subject to applicable law, Purchaser will be entitled
to all rights and privileges as owner of any non-cash dividend, distribution,
issuance or proceeds and may withhold the entire Offer Price or deduct from the
Offer Price the amount or value of the non-cash dividend, distribution, issuance
or proceeds, as determined by Purchaser in its sole discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs and
nothing in this Offer to Purchase shall constitute a waiver by Purchaser or
Parent of any of its rights under the Merger Agreement or a limitation of
remedies available to Purchaser or Parent for any breach of the Merger
Agreement, including termination of the Merger Agreement.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after expiration or termination of the Offer), to pay for any Shares
tendered, and may postpone the acceptance for payment or, subject to the
restriction referred to above, payment for any Shares tendered, and may amend or
terminate the Offer (whether or not any Shares have theretofore been purchased
or paid for) (A) unless the following conditions have been satisfied: (i) there
have been validly tendered and not withdrawn prior to the time the Offer shall
otherwise expire a number of Shares which constitutes a majority of the Shares
outstanding on a fully-diluted basis on the date of purchase ('on a
fully-diluted basis' for purposes of such condition meaning, as of any date, the
number of Shares outstanding, together with Shares the Company is or may be
required to issue pursuant to obligations outstanding at that date under
employee stock option or other benefit plans, options, warrants or convertible
or exchangeable securities, or otherwise); (ii) prior to the time the Offer
shall otherwise expire, Preferred Securities outstanding on the date of the
Merger Agreement having an aggregate liquidation preference of more than 50% of
the aggregate liquidation preference of all Preferred Securities outstanding on
the date of the Merger Agreement will have been converted by the holders thereof
into Shares; (iii) all regulatory and related approvals of Governmental Entities
have been obtained or made on terms reasonably satisfactory to Purchaser
(including, without limitation, pursuant to the Competition Act (Canada), the
Federal Law on Economic Competition of Mexico and the Austrian Cartel Act of
1988, as amended); (iv) any applicable waiting periods under the HSR Act shall
have expired or been terminated prior to the expiration of the Offer; (v) the
Company shall have caused the Stock Option Plan, the Stock Purchase Plan and the
Subordinated Debentures to be amended, in each case effective no later than the
Effective Time, in such manner as to provide that after the Effective Time, the
holders of the Equity Purchase Rights evidenced thereby shall only be entitled
to receive the consideration specified in the Merger Agreement; (vi) the FCC
shall have granted the Pro-Forma Application, and the transactions contemplated
by the Merger Agreement with respect thereto shall have been consummated on
terms reasonably satisfactory to Parent (the 'FCC Condition'); and/or (B) if, at
any time on or after the date of the Merger Agreement and before acceptance for
payment of, or payment for, such Shares any of the following events shall occur
or shall be deemed by Purchaser to have occurred:
(i) there shall be threatened, instituted or pending by any United
States, Canadian or other court or Governmental Entity any suit, action or
proceeding (1) challenging the acquisition by Parent or Purchaser of any
Shares under the Offer or seeking to restrain or prohibit the making or
consummation of the Offer or Merger or seeking to obtain from the Company,
Parent or any of their respective subsidiaries any damages
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that are material in relation to the Company and its subsidiaries taken as
a whole, (2) seeking to prohibit or limit the ownership or operation by the
Company, Parent or any of their respective subsidiaries of any material
portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or Parent and its subsidiaries, taken as a whole, or to
compel the Company or Parent to dispose of or hold separate any material
portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or Parent and its subsidiaries, taken as a whole, as a
result of the Offer or any of the other transactions contemplated by the
Merger Agreement, (3) seeking to impose material limitations on the ability
of Parent or Purchaser to acquire or hold, or exercise full rights of
ownership of, any Shares accepted for payment pursuant to the Offer,
including, without limitation, the right to vote such Shares on all matters
properly presented to the Stockholders, or (4) seeking to prohibit Parent
or any of its subsidiaries from effectively controlling in any material
respect any material portion of the business or operations of the Company
and its subsidiaries; or
(ii) any United States, Canadian or other Governmental Entity or
authority or United States, Canadian or other domestic or foreign court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction
or other order which is in effect and which (1) materially restricts,
prevents or prohibits consummation of the Offer, the Merger or any other
transaction contemplated by the Merger Agreement or results in the
obligation to pay material damages as a result of or in connection with the
transactions contemplated by the Merger Agreement, (2) prohibits or limits
materially the ownership or operation by the Company, Parent or any of
their subsidiaries of all or any material portion of the business or assets
of the Company and its subsidiaries taken as a whole or compels the
Company, Parent or any of their subsidiaries to dispose of or hold separate
all or any material portion of the business or assets of the Parent or any
of its subsidiaries, or of the Company and its subsidiaries taken as a
whole, (3) imposes limitations on the ability of Parent, Purchaser or any
other subsidiary of Parent to acquire or hold, or to exercise effectively
full rights of ownership of, any Shares, including, without limitation, the
right to vote any Shares acquired by Purchaser pursuant to the Offer or
otherwise on all matters properly presented to the Stockholders, including,
without limitation, the approval and adoption of the Merger Agreement and
the transactions contemplated thereby or (4) requires divestitures by
Parent, Purchaser or any other affiliate of Parent of any Shares;
(iii) the representations and warranties of the Company contained in
the Merger Agreement will not be true and correct when made or (except for
those representations and warranties that address matters as of a specific
date) will have ceased to be true as of the date of consummation of the
Offer as though made on and as of such date;
(iv) the Company shall not have performed or complied in all material
respects with any of its obligations under the Merger Agreement to be
performed or complied with by it;
(v) the Merger Agreement shall have been terminated in accordance with
its terms;
(vi) the Board will have (1) withdrawn or materially modified or
changed (including by amendment of the Schedule 14D-9) in a manner adverse
to Purchaser, its recommendation of the Offer, the Merger Agreement or the
Merger, or (2) the Board will have approved or recommended an Acquisition
Proposal;
(vii) all consents of third parties as are necessary in connection
with the transactions contemplated hereby (including consents necessary to
prevent any conflict, violation or breach of any agreement of the Company
or any of its subsidiaries, other than conflicts, breaches or violations of
the agreements identified on Schedule 4.1(c)(ii) to the Merger Agreement)
will have been obtained, except such consents the failure to deliver which
could not reasonably be expected to have a material adverse effect on the
business, operations, assets, condition (financial or otherwise) or
prospects of the Company and its subsidiaries, taken as a whole;
(viii) other than the filing of the Certificate of Merger with respect
to the Merger as provided for by Section 2.3 of the Merger Agreement, all
licenses, permits, authorizations, consents, orders, qualifications or
approvals of, or declarations or filings with, or expirations of waiting
periods imposed by, any Governmental Entity requisite to consummation of
the Merger and the transactions contemplated thereby, will have been filed,
occurred or been obtained, as the case may be;
(ix) (1) it shall have been publicly disclosed or Purchaser will have
otherwise learned that, except as contemplated by the Stockholders
Agreement, any person or 'group' (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent or its affiliates or any group of which
any of them is a member, will have
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acquired beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of more than 20% of any class or series
of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or will have
been granted an option, right or warrant, conditional or otherwise, to
acquire beneficial ownership of more than 20% of any class or series of
capital stock of the Company (including the Shares); or (2) any person or
group will have entered into a definitive agreement or agreement in
principle with the Company with respect to (A) a merger, consolidation or
other business combination with, or acquisition of a material portion of
the assets of, the Company, or (B) a tender or exchange offer for Shares;
or
(x) there will have occurred, developed or come into effect or
existence any event, action, state, condition or major financial occurrence
of national or international consequence or any law, regulation, action,
government regulation, inquiry or other occurrence of any nature whatsoever
which, in the opinion of Purchaser, materially adversely affects or
involves, or is reasonably likely to materially adversely affect or
involve, (1) the financial markets in the United States generally, or (2)
the financial condition, business, operations, assets, affairs or prospects
of the Company and its subsidiaries taken as a whole or the value of the
Shares; or
which, in the judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or omission by Parent or Purchaser) giving
rise to any such condition, makes it inadvisable to proceed with such acceptance
for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and its
affiliates and may be asserted by Purchaser regardless of the circumstances
(including, without limitation, any action or inaction by Purchaser or any of
its affiliates) giving rise to any such condition or may be waived by Purchaser,
in whole or in part, from time to time in its sole discretion, except as
otherwise provided in the Merger Agreement. The failure by Purchaser at any time
to exercise any of the foregoing rights will not be deemed a waiver of any such
right and each such right will be deemed an ongoing right and may be asserted at
any time and from time to time. Any determination by Purchaser concerning any of
the events described in the Merger Agreement will be final and binding.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company, but without any independent
investigation, neither Purchaser nor Parent is aware of any license or
regulatory permit that appears to be material to the business of the Company and
its subsidiaries, taken as a whole, that might be adversely affected by
Purchaser's acquisition of Shares as contemplated in this Offer to Purchase or
of any approval or other action by any governmental authority that would be
required for the acquisition or ownership of Shares by Purchaser as contemplated
in this Offer to Purchase. Should any such approval or other action be required,
Purchaser and Parent presently contemplate that such approval or other action
will be sought, except as described below under 'State Takeover Laws.' There can
be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions; or that failure to
obtain any such approval or other action might not result in consequences
adverse to the Company's business; or that certain parts of the Company's
business might not have to be disposed of if such approvals were not obtained or
other actions were not taken or in order to obtain any such approval or other
action. If certain types of adverse action are taken with respect to the matters
discussed below, Purchaser could decline to accept for payment or pay for any
Shares tendered. See Section 14 above for certain conditions to the Offer.
Litigation. On May 20, 1996, a purported class action was commenced in the
Court of Chancery of the State of Delaware, New Castle County, on behalf of
holders of Shares. The defendants are Leonard J. Fassler, Edward A. Kerbs,
Gerald M. LeBow, Gerald A. Poch, Anthony T. Towell, James K. McCleary, Richard
J. Williams (all of whom are Company directors), the Company and GE Capital
Services. The complaint alleges that the individual defendants breached a
fiduciary duty, and that the Company and GE Capital Services aided and abetted a
breach of fiduciary duty by, among other things, failing to implement
'procedures for the maximization of shareholder value' and arranging for the
payment of 'an unreasonably low and unfair price' in connection with GE Capital
Services' proposed purchase of the outstanding Shares of the Company. Damages in
an unspecified amount and injunctive relief, including an order enjoining GE
Capital Services' proposed
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purchase of the outstanding Shares of the Company, are sought. The absence of an
injunction, among other things, is a condition to Purchaser's obligation to
purchase the Shares tendered pursuant to the Offer. See Section 14. The
foregoing description of the complaint is qualified in its entirety by reference
to such complaint, filed as Exhibit (g)(1) to Purchaser's and Parent's Tender
Offer Statement on Schedule 14D-1 with respect to the Offer, filed with the
Commission on the date hereof and incorporated herein by reference.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places of business in those states.
In Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and was therefore unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that the laws were applicable
only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with 'interested stockholders' (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directors
has given its prior approval of either the business combination or the
transaction that resulted in the stockholder becoming an 'interested
stockholder.' The Company has represented in the Merger Agreement that it
approved the Merger Agreement, the Stockholders Agreement and the transactions
contemplated thereby, including the Offer and the Merger, and has taken all
necessary steps to render Section 203 of the DGCL inapplicable to the Merger
Agreement, the Stockholders Agreement and the transactions contemplated thereby,
including the Offer and the Merger.
Based on information supplied by the Company and the Company's
representations in the Merger Agreement, Purchaser does not believe that any
state takeover statutes apply to the Offer or the Merger. Neither Purchaser nor
Parent has currently complied with any state takeover statute or regulation.
Purchaser reserves the right to challenge the applicability or validity of any
state law purportedly applicable to the Offer or the Merger and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the Merger
is intended to be a waiver of that right. If it is asserted that any state
takeover statute is applicable to the Offer or the Merger and an appropriate
court does not determine that it is inapplicable or invalid as applied to the
Offer or the Merger, Purchaser might be required to file certain information
with, or to receive approvals from, the relevant state authorities, and
Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in consummating the Offer or the Merger. In
such case, Purchaser may not be obligated to accept for payment or pay for any
Shares tendered pursuant to the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the purchase of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period that follows the filing by
Purchaser of a Notification and Report Form with respect to the Offer, unless
Purchaser receives a request for additional information or documentary material
from the Antitrust Division or the Federal Trade Commission (the 'FTC') or
unless early termination of the waiting period is granted. Such filing was made
on May 23, 1996 and such waiting period will expire at 11:59 p.m. on Friday ,
June 7, 1996. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or documentary material from
Purchaser concerning the Offer, the waiting period will be extended and would
expire 11:59 P.M., New York City time, on the tenth calendar day after the date
of substantial compliance by Purchaser with such request. Only one extension of
the waiting period pursuant to a request for additional information is
authorized by the HSR Act. Thereafter, the waiting period may be extended only
by court order or with the consent of Purchaser. In practice, complying with a
request for additional information or documentary material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while the negotiations continue. Moreover, the
Merger Agreement provides that the Offer may be extended for (x) for up to
twenty (20) business days after the initial expiration date of the Offer or (y)
for longer periods (not to exceed 120 calendar days from the commencement of the
Offer) in the event that any condition to the Offer is not satisfied.
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The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's proposed acquisition of
the Company. At any time before or after Purchaser's purchase of Shares pursuant
to the Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger or seeking the divestiture of Shares acquired by
Purchaser or the divestiture of substantial assets of Purchaser or its
subsidiaries, or of the Company or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer on antitrust grounds will not
be made or, if such a challenge is made, of the result of that challenge.
FCC Regulations. (i) The Company, through certain wholly owned
subsidiaries that it controls (the 'Licensee Subsidiaries'), owns and operates
an FM radio station serving Stowe, Vermont and an AM/FM combination station
serving Waco, Texas (the 'Waco Station'). In addition, a subsidiary of the
Company has a limited partnership interest in Radio Equity Partners, Limited
Partnership, certain subsidiaries of which own and operate radio stations. These
stations are subject to the Communications Act of 1934, as amended (the
'Communications Act') and the rules and regulations of the FCC. The
Communications Act and applicable FCC regulations prohibit the transfer of
control of a corporation, such as the Licensee Subsidiaries, that holds a
broadcast license or the assignment of such license without prior FCC approval.
An application must be filed with the FCC in order to obtain such approval. The
Communications Act requires the FCC to find that the proposed transfer or
assignment would serve the public interest, convenience and necessity and that
the proposed transferee or assignee possesses the requisite legal, financial,
technical and other qualifications to operate the stations before it may grant
the proposed transfer of control or assignment.
The Offer, if consummated, will result in a transfer of control of the
Licensee Subsidiaries that requires the prior approval of the FCC. Transfer of
the limited partnership interest in Radio Equity Partners, Limited Partnership
to the Purchaser does not require the prior approval of the FCC. The FCC's
regulations recognize two categories of transfers of control and assignments:
(i) pro forma or short-form transfers or assignments which, among other things,
do not involve a substantial change in ownership or control either because less
than 50% of the voting control of the licensed entity is changing hands or
because the same persons or entities will exercise de facto control over the
licensed entity both before and after the transfer of control or assignment and
(ii) long-form transfers or assignments that do involve a substantial change in
control. Applications for approval of short-form transfers or assignments are
filed on FCC Form 316 and do not require a 30-day public notice period prior to
action by the FCC. Applications for approval of long-form transfers or
assignments are filed on FCC Form 314 (assignments) or 315 (transfers of
control) and do require a 30-day public notice period prior to action by the FCC
on such applications.
To permit the Offer to proceed and to be consummated in advance of FCC
approval of a long-form application that transfers control of the Licensee
Subsidiaries to Purchaser, the Company intends to file promptly one or more
applications on FCC Form 316 (collectively, the 'Short-Form Application') that
seeks FCC approval of a transfer of control of the Licensee Subsidiaries to a
group (the 'Control Group') comprised of not less than a majority of the
Company's current directors. To effect this transfer of control, the Licensee
Subsidiaries (or a newly-formed corporation which would acquire the capital
stock of the Licensee Subsidiaries) would authorize two classes of capital
stock, Class A voting shares (the 'Voting Stock') representing one percent (1%)
of the equity and one percent (1%) of the total number of shares of outstanding
capital stock of the issuer and Class B non-voting shares (the 'Non-Voting
Stock') representing ninety-nine percent (99%) of the equity and ninety-nine
percent (99%) of the total number of shares of outstanding capital stock of the
issuer. The Voting Stock would be issued to the Control Group (either directly
or through a newly formed limited liability company ('New LLC'), the sole
members of which would be the Control Group). The Non-Voting Stock would be held
by the Company. The Control Group would have the right to vote all of the Voting
Stock. The Company would have no right to vote, except that the Company may vote
on certain matters deemed to be outside the ordinary course of business, as long
as the right to vote on such matters does not result in the Company holding an
'attributable' ownership interest in the Licensee Subsidiaries under and within
the meaning of the FCC's regulations.
Because the Control Group currently exercises de facto control over the
Licensee Subsidiaries and would exercise both de facto and de jure control over
the Licensee Subsidiaries, Purchaser believes that the proposed
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direct or indirect transfer of control of the Licensee Subsidiaries to the
Control Group does not involve a substantial change in ownership under and
within the meaning of the FCC's regulations and that approval therefor is
appropriately sought through the FCC's short-form application procedures. There
can be no assurance, however, that approval of the Short-Form Application will
be granted or, if granted, that such approval will be on terms and conditions
acceptable to the Company.
Upon grant of the Short-Form Application and transfer of control of the
Licensee Subsidiaries to the Control Group, the Control Group, the Licensee
Subsidiaries and Purchaser will promptly file with the FCC an application on FCC
Form 315 (the 'Long-Form Application') that seeks FCC approval of a transfer of
control of the Licensee Subsidiaries to Purchaser. Receipt of approval by the
FCC of the Short-Form Application will not eliminate the requirement that the
Purchaser seek and receive FCC approval of the Long-Form Application prior to
assuming direct or indirect control of the Licensee Subsidiaries. Approval of
the Short-Form Application and the filing of the Long-Form Application would,
however, satisfy the FCC Condition.
The FCC has recently granted an application to assign the licenses of the
Waco Station to a third party. It is not anticipated that the assignment of the
Waco Station will have been consummated prior to FCC action on the Short-Form
Application or that the filing of the Short-Form Application will have an
adverse effect on the assignment of the licenses of the Waco Station. It is
anticipated that consummation of the assignment of the Waco Station will occur
prior to the approval and consummation of the Long-Form Application in which
event the Waco Licensee Subsidiary will be omitted from the Long-Form
Application.
The FCC generally acts upon unopposed short-form applications within two to
three weeks of the filing of such applications. There can be no assurance that
the FCC will reach a decision on the Short-Form Application within such a time
period. Interested parties may file informal objections to the Short-Form
Application at any time prior to FCC action on the Short-Form Application. If an
objection is filed to a short-form application, the FCC generally will take
longer to reach a decision. There can be no assurance that an informal objection
will not be filed to the Short-Form Application.
Interested parties may file petitions to deny approval of the Long-Form
Application within 30 days after the date of the FCC's public notice announcing
the acceptance for filing of the Long-Form Application, and the FCC may not
grant the Long-Form Application prior to the completion of this 30-day public
notice period. Interested parties may file informal objections to the Long-Form
Application at any time prior to FCC action on the Long-Form Application. The
parties to the Long-Form Application are entitled to file an opposition to any
petitions to deny or informal objections filed against the Long-Form
Application. In recent years, the FCC has generally reached decisions regarding
applications for transfer of control in substantial mergers involving entities
with significant FCC regulated interests within 12 months or less of the filing
of the long-form application. There can be no assurance, however, that the FCC
will reach a decision on the Long-Form Application within such a time period.
The Communications Act and the FCC's regulations permit the FCC to delegate
authority to its staff in matters that do not present novel questions of fact,
law or policy. Under this delegated authority, FCC staff members regularly
review and either grant or deny applications for approval to transfer control of
FCC-licensed entities. Staff decisions made pursuant to delegated authority are
subject to reconsideration and to review by the full FCC. Petitions for
reconsideration and applications for review must be filed within 30 days after
public notice of the staff action at issue. In addition, the FCC may on its own
motion review actions taken pursuant to delegated authority. The FCC has 40 days
after public notice of such actions to begin such review. Generally, decisions
made by the FCC staff acting under delegated authority are reached in less time
than decisions made by the full FCC. Purchaser believes that action on the
Short-Form Application and the Long-Form Application will be taken by the FCC
staff acting under delegated authority, but there can be no assurance that the
full FCC will not act in the first instance on either or both of the Short-Form
Application and the Long-Form Application.
If the full FCC, rather than the staff, grants either or both of the
Short-Form Application or the Long-Form Application, interested parties may file
petitions for reconsideration of such orders granting approval. As to each such
application, petitions for reconsideration must be filed within 30 days after
the date on which the FCC releases public notices of its approval orders. The
filing of such a petition would not stay the FCC's approval automatically,
although a stay can be sought from the FCC or from a court. In addition, the FCC
may reconsider its approval orders within 30 days of the public notice even if
no such petitions are filed. Interested parties may also seek judicial review of
the FCC's decision, a request for which must also be filed within 30 days after
the date on which the FCC releases public notice of its order either approving
or disapproving the Short-Form
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Application or the Long-Form Application or its order disposing of any petitions
for reconsideration of the FCC's initial decision.
(ii) Alien Ownership. The Communications Act and the FCC's regulations
impose restrictions on the percentage of the stock of a corporation that holds a
broadcast license issued by the FCC that may be owned by foreign corporations or
persons who are not citizens of the United States. Purchaser does not believe
that its acquisition of control of the Licensee Subsidiaries through
consummation of the Long-Form Application would violate any of the restrictions
relating to ownership and control by foreign corporations and non-U.S. citizens,
(iii) Directors, Officers and Certain Shareholders. The FCC assesses, as
part of the process of considering applications for consent to transfers of
control, certain information with respect to the persons and entities deemed to
have an 'attributable interest' in the entity to which control is being
transferred. Through such consideration, the FCC determines whether the proposed
transferee of control possesses the requisite legal, financial, technical and
other qualifications to hold the FCC licenses. Under existing FCC regulations,
the officers, directors and, in most circumstances, equity holders who own five
percent (5%) or more of the outstanding voting stock (and their officers and
directors, if any) of a company that holds broadcast licenses are deemed to have
an attributable interest in the company for purposes of determining compliance
with the FCC's local and national multiple-ownership rules for television
broadcast stations, the local multiple-ownership rules for radio stations, the
cable/television broadcast station cross-ownership rule and the
newspaper/broadcast cross-ownership rule. Passive institutional investors, such
as mutual funds, insurance companies and bank trust departments, may own up ten
percent (10%) of the outstanding voting stock without being subject to
attribution. Indirect voting stock interests will be deemed attributable if the
product of the ownership percentages in each link of the vertical ownership
chain (excluding interests in excess of 50%) is equal to or greater than five
percent (5%).
The FCC also has a 'cross-interest' policy, which operates as an extension
of the multiple and cross-ownership rules to bar certain relationships not
expressly prohibited by the FCC's regulations. Under this policy, a person or
entity may be prohibited from having both an attributable interest in one media
property and a substantial non-attributable equity ownership interest in another
media property which serves substantially the same area if attributable
ownership interests in both media properties would violate the FCC's ownership
regulations.
Parent currently owns and operates through subsidiaries a television
station in San Juan, Puerto Rico. Parent also owns directly or through
subsidiaries non-attributable ownership interests in television broadcast
stations and cable television systems. GE currently owns and operates through
its NBC subsidiary nine television stations located in New York, New York;
Washington, D.C.; Philadelphia, Pennsylvania; Miami, Florida; Chicago, Illinois;
Los Angeles, California; Columbus, Ohio; Providence, Rhode Island; and
Raleigh-Durham (Goldsboro), North Carolina. Purchaser does not believe that any
of the attributable or non-attributable interests in media properties held by it
or its affiliates will result in a violation of the FCC's multiple or
cross-ownership rules or cross-interest policy when combined with the
attributable media interests of the Company.
Competition Act (Canada). Certain provisions of the Competition Act
require pre-merger notification to the Director of Investigation and Research
(the 'Canadian Director') of significant transactions, which may include the
acquisition of a large percentage of the stock of a public company that has
Canadian operations, or a merger or amalgamation involving such an entity.
Pre-merger notification is generally required with respect to transactions in
which the parties to the transaction and their affiliates have assets in Canada,
or annual gross revenues from sales in, from or into Canada in excess of Cdn.
$400 million and which involve the direct or indirect acquisition of an
operating business in Canada of which the value of the Canadian assets, or the
annual gross revenues from sales in or from Canada generated by such assets,
exceed Cdn. $35 million (or, in the case of an amalgamation of two or more
corporations, one or more of which carries on or controls a corporation that
carries on an operating business in Canada, the Canadian assets or the annual
gross revenues from sales in or from Canada of the entity that results from such
amalgamation or the entities controlled by such entity exceed Cdn. $70 million).
In the case of an acquisition of shares of a public company, the transaction
must also result in the acquiror holding voting shares that carry more than 20%
of the outstanding votes (or more than 50% if the acquiror already holds 20% or
more) attached to all the voting shares of the public company. If a transaction
is subject to the pre-merger notification requirements, the parties must file
either a short-form or long-form notification and wait the applicable waiting
period before completing the transaction. The waiting period for a
35
<PAGE>
short-form notification is seven days after a complete notification is filed,
and 21 days in the case of a long-form notification. If a short-form
notification is filed, the Canadian Director may require the filing of a
long-form notification at any time prior to the expiration of the seven-day
waiting period, in which event the waiting period would be extended to 21 days
after a complete long-form notification is filed. A 'no-action' advisory
opinion, while confirming that the Canadian Director does not currently intend
to challenge a transaction, does not bring with it the statutory bar on
subsequent challenge.
The Canadian Director may apply to the 'Competition Tribunal,' a
specialized tribunal empowered to deal with certain matters governed by the
Competition Act with respect to a 'merger' (as defined in the Competition Act)
and, if the Competition Tribunal finds that the merger prevents or lessens or is
likely to prevent or lessen competition substantially, it may order that the
merger not proceed or, in the event that the merger has been completed, order
its dissolution or the disposition of some or all the assets or shares involved.
A merger may be subjected to an order of the Competition Tribunal whether or not
it is a notifiable transaction. Notwithstanding the giving of the required
notice and expiration of the applicable waiting period, the Canadian Director
may apply for an order of the Competition Tribunal at a time up to three years
after the merger has been substantially completed. In some instances, the
Canadian Director may issue an 'advance ruling certificate,' in which he
certifies that he would not have sufficient grounds on which to apply to the
Competition Tribunal under the merger provisions of the Competition Act or a
'no-action' advisory opinion. If the Canadian Director issues an advance ruling
certificate in respect of a proposed transaction, that transaction is exempt
from the pre-merger notification provisions and the Canadian Director is
statutorily barred from challenging the merger solely on the basis of
information that is the same or substantially the same as the information on the
basis of which the advance ruling certificate was issued.
Parent intends to cause a short-form notification to be filed with respect
to the Offer and the Merger with the Canadian Director and, to the extent
necessary, to observe any applicable waiting period.
Cartel Act (Austria). Pursuant to certain provisions of the Austrian
Cartel Act of 1988, as amended (the 'Cartel Act'), certain significant
acquisition transactions require either pre-merger or post-merger notification
to the Oberlandesgericht Wien als Kartellgericht (the 'Cartel Court').
Transactions subject to pre-merger or post-merger notification include
acquisitions of shares of another company if, as a result, a 25% or 50% interest
in such company is achieved or exceeded. Post-merger notification is required if
the combined worldwide turnover ('turnover') of the parties involved was ATS 150
million in the last financial year. Pre-merger notification is required if the
combined world-wide total turnover of the parties to the transaction was ATS 3.5
billion or more in the financial year immediately preceding the proposed merger
and if at least two of the parties to the transaction achieved a turnover of ATS
5 million or more in the financial year immediately preceding the proposed
merger. A notice of merger may be submitted to the Cartel Court upon the
execution of the acquisition agreement. The transaction may be consummated after
clearance by the Cartel Court. Upon receipt of the notice, the Cartel Court
serves copies of the pre-merger notification filing to the Federal Chamber of
Commerce, the Attorney General's Office, the Federal Chamber of Labour, and the
Presidents' Conference of the Chambers of Agriculture (collectively, the
'Statutory Interveners'). Within four weeks of receipt of such filing, any of
the Statutory Interveners may request an investigation of the transaction by the
Cartel Court. A third party would only be entitled to file a petition with the
Cartel Court if a merger subject to pre-notification was implemented without or
prior to clearance by the Cartel Court. If no request by any Statutory
Intervenors is made within the four-week period, the Cartel Court is obligated
to issue a 'negative clearance,' which constitutes approval of the transaction.
If a request for an investigation is made, the Cartel Court is obligated to
review the competitive effects of the transaction. Pursuant to such an
investigation, the Cartel Court may prohibit the consummation of the
transaction. The Cartel Court is required to issue a prohibition order within
five months of receipt of the pre-merger notification in order to prohibit
consummation of the transaction.
Parent intends to file any required notice with respect to the Offer and
the Merger with the Cartel Court and, to the extent necessary, to observe any
applicable waiting period.
Federal Law on Economic Competition (Mexico). The Federal Law on Economic
Competition requires notification to the Mexican Federal Competition Commission
(the 'MFCC') regarding transactions that could be deemed a 'concentration' prior
to the consummation of the transaction in question. Such notification is
required for (a) any transaction or series of related transactions that exceed
12 million times the prevailing minimum wage for the Federal District of Mexico
(approximately US $36,747,000 based on the U.S. dollar to Mexican peso exchange
rate on May 22, 1996), (b) any transaction or series of related transactions
that result in
36
<PAGE>
the accumulation of 35% or more of the assets or shares of stock of an economic
agent whose assets or sales exceed 12 million times the prevailing minimum wage
for the Federal District of Mexico, or (c) any transaction that involves the
participation of two or more economic agents whose assets or annual sales volume
exceed, jointly or separately, 48 million times the prevailing minimum wage for
the Federal District of Mexico (approximately US $146,990,000 based on the U.S.
dollar to Mexican peso exchange rate on May 22, 1996), and such transaction
results in an additional accumulation of assets or capital stock in excess of
4.8 million times such minimum wage (approximately US $14,699,000 based on the
U.S. dollar to Mexican peso exchange rate on May 22, 1996). Once notification
has been received, the MFCC is required to raise any objection within 45
calendar days from the date of notification or, as the case may be, from the
date of filing of any additional information requested by the MFCC. If the
45-day period lapses without the MFCC raising any objection, the transaction
will be deemed approved.
Parent intends to file any required notice with respect to the Offer and
the Merger with the MFCC and, to the extent necessary, to observe any applicable
waiting period.
Other Foreign Approvals. According to the 1995 Annual Report, the Company
also owns property and conducts business in a number of other foreign countries
and jurisdictions. In connection with the acquisition of the Shares pursuant to
the Offer, the laws of certain of those foreign countries and jurisdictions may
require the filing of information with, or the obtaining of the approval of,
governmental authorities in such countries and jurisdictions. The governments in
such countries and jurisdictions might attempt to impose additional conditions
on the Company's operations conducted in such countries and jurisdictions as a
result of the acquisition of the Shares pursuant to the Offer or the proposed
Second-Step Merger. There can be no assurance that Parent or the Purchaser will
be able to cause the Company or its subsidiaries to satisfy or comply with such
laws or that compliance or noncompliance will not have adverse consequences for
the Company or any subsidiary after purchase of the Shares pursuant to the Offer
or the proposed Second-Step Merger.
16. FEES AND EXPENSES
Lazard Freres is acting as Dealer Manager in connection with the Offer and
has provided certain financial advisory services to Parent in connection with
the proposed acquisition of the Company. Parent has agreed to pay Lazard Freres
a fee of approximately $3.9 million, which became payable upon consummation of
the transaction. The fee is based on a percentage of the aggregate consideration
paid in connection with the Merger. The term 'aggregate consideration' is
defined in the letter agreement between Lazard Freres and the Company to be an
amount equal to the total amount of cash and the fair market value (on the date
of payment) of all other property paid or payable by Parent to the Company or
its Stockholders, including amounts paid or payable in respect of convertible
securities, warrants, stock appreciation rights, options and other similar
rights, plus the principal amount of all indebtedness for money borrowed as set
forth in the consolidated balance sheet of the Company. In addition, Parent has
agreed to reimburse Lazard Freres for all reasonable out-of-pocket expenses
incurred by Lazard Freres in connection with the transaction, including the fees
and reasonable expenses of counsel, and to indemnify Lazard Freres and certain
related persons against certain losses, claims, damages, liabilities and
expenses, including certain liabilities under the federal securities laws.
Lazard Freres Asset Management, a division of Lazard Freres, holds Shares on
behalf of clients and other accounts over which it may have discretionary
authority.
Purchaser has retained Georgeson & Company Inc. to act as the Information
Agent, and The Chase Manhattan Bank (National Association) to act as the
Depositary, in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, will be reimbursed for certain reasonable out-of-pocket expenses and
will be indemnified against certain liabilities and expenses in connection
therewith, including certain liabilities under the federal securities laws.
Except as set forth above, Purchaser will not pay any fees or commissions
to any broker or dealer or other person for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will be reimbursed by Purchaser for customary mailing and handling expenses
incurred by them in forwarding the offering materials to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares who reside in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of the jurisdiction. However, Purchaser may,
in its discretion, take such
37
<PAGE>
action as it may deem necessary to make the Offer in any jurisdiction and to
extend the Offer to holders of Shares in that jurisdiction. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
Purchaser by one or more registered brokers or dealers that are licensed under
the laws of the jurisdiction.
Purchaser has filed the Schedule 14D-1 with the Commission containing
certain additional information with respect to the Offer pursuant to Rule 14d-1
under the Exchange Act. The Schedule and any amendments to the Schedule,
including exhibits, may be examined and copies may be obtained from the
principal office of the Commission in the manner set forth in Section 8 above
(except that they will not be available at the regional offices of the
Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER THAT IS NOT CONTAINED IN THE OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, THE INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
GAC ACQUISITION I CORP.
May 24, 1996
38
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER,
GAC ACQUISITION II CORP., PARENT,
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND GENERAL ELECTRIC COMPANY
A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of each director and executive officer of Parent. Unless
otherwise indicated below, the business address of each such person is 260 Long
Ridge Road, Stamford, Connecticut 06927 and each such person is a citizen of the
United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND EMPLOYMENT AND FIVE-YEAR EMPLOYMENT
BUSINESS ADDRESS HISTORY
- --------------------------------------- ---------------------------------------
<S> <C>
Nigel D. T. Andrews(1) ................ Director; Executive Vice President of
Parent and GE Capital Services
(1993-present); Vice President and
General Manager of GE Plastics America
(1990-1993); Director of GE Capital
Services.
Nancy E. Barton ....................... Director; Senior Vice President,
General Counsel of Parent and GE
Capital Services (1995-present); Vice
President and Senior Litigation Counsel
(1991-1995); Partner, Weil, Gotshal &
Manges LLP (1991).
James R. Bunt ......................... Director. See Part E.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Dennis D. Dammerman ................... Director. See Part E.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Paolo Fresco(2) ....................... Director. See Part E.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Dale F. Frey .......................... Director. See Part E.
General Electric Investment Corporation
3003 Sumner Street
Stamford, CT 06904
Benjamin W. Heineman, Jr. ............. Director. See Part E.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Hugh J. Murphy ........................ Director. See Part D.
GE Power Generation Customer Service
One River Road
Schenectady, NY 12345
Denis J. Nayden ....................... Director; President and Chief Operating
Officer of Parent and Executive Vice
President of GE Capital Services;
President and Chief Operating Officer,
Kidder Peabody (1994-1995); Executive
Vice President of Parent (1991-1994);
Director of GE Capital Services.
</TABLE>
- ------------------
1. Mr. Andrews is a citizen of the United Kingdom.
2. Mr. Fresco is a citizen of Italy.
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND EMPLOYMENT AND FIVE-YEAR EMPLOYMENT
BUSINESS ADDRESS HISTORY
- --------------------------------------- ---------------------------------------
<S> <C>
Michael A. Neal ....................... Director; Executive Vice President of
Parent and GE Capital Services
(1993-present); Vice President and
General Manager of Commercial Equipment
Financing (1991-1993); Director of GE
Capital Services.
James A. Parke ........................ Director; Senior Vice President,
Finance of Parent and GE Capital
Services (1989-present); Director of
Montgomery Ward.
John M. Samuels ....................... Director; Vice President and Senior
General Electric Company Counsel, Taxes of GE (1991-present);
3135 Easton Turnpike Director of GE Capital Services.
Fairfield, CT 06431
Edward D. Stewart ..................... Director; Executive Vice President of
Parent and GE Capital Services
(1992-present); Vice President and
General Manager, GE Capital Auto
Financial Services (1991-1992);
Director of Manheim Auto Auctions,
Stamford Hospital Foundation, Child
Guidance Center of Stamford and INROADS
of Fairfield-Westchester County, and GE
Capital Services.
John F. Welch, Jr. .................... Director. See Part E.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Gary C. Wendt ......................... Chairman and Chief Executive Officer of
Parent and Chairman, President and
Chief Executive Officer of GE Capital
Services (1986-present); member of the
National Board of Governors Boys &
Girls Clubs of America; Trustee of the
Boy's and Girl's Club of Stamford and
past Campaign Chairman of its Capital
Fund Campaign; a Trustee of Outward
Bound USA; Chairman of The Regional
Plan Association; Director and past
Chairman of the Southwestern Area
Commerce & Industry Association of
Connecticut (SACIA); member of the
Board of Governors for the United Way
of Tri State.
James A. Colica ....................... Senior Vice President, Risk Management
& Credit Policy (1991-present).
Michael D. Fraizer .................... Senior Vice President, Insurance/
General Electric Capital Corporation Investment Products; employee of
292 Long Ridge Road Parent since 1991.
Stamford, CT 06927
Robert L. Lewis ....................... Senior Vice President, Finance of
General Electric Capital Corporation Parent and President of GE Capital
1600 Summer Street, 6th Floor Transportation and Industrial
Stamford, CT 06905 Financing; employed by Parent since
1973.
Lawrence J. Toole ..................... Senior Vice President, Human Resources
of Parent and GE Capital Services
(1991-present).
Jeffrey S. Werner ..................... Senior Vice President, Corporate
General Electric Capital Corporation Treasury and Global Funding Operation
777 Long Ridge Road of Parent and GE Capital Services
Stamford, CT 06927 (1992-present); Vice President and
Treasurer (1988-1992).
</TABLE>
I-2
<PAGE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of Purchaser. The
business address of each such person is 6875 Jimmy Carter Boulevard, Suite 3200,
Norcross, Georgia 30071, and each such person is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND EMPLOYMENT AND FIVE-YEAR EMPLOYMENT
BUSINESS ADDRESS HISTORY
- --------------------------------------- ---------------------------------------
<S> <C>
Michael S. Ford........................ Director and President of Purchaser and
GAC II (May 1996-present); President
and Chief Executive Officer of GE
Capital Technology Management Services
(1994-present); President and Chief
Executive Officer of GE Capital
Computer Leasing (1990-1994).
David J. Lidstone...................... Director, Vice President and Secretary
of Purchaser and GAC II (May
1996-present); Senior Vice President
and General Counsel, GE Capital
Technology Management Services
(1994-1996); Vice President and General
Counsel, GE Capital Computer Leasing
(1991-1994).
D. Michael Upton....................... Director, Vice President and Treasurer
of Purchaser and GAC II (May 1996-
present); Senior Vice President,
Business Developments, GE Capital
Technology Management Services
(1993-present); Manager, GE Rental/
Lease Operations (1991-1993).
</TABLE>
C. DIRECTORS AND EXECUTIVE OFFICERS OF GAC ACQUISITION II CORP.
The following table sets forth the name, present principal occupation or
employment and material occupation, positions, offices or employment for the
past five years of each director and executive officer of GAC II. The business
address of each such person is 6875 Jimmy Carter Boulevard, Suite 3200,
Norcross, Georgia 30071, and each such person is a citizen of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND EMPLOYMENT AND FIVE-YEAR EMPLOYMENT
BUSINESS ADDRESS HISTORY
- --------------------------------------- ---------------------------------------
<S> <C>
Michael S. Ford........................ Director and President (May 1996-
present). See Part B.
David J. Lidstone...................... Director, Vice President and Secretary
(May 1996-present). See Part B.
D. Michael Upton....................... Director, Vice President and Treasurer
(May 1996-present). See Part B.
</TABLE>
I-3
<PAGE>
D. DIRECTORS AND EXECUTIVE OFFICERS OF GENERAL ELECTRIC CAPITAL SERVICES, INC.
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of each director and executive officer of General Electric
Capital Services, Inc. Unless otherwise indicated below, the business address of
each such person is 260 Long Ridge Road, Stamford, Connecticut 06927 and each
such person is a citizen of the United States.
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- --------------------------------------------------
<S> <C>
Kaj Ahlmann(1) .......... Director; Chairman, President and Chief Executive
Employers Reinsurance Officer, Employers Reinsurance Corporation
Corp. (1993-present); Chief Operating Officer, Employers
5200 Metcalf Reinsurance International Company (1992-1993);
Overland Park, KS 66201 Managing Director, Nordisk Reinsurance Company
(1988-1992).
Nigel D. T. Andrews(1) .. Director; Executive Vice President of Parent and
GE Capital Services (1993-present); Vice President
and General Manager of GE Plastics America
(1990-1993); Director of Parent.
James R. Bunt ........... Director. See Part E.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Dennis D. Dammerman ..... Director. See Part E.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Paolo Fresco(2) ......... Director. See Part E.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Dale F. Frey ............ Director. See Part E.
General Electric
Investment Corporation
3003 Summer Street
Stamford, CT 06904
Benjamin W. Heineman, Jr. Director. See Part E.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Hugh J. Murphy .......... Director; Senior Vice President, GE Power
GE Power Generation Generation Customer Service (1991-present);
Customer Service Director of Parent.
One River Road
Schenectady, NY 12345
Denis J. Nayden.......... Director; Executive Vice President. See Part A.
Michael A. Neal.......... Director; Executive Vice President. See Part A.
John M. Samuels ......... Director. See Part A.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Edward D. Stewart........ Director; Executive Vice President. See Part A.
John F. Welch, Jr. ...... Director. See Part E.
General Electric Company
3135 Easton Turnpike
Fairfield, CT 06431
Gary C. Wendt............ Chairman, President and Chief Executive Officer.
See Part A.
</TABLE>
- ------------------
(1) Mr. Ahlmann is a citizen of Denmark.
(2) Mr. Fresco is a citizen of Italy.
I-4
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- --------------------------------------------------
<S> <C>
Nancy E. Barton.......... Senior Vice President and General Counsel, Parent
and GE Capital Services (1995-present); Vice
President and Senior Litigation Counsel, Parent
(1991-1995); Partner, Weil, Gotshal & Manges LLP
(1991); Director of Parent.
James A. Parke........... Senior Vice President, Finance. See Part A.
Lawrence J. Toole........ Senior Vice President, Human Resources. See
Part A.
Jeffrey S. Werner ....... Senior Vice President, Corporate Treasury and
GE Capital Corporation Global Funding Operation. See Part A.
777 Long Ridge Road
Stamford, CT 06927
</TABLE>
E. DIRECTORS AND EXECUTIVE OFFICERS OF GE
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employment for the
past five years of each director and executive officer of GE. Unless otherwise
indicated below, the business address of each such person is 3135 Easton
Turnpike, Fairfield, Connecticut 06431 and each such person is a citizen of the
United States.
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- --------------------------------------------------
<S> <C>
D. Wayne Calloway ....... Chairman of the Board, and Director, PepsiCo,
PepsiCo, Inc. Inc., Beverages, Snack Foods and Restaurants,
700 Anderson Hill Road Purchase, N.Y. Director since 1991. A graduate
Purchase, NY 10577 of Wake Forest University, Mr. Calloway joined
PepsiCo in 1967, became president and chief
operating officer of Frito-Lay, Inc. in 1976 and
chairman of the board and chief executive
officer of Frito-Lay in 1978. Mr. Calloway
became executive vice president, chief financial
officer and director of PepsiCo in 1983,
president and chief operating officer in 1985
and chairman and chief executive officer in
1986. Mr. Calloway was Chief Executive Officer
of PepsiCo from 1986 to 1996. He is a director
of Citicorp and Exxon, chairman of Grocery
Manufacturers of America, and a member of the
Business Council and the Business Roundtable. He
is also a trustee of the Wake Forest University.
Silas S. Cathcart ....... Director and retired Chairman of the Board,
222 Wisconsin Avenue Illinois Tool Works, Inc., Diversified Products,
Suite 103 Chicago, Ill. Director 1972-1987 and since 1990.
Lake Forest, IL 60045 Following his graduation from Princeton in 1943,
Mr. Cathcart joined Illinois Tool Works, Inc., a
manufacturer of tools, fasteners, packaging and
other products. He was named a vice president in
1954, executive vice president in 1962,
president and director in 1964, and served as
chairman from 1972 to 1986. From 1987 to 1989,
he served as chairman of the board of Kidder,
Peabody Group Inc. Mr. Cathcart is a director of
Baxter International, Inc., Montgomery Ward &
Co., Inc. and Quaker Oats Company. He is also on
the board of the Chicago Botanic Garden and is a
trustee of the Buffalo Bill Historical Society.
Dennis D. Dammerman ..... Senior Vice President, Finance, and Chief
Financial Officer, General Electric Company.
Director since 1994. Mr. Dammerman joined GE
after graduating from the University of Dubuque
in 1967. He had financial assignments in several
GE businesses before being named vice president
and comptroller of General Electric Credit
Corporation (now General Electric Capital
Corporation) in 1979. In 1981, he became vice
president and general manager of GE Capital's
Commercial Financial Services Department and,
later that year, of GE Capital's Real Estate
Financial Services Division. In 1984, he was
elected senior vice president for finance and
became an executive officer of GE.
Paolo Fresco(1) ......... Vice Chairman of the Board and Executive Officer,
General Electric Company General Electric Company. Director since 1990. Mr.
(U.S.A) Fresco received a law degree from the University
3 Shortlands, Hammersmith of Genoa. After practicing law in Rome, he
London W6 8BX, England joined GE's Italian subsidiary, Compagnia
Generale di Elettricita (COGENEL), in 1962 as
corporate counsel, becoming president and
general manager of that
</TABLE>
- ------------------
(1) Mr. Fresco is a citizen of Italy.
I-5
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- --------------------------------------------------
<S> <C>
company in 1972. In 1976, he joined GE's
International Group and was elected a vice
president in 1977. Mr. Fresco became vice
president and general manager--Europe and Africa
Operations in 1979, and in 1985 was named vice
president and general manager--International
Operations. In 1987, he was elected senior vice
president--GE International. He became a member
of the Board in 1990, and was elected vice
chairman of the Board and executive officer in
1992.
Claudio X. Gonzalez(2) .. Chairman of the Board and Chief Executive Officer,
Kimberly-Clark de Mexico, Kimberly-Clark de Mexico, S.A. de C.V., Mexico
S.A. de C.V. City, and Director, Kimberly-Clark Corporation,
Jose Luis Lagrange 103, Consumer and Paper Products. Director since
Tercero Piso 1993. Mr. Gonzalez is a graduate of Stanford
Colonia Los Morales University. He was employed by Kimberly-Clark in
Mexico, D.F. 11510, 1956 and by Kimberly-Clark de Mexico, S.A. in
Mexico 1957. He was elected vice president of
operations of Kimberly-Clark de Mexico, S.A. in
1962 and executive vice president and managing
director in 1966. He assumed his present
position in 1973. Mr. Gonzalez is a director of
Kellogg Company, The Mexico Fund, Inc., Banco
Nacional de Mexico, Grupo Industrial ALFA, Grupo
Industrial Saltillo, Grupo Carso, Synkro and
Telefonos de Mexico.
Robert E. Mercer ........ Retired Chairman of the Board and former Director,
The Goodyear Tire & Rubber Company, Akron, Ohio.
Director since 1984. A graduate of Yale
University, Mr. Mercer joined Goodyear in 1947.
He became president of the Kelly-Springfield
Tire Company subsidiary in 1974 and was elected
an executive vice president of Goodyear in 1976.
Mr. Mercer was elected president of Goodyear in
1978, president and chief operating officer in
1981, vice chairman and chief executive officer
in 1982, and served as chairman and chief
executive officer from 1983 to 1989. He is also
chairman of the board of Roadway Express, Inc.
Gertrude G. Michelson ... Former Senior Vice President--External Affairs and
151 West 34th Street former Director, R. H. Macy & Co., Inc.,
New York, NY 10001 Retailers, New York, N.Y. Director since 1976.
Mrs. Michelson received a BA degree from
Pennsylvania State University in 1945 and an LLB
degree from Columbia University in 1947, at
which time she joined Macy's--New York. Mrs.
Michelson was elected a vice president in 1963,
senior vice president in 1979, and was named
senior vice president--external affairs in 1980.
She served as senior advisor to R. H. Macy &
Co., Inc. from 1992 to 1994. She is also a
director of The Chubb Corporation, The Goodyear
Tire & Rubber Company and Stanley Works. Mrs.
Michelson is chairman emeritus of the Board of
Trustees of Columbia University and a governor
of the American Stock Exchange.
John D. Opie ............ Vice Chairman of the Board and Executive Officer,
General Electric Company. Director since 1995. Mr.
Opie joined GE after graduating from Michigan
College of Mining and Technology with a BS
degree in 1961. He has held key leadership
positions in several GE materials and electrical
products businesses. He was named vice president
of the Lexan Products Division in 1980, vice
president of the Specialty Plastics Division in
1982, vice president of the Construction
Equipment Business Operations in 1983, and
senior vice president and head of General
Electric Lighting in 1986. He was elected vice
chairman of the Board and executive officer in
1995.
Roger S. Penske ......... Chairman of the Board, President and Director,
Penske Corporation Penske Corporation and Detroit Diesel Corporation,
13400 Outer Drive, West Transportation and Automotive Services, Detroit,
Detroit, MI 48239-4001 Mich. Director since 1994. A 1959 graduate of
Lehigh (Pa.) University, Mr. Penske became
president of Penske Corporation in 1969. He
became chief executive officer of Detroit Diesel
Corporation in 1988. Mr. Penske is also a
director of Philip Morris Companies Inc. He
serves as a trustee of the Henry Ford Museum and
Greenfield Village and as a director of Detroit
Renaissance.
</TABLE>
- ------------------
(2) Mr. Gonzalez is a citizen of Mexico.
I-6
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- --------------------------------------------------
<S> <C>
Barbara Scott Preiskel .. Former Senior Vice President, Motion Picture
Suite 3125 Associations of America, New York, NY. Director
60 East 42nd Street since 1982. Mrs. Preiskel graduated from
New York, NY 10165 Wellesley College and Yale Law School. She
joined the Motion Picture Associations of
America in 1959 as deputy attorney and served as
senior vice president and general counsel from
1977 to 1983. Mrs. Preiskel is a trustee of
Wellesley College and Tougaloo College, and is
the chairman of the New York Community Trust.
She is a director of American Stores Company,
Massachusetts Mutual Life Insurance Company,
Textron Inc. and the Washington Post Company.
Frank H.T. Rhodes ....... President Emeritus, Cornell University, Ithaca,
Cornell University N.Y. Director since 1984. An English-born
3104 Snee Building naturalized U.S. citizen, Dr. Rhodes holds
Ithaca, NY 14853 bachelor of science, doctor of philosophy and
doctor of science degrees from the University of
Birmingham (U.K.). He served as president of
Cornell University from 1977 to 1995. Dr. Rhodes
is a director of Tompkins County Trust Company.
He is a trustee of the Mellon Foundation and the
Committee for Economic Development. He was
appointed by President Reagan as a member of the
National Science Board, of which he is chairman,
and by President Bush as a member of the
President's Education Policy Advisory Committee.
Andrew C. Sigler ........ Chairman of the Board, Chief Executive Officer and
Champion International Director, Champion International Corporation,
Corporation Paper and Forest Products, Stamford, Conn.
1 Champion Plaza Director since 1984. A graduate of Dartmouth
Stamford, CT 06921 College with an MBA degree from its Amos Tuck
School of Business Administration, Mr. Sigler
joined Champion Papers Inc., a predecessor of
Champion International, in 1956. He because
executive vice president of Champion
International in 1972, a director in 1973,
president and chief executive officer in 1974,
and chairman in 1979. Mr. Sigler is also a
director of AlliedSignal, Inc., Bristol-Myers
Squibb Company and Chemical Banking Corporation,
and is a member of the Board of Trustees of
Dartmouth College. He is a member of the
Business Roundtable and the Business Council and
is active in various civic organizations.
Douglas A. Warner III ... Chairman of the Board, President, Chief Executive
J.P. Morgan & Co., Inc. & Officer and Director, J.P. Morgan & Co.
Morgan Guaranty Trust Co. Incorporated and Morgan Guaranty Trust Company,
60 Wall Street New York, N.Y. Director since 1992. Following
New York, NY 10260 graduation from Yale University in 1968, Mr.
Warner joined Morgan Guaranty Trust Company, a
wholly owned subsidiary of J.P. Morgan & Co.
Incorporated. He was named a senior vice
president of the bank in 1985, executive vice
president in 1987, executive vice president of
the parent in 1989, and managing director of the
bank and its parent in 1989. He was elected
president and director of the bank and its
parent in 1990 and became chairman and chief
executive officer in 1995. Mr. Warner is also a
director of Anheuser-Busch Companies, Inc., a
member of the Board of Managers and the Board of
Overseers of the Memorial Sloan-Kettering Cancer
Center, a trustee of Cold Spring Harbor
Laboratory and a trustee of the Pierpont Morgan
Library.
John F. Welch, Jr. ...... Chairman of the Board and Chief Executive Officer,
General Electric Company. Director since 1980. A
1957 graduate of the University of Massachusetts
with MS and PhD degrees from the University of
Illinois, Mr. Welch joined GE in 1960. Following
managerial assignments in the plastics and
chemical and metallurgical businesses, he was
elected a vice president in 1972. In 1973, he
was named vice president and group executive of
the Components and Materials Group. He became a
senior vice president and sector executive of
the Consumer Products and Services Sector in
1977 and was elected a vice chairman and named
an executive officer in 1979. Mr. Welch was
elected chairman and named chief executive
officer in 1981.
Philip D. Ameen ......... Vice President and Comptroller of GE; executive of
GE for the last five years.
James R. Bunt ........... Vice President and Treasurer; executive of GE for
the last five years; Director of Parent and GE
Capital Services.
</TABLE>
I-7
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRESENT PRINCIPAL OCCUPATION OR
BUSINESS ADDRESS EMPLOYMENT AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------- --------------------------------------------------
<S> <C>
David L. Calhoun ........ Vice President, GE Transportation Systems;
General Electric Company executive of GE for the last five years.
2901 East Lake Road
Erie, PA 16531
William J. Conaty ....... Senior Vice President--Human Resources; executive
of GE for the last five years.
Lewis S. Edelheit ....... Senior Vice President--Corporate Research and
General Electric Company Development (1992-present). Manager of Electronic
P.O. Box 8 Systems Research Center (1991-1992).
Schenectady, NY 12301
Dale F. Frey ............ Vice President and Chairman; President, General
General Electric Company Electric Investment Corporation; executive of GE
3003 Sumner Street for the last five years; Director of Parent and
Stamford, CT 06905 GE Capital Services.
Benjamin W. Heineman, Jr. Senior Vice President, General Counsel and
Secretary; executive of GE for the last five
years; Director of Parent and GE Capital
Services.
W. James McNerney, Jr. .. Senior Vice President, GE Lighting; executive of
General Electric Company GE for the last five years.
Nela Park
Cleveland, OH 44122
Eugene F. Murphy ........ Senior Vice President, GE Aircraft Engines;
General Electric Company executive of GE for the last five years.
1 Newmann Way
Cincinnati, OH 05215
Robert L. Nardelli ...... Senior Vice President, GE Power Systems; executive
General Electric Company of GE since 1992. President of Camco (1991-1992).
1 River Road
Schenectady, NY 12345
Robert W. Nelson ........ Vice President, Corporate Financial Planning and
Analysis; executive of GE for the last five years.
Gary M. Reiner .......... Senior Vice President, Chief Information Officer;
executive of GE for the last five years.
Gary L. Rogers .......... Senior Vice President, GE Plastics; executive of
General Electric Company GE for the last five years.
1 Plastics Avenue
Pittsfield, MA 01201
James W. Rogers ......... Vice President, GE Motors; executive of GE for the
General Electric Company last five years.
1635 Broadway
Fort Wayne, IN 46801
J. Richard Stonesifer ... Senior Vice President, GE Appliances; executive of
General Electric Company GE for the last five years.
Appliance Park
Louisville, KY 40225
John M. Trani ........... Senior Vice President, GE Medical Systems;
General Electric Company executive of GE for the last five years.
P.O. Box 414
Milwaukee, WI 53201
Lloyd G. Trotter ........ Vice President, GE Electrical Distribution and
General Electric Company Control; executive of GE for the last five years.
41 Woodford Avenue
Plainville, CT 06062
</TABLE>
I-8
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, certificates for Shares and
any other required documents should be sent or delivered by each stockholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depository, at one of the addresses set forth below:
The Depositary for the Offer is:
THE CHASE MANHATTAN BANK (National Association)
By Mail: By Overnight Delivery: By Hand:
Box 3032 c/o Chase Securities (9.00 a.m.--5:00 p.m.
4 Chase MetroTech Center Processing Corp. New York City Time)
Brooklyn, NY 11245 Fort Lee Executive Park 1 Chase Manhattan Plaza
1 Executive Drive Floor 1-B
(6th floor) Nassau and Liberty
Fort Lee, NJ 07024 Streets
By Facsimile Transmission New York, NY 10081
(201) 592-4372
Information and Confirm
by Telephone
(201) 592-4370
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent as set forth below and will be furnished promptly at
Purchaser's expense. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
TOLL-FREE (800) 223-2064
BROKERS AND BANKS, PLEASE CALL COLLECT (212) 440-9800
THE DEALER MANAGER FOR THE OFFER IS:
LAZARD FRERES & CO. LLC
30 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
(CALL COLLECT) 212-632-6717
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
AMERIDATA TECHNOLOGIES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED MAY 24, 1996
BY
GAC ACQUISITION I CORP.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
GENERAL ELECTRIC CAPITAL CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 21, 1996, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand:
Box 3032 c/o Chase Securities (9:00 a.m.-5:00 p.m.
4 Chase MetroTech Center Processing Corp. New York City Time)
Brooklyn, NY 11245 Fort Lee Executive Park 1 Chase Manhattan Plaza
1 Executive Drive (6th Floor) Floor 1-B
Fort Lee, NJ 07024 Nassau and Liberty
Streets
By Facsimile Transmission New York, NY 10081
(201) 592-4372
Information and Confirmation
by Telephone
(201) 592-4370
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
BELOW AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) of AmeriData Technologies, Inc. (the 'Stockholders') if
certificates evidencing Shares ('Certificates') are to be forwarded with this
Letter of Transmittal or if delivery of Shares is to be made by book-entry
transfer to an account maintained by The Chase Manhattan Bank (National
Association) (the 'Depositary') at The Depository Trust Company ('DTC'), the
Midwest Securities Trust Company ('MSTC') or the Philadelphia Depository Trust
Company ('PDTC') (each a 'Book-Entry Transfer Facility') pursuant to the
procedures set forth in Section 3 of the Offer to Purchase (as defined below).
Stockholders whose Certificates are not immediately available or who cannot
deliver either their Certificates for, or a Book-Entry Confirmation (as defined
in Section 3 of the Offer to Purchase) with respect to, their Shares and all
other required documents to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) may tender their Shares according
to the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase. See Instruction 2 hereof. Delivery of documents to a Book-Entry
Transfer Facility does not constitute delivery to the Depositary.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER).
Name of Tendering Institution: ____________________________________________
Check Box of Book-Entry Transfer Facility:
/ / DTC / / MSTC / / PDTC
Account Number: ___________________________________________________________
Transaction Code Number: __________________________________________________
<PAGE>
/ / CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s): __________________________________________
Window Ticket Number (if any): ____________________________________________
Date of Execution of Notice of Guaranteed Delivery: _______________________
Name of Institution that Guaranteed Delivery: _____________________________
If delivered by book-entry transfer, check box of applicable Book-Entry
Transfer Facility:
/ / DTC / / MSTC / / PDTC
Account Number: ___________________________________________________________
Transaction Code Number: __________________________________________________
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
Name(s) and Address(es) of Registered Holder(s) Share Number of Shares Number of
(Please fill in, if blank, exactly as name(s) Certificates Represented by Shares
appear(s) on the Certificate(s)) Number(s)(1) Certificate(s)(1) Tendered(2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
------------- ----------------- ------------
------------- ----------------- ------------
------------- ----------------- ------------
------------- ----------------- ------------
------------- ----------------- ------------
------------- ----------------- ------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by Stockholders delivering Shares by Book-Entry
Transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares
represented by Certificates delivered to the Depositary are being
tendered. See Instruction 4.
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to GAC Acquisition I Corp., a Delaware
corporation ('Purchaser'), and an indirect wholly-owned subsidiary of General
Electric Capital Corporation, a New York corporation ('Parent'), the
above-described shares of common stock, $.01 par value (the 'Shares'), of
AmeriData Technologies, Inc., a Delaware corporation (the 'Company'), for $16.00
per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated May 24, 1996 (the 'Offer to
Purchase'), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the 'Offer'). The undersigned understands
that Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to any newly formed direct or indirect wholly-owned subsidiary
of Purchaser, the right to purchase all or any portion of the Shares tendered
pursuant to the Offer, but any such transfer or assignment will not relieve
Purchaser of its obligations under the Offer or prejudice the rights of
tendering Stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of, or payment for,
Shares tendered with this Letter of Transmittal in accordance with the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms or conditions of any such extension or amendment), the
undersigned hereby sells, assigns and transfers to, or upon the order of,
Purchaser all right, title and interest in and to all of the Shares that are
being tendered hereby and any and all other Shares or other securities issued or
issuable in respect of such Shares on or after May 24, 1996 (a 'Distribution')
and irrevocably constitutes and appoints the Depositary as the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares (and
any Distributions), with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest), to (i)
deliver Certificates evidencing such Shares (and any Distributions), or transfer
ownership of such Shares (and all Distributions) on the account books maintained
by a Book-Entry Transfer Facility together, in any such case, with all
accompanying evidences of transfer and authenticity to, or upon the order of,
Purchaser, upon receipt by the Depositary as the undersigned's agent, of the
purchase price with respect to such Shares; (ii) present such Shares (and any
Distributions) for transfer on the books of the Company; and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and subject to
the conditions of the Offer.
The undersigned hereby irrevocably appoints each designee of Purchaser as
the attorney-in-fact and proxy of the undersigned, each with full power of
substitution, to the full extent of the undersigned's rights with respect to all
Shares tendered hereby and accepted for payment and paid for by Purchaser (and
any Distributions) including, without limitation, the right to vote such Shares
(and any Distributions) in such manner as each such attorney and proxy or his
substitute shall, in his sole discretion, deem proper. All such powers of
attorney and proxies, being deemed to be irrevocable, shall be considered
coupled with an interest in the Shares tendered with this Letter of Transmittal.
Such appointment will be effective
<PAGE>
when, and only to the extent that, Purchaser accepts such Shares for payment.
Upon such acceptance for payment, all prior powers of attorney and proxies given
by the undersigned with respect to such Shares (and any Distributions) will be
revoked, without further action, and no subsequent powers of attorneys and
proxies may be given with respect thereto (and, if given, will be deemed
ineffective). The designees of Purchaser will, with respect to the Shares (and
any Distributions) for which such appointment is effective, be empowered to
exercise all voting and other rights of the undersigned with respect to such
Shares (and any Distributions) as they in their sole discretion may deem proper.
Purchaser reserves the absolute right to require that, in order for Shares to be
deemed validly tendered, immediately upon the acceptance for payment of such
Shares, Purchaser or its designees are able to exercise full voting rights with
respect to such Shares (and any Distributions), including voting at any meeting
of Stockholders then scheduled.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions) and that, when the same are accepted for
payment and paid for by Purchaser, Purchaser will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances, and that the Shares tendered hereby (and any Distributions)
will not be subject to any adverse claim. The undersigned, upon request, will
execute and deliver any additional documents deemed by the Depositary or
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of Shares tendered hereby (and any Distributions). In addition, the
undersigned shall promptly remit and transfer to the Depositary for the account
of Purchaser any and all Distributions issued to the undersigned on or after May
24, 1996 in respect of the Shares tendered hereby, accompanied by appropriate
documentation of transfer, and pending such remittance and transfer or
appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of any such Distributions and may withhold the entire
purchase price or deduct from the purchase price the amount of value thereof, as
determined by Purchaser in its sole discretion.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 3 of the Offer to Purchase and in the
instructions to this Letter of Transmittal will constitute a binding agreement
between the undersigned and Purchaser with respect to such Shares, upon the
terms and subject to the conditions of the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, Purchaser may not be required to accept for payment any
of the Shares tendered hereby.
Unless otherwise indicated in this Letter of Transmittal under 'Special
Payment Instructions,' please issue the check for the purchase price and return
any Certificates evidencing Shares not tendered or not accepted for payment in
the name(s) of the registered holder(s) appearing under 'Description of Shares
Tendered.' Similarly, unless otherwise indicated under 'Special Delivery
Instructions,' please mail the check for the purchase price and return any
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under 'Description of Shares Tendered.' In the event that
both the 'Special Payment Instructions' and the 'Special Delivery Instructions'
are completed, please issue the check for the purchase price and return any such
Certificates evidencing Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and return such Certificates (and accompanying documents, as appropriate)
to, the person(s) so indicated. Unless otherwise indicated in this Letter of
Transmittal under 'Special Payment Instructions,' in the case of a book-entry
delivery of Shares, please credit the account maintained at the Book-Entry
Facility indicated above with respect to any Shares not accepted for payment.
The undersigned recognizes that Purchaser has no obligation pursuant to the
'Special Payment Instructions' to transfer any Shares from the name of the
registered holder if Purchaser does not accept for payment any of the Shares
tendered hereby.
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed Certificates:
_____________________________________
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
TO BE COMPLETED ONLY IF CERTIFICATES FOR SHARES NOT
TENDERED OR NOT ACCEPTED FOR PAYMENT AND/OR THE CHECK FOR
THE PURCHASE PRICE OF SHARES ACCEPTED FOR PAYMENT ARE TO
BE ISSUED IN THE NAME OF SOMEONE OTHER THAN THE
UNDERSIGNED, OR IF SHARES DELIVERED BY BOOK-ENTRY
TRANSFER THAT ARE NOT ACCEPTED FOR PAYMENT ARE TO BE
RETURNED BY CREDIT TO AN ACCOUNT MAINTAINED AT A
BOOK-ENTRY TRANSFER FACILITY, OTHER THAN TO THE ACCOUNT
INDICATED ABOVE.
Issue Check/Certificate(s) to:
Name:
----------------------------------------------------
(Please type or Print)
Address:
-------------------------------------------------
- ---------------------------------------------------------
(Include Zip Code)
- ---------------------------------------------------------
(Tax Identification or Social Security No.)
(See Substitute Form W-9)
Credit unpurchased Shares delivered by book-entry
transfer to the Book-Entry Transfer Facility account set
forth below:
/ / DTC / / MSTC / / PDTC
(Check One)
- ---------------------------------------------------------
(DTC/MSTC/PDTC Account Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
TO BE COMPLETED ONLY IF CERTIFICATES FOR SHARES NOT
TENDERED OR NOT ACCEPTED FOR PAYMENT AND THE CHECK FOR
THE PURCHASE PRICE OF SHARES ACCEPTED FOR PAYMENT ARE TO
BE SENT TO SOMEONE OTHER THAN THE UNDERSIGNED OR TO THE
UNDERSIGNED AT AN ADDRESS OTHER THAN THAT SHOWN ABOVE.
Mail Check/Certificate(s) to:
Name:
----------------------------------------------------
(Please type or Print)
Address:
-------------------------------------------------
- ----------------------------------------------------------
(Include Zip Code)
- ----------------------------------------------------------
(Tax Identification or Social Security No.)
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, no
signature guarantee is required on this Letter of Transmittal (a) if this Letter
of Transmittal is signed by the registered holder(s) (which term, for the
purposes of this document, includes any participant in any of the Book-Entry
Facilities' systems whose name appears on a security position listing as the
owner of the Shares) of Shares tendered herewith and such registered holder has
not completed either the box entitled 'Special Delivery Instructions' or the box
entitled 'Special Payment Instructions' on this Letter of Transmittal or (b) if
such Shares are tendered for the account of a financial institution (including
most commercial banks, savings and loan associations and brokerage houses) that
is a participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an 'Eligible Institution'). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5. If the Certificates are registered in the name
of a person other than the signer of this Letter of Transmittal, or if payment
is to be made or delivered to, or Certificates evidencing unpurchased Shares are
to be issued or returned to, a person other than the registered owner, then the
tendered Certificates must be endorsed or accompanied by duly executed stock
powers, in either case signed exactly as the name or names of the registered
owner or owners appear on the Certificates, with the signatures on the
Certificates or stock powers guaranteed by an Eligible Institution as provided
in this Letter of Transmittal. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by Stockholders if Certificates evidencing Shares are to be forwarded with this
Letter of Transmittal or if delivery of Shares is to be made pursuant to the
procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase. For a Stockholder to validly tender Shares pursuant to the Offer,
either (a) a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile), with any required signature guarantees and any other
required documents, must be received by the Depositary at one of its addresses
set forth in this Letter of Transmittal on or prior to the Expiration Date (as
defined in the Offer to Purchase) and either (i) Certificates for tendered
Shares must be received by the Depositary at one of those addresses on or prior
to the Expiration Date or (ii) Shares must be delivered pursuant to the
procedures for book-entry transfer set forth in Section 3 of the Offer to
Purchase and a Book-Entry Confirmation must be received by the Depositary on or
prior to the Expiration Date or (b) the tendering Stockholder must comply with
the guaranteed delivery procedures set forth below and in Section 3 of the Offer
to Purchase.
Stockholders whose Certificates are not immediately available or who cannot
deliver their Certificates and all other required documents to the Depositary or
complete the procedures for book-entry transfer on or prior to the Expiration
Date may tender their Shares by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) tender
must be made by or through an Eligible Institution, (ii) a properly completed
and duly executed Notice of Guaranteed Delivery, substantially in the form made
available by Purchaser, must be received by the Depositary prior to the
Expiration Date, and (iii) Certificates representing all tendered Shares in
proper form for transfer, or a Book-Entry Confirmation with respect to all the
tendered Shares, together with a Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in Section 2 of the Offer
to Purchase) in connection with a book-entry transfer and any other documents
required by this Letter of Transmittal, must be received by the Depositary
within three New York Stock Exchange, Inc. trading days after the date of such
Notice of Guaranteed Delivery. If Certificates are forwarded separately to the
Depositary, a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile) must accompany each delivery.
THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS, IS AT THE OPTION AND SOLE RISK OF THE TENDERING
STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering Stockholders, by execution of
this Letter of Transmittal (or a facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided in this Letter of Transmittal
is inadequate, the information required under 'Description of Shares Tendered'
should be listed on a separate signed schedule attached to this Letter of
Transmittal.
4. PARTIAL TENDERS. If fewer than all of the Shares represented by any
Certificates delivered to the Depositary with this Letter of Transmittal are to
be tendered, fill in the number of Shares that are to be tendered in the box
entitled 'Number of Shares Tendered.' In such cases, a new Certificate for the
remainder of the Shares that were evidenced by your old Certificate(s) will be
sent, without expense, to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled 'Special Payment Instructions' or
the box entitled 'Special Delivery Instructions' on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares represented by
Certificate(s) delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered hereby, the signature(s) must correspond
exactly with the name(s) as written on the face of the Certificate(s) without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all the owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of Certificates.
If this Letter of Transmittal or any Certificates or instruments of
transfer are signed by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, that person
<PAGE>
should so indicate when signing, and proper evidence satisfactory to Purchaser
of that person's authority to so act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Certificates or
separate instruments of transfer are required unless payment is to be made, or
Certificates not tendered or not purchased are to be issued or returned, to a
person other than the registered holder(s). Signatures on the Certificates or
instruments of transfer must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares evidenced by the Certificate(s) listed and
transmitted hereby, the Certificate(s) must be endorsed or accompanied by
appropriate instruments of transfer, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Certificate(s). Signatures on
the Certificate(s) or instruments of transfer must be guaranteed by an Eligible
Institution.
6. TRANSFER TAXES. Except as set forth in this Instruction 6, Purchaser
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or (in the circumstances permitted hereby)
if Certificates for Shares not tendered or not purchased are to be registered in
the name of, any person other than the registered holder(s), or if tendered
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any transfer taxes (whether
imposed on the registered holder(s) or such person) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or exemption therefrom is
submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Certificate(s) listed in this Letter of
Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and Certificates
for unpurchased Shares are to be issued in the name of a person other than the
signer of this Letter of Transmittal or if a check is to be sent and
Certificates are to be returned to someone other than the signer of this Letter
of Transmittal or to an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. If any tendered Shares
are not purchased for any reason and the Shares are delivered by Book-Entry
Transfer Facility, the Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance may be directed to the Information Agent (as defined below) at
its address or telephone number set forth below and requests for additional
copies of the Offer to Purchase, this Letter of Transmittal and the Notice of
Guaranteed Delivery may be directed to the Information Agent or brokers,
dealers, commercial banks and trust companies and such materials will be
furnished at Purchaser's expense.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by
Purchaser (subject to certain limitations in the Merger Agreement (as defined in
the Offer to Purchase)), in whole or in part, at any time or from time to time,
in Purchaser's sole discretion.
10. BACKUP WITHHOLDING TAX. Each tendering Stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ('TIN') on
Substitute Form W-9, which is provided under 'Important Tax Information' below
and to certify that the Stockholder is not subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering Stockholder to a penalty and 31% backup federal income tax withholding
on the payment of the purchase price for the Shares. If the tendering
Stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future, the tendering Stockholder should check the
box in Part III of the Substitute Form W-9 and sign and date both the Substitute
Form W-9 and the 'Certificate of Awaiting Taxpayer Identification.' If the
Stockholder has indicated in the box in Part III that a TIN has been applied for
and the Depositary is not provided with a TIN by the time of payment, the
Depositary will withhold 31% of all payments of the purchase price, if any, made
thereafter pursuant to the Offer until a TIN is provided to the Depositary.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has been lost, destroyed or stolen, the Stockholder should promptly
notify the Depositary by checking the box immediately preceding the special
payment/special delivery instructions and indicating the number of Shares lost.
The Stockholders will then be instructed as to the steps that must be taken in
order to replace the Certificate(s). This Letter of Transmittal and related
documents cannot be processed until the procedures for replacing lost or
destroyed Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
THEREOF (TOGETHER WITH CERTIFICATES OR A BOOK-ENTRY CONFIRMATION FOR SHARES AND
ANY OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE DEPOSITARY, OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Stockholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payer) with
such Stockholder's correct TIN on Substitute Form W-9 below. If such Stockholder
is an individual, the TIN is his Social Security Number. If the tendering
Stockholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future, the Stockholder should so indicate on the
Substitute Form W-9. See Instruction 10. If the Depositary is not provided with
the correct TIN, the Stockholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to the Stockholder
with respect to Shares purchased pursuant to the Offer may be subject to backup
federal income tax withholding at a 31% rate.
Certain Stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements and should indicate their status by writing 'exempt' across the
face of, and by signing and dating, the Substitute Form W-9. In order for a
foreign individual to qualify as an exempt recipient, that Stockholder must
submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Forms for such statements can be obtained from the
Depositary. See the enclosed Guidelines for Certificates of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
<PAGE>
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the Stockholder. Backup withholding is not an additional
tax. Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup federal income tax withholding with respect to payment of
the purchase price for Shares purchased pursuant to the Offer, a Stockholder
must provide the Depositary with his correct TIN by completing the Substitute
Form W-9 below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that the Stockholder is awaiting a TIN) and that (1) the Stockholder
has not been notified by the Internal Revenue Service that he is subject to
backup withholding as a result of failure to report all interest or dividends or
(2) the Internal Revenue Service has notified the Stockholder that he is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Stockholder is required to give the Depositary the Social Security
Number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are registered in more than one name or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidance on which number to report.
<PAGE>
IMPORTANT
STOCKHOLDER: SIGN HERE AND COMPLETE SUBSTITUTE
FORM W-9 ON REVERSE
--) (--
- --------------------------------------------------------------------------------
(Signature(s) of Stockholder(s))
--) (--
- --------------------------------------------------------------------------------
(Signature(s) of Stockholder(s))
Dated: ______________, 1996
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on the Certificate or on a security position listing or by person(s) authorized
to become registered holder(s) by Certificates and documents transmitted
herewith. If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, agents, officers or corporations or others acting in a
fiduciary or representative capacity, please provide the following information.
See Instruction 5.)
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Type or Print)
Capacity (Full Title):
----------------------------------------------------------
(See Instruction 5)
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Daytime Area Code and Telephone Number:
-----------------------------------------
(Home)
- --------------------------------------------------------------------------------
(Business)
Taxpayer Identification or Social Security No.:
---------------------------------
(See Substitute Form W-9 on Reverse Side)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
- --------------------------------------------------------------------------------
(Authorized Signature(s))
- --------------------------------------------------------------------------------
(Name)
- --------------------------------------------------------------------------------
(Name of Firm)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Address Including Zip Code)
- --------------------------------------------------------------------------------
(Area Code and Telephone Number)
Dated: ______________, 1996
<PAGE>
PAYER'S NAME: THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
SUBSTITUTE
FORM W-9
DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE PAYER'S
REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN)
PART I -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING
AND DATING BELOW.
PART II -- For Payees exempt from backup withholding, see the enclosed
Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 and complete as instructed therein.
PART III -- Social Security Number OR Employer Identification Number
- -------------------------------------
(If awaiting TIN write 'Applied for')
Certifications--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service ('IRS') that I am subject to
backup withholding as a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
Certification Instructions--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you are subject to backup withholding, you
receive another notification from the IRS that you were no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the
enclosed guidelines).
SIGNATURE DATE
-------------------------------------- -----------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER TO PURCHASE. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE 'APPLIED FOR' IN
THE BOX IN PART III OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a Taxpayer Identification Number to the appropriate
Internal Revenue Service Center or Social Security Administration Office
or (2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number by
the time of payment, 31% of all payments of the purchase price pursuant to
the Offer made to me thereafter will be withheld until I provide a
number.
Signature Date
-------------------------------------- -----------------------
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
-------------
Wall Street Plaza
New York, New York 10005
Call Toll-Free (800) 223-2064
Banks and Brokers, please call collect (212) 440-9800
The Dealer Manager for the Offer is:
LAZARD FRERES & CO. LLC
30 Rockefeller Plaza
New York, New York 10020
(212) 632-6717
(Call Collect)
May 24, 1996
<PAGE>
AGREEMENT AND PLAN OF MERGER
among
GENERAL ELECTRIC CAPITAL CORPORATION
GAC ACQUISITION I CORP.
and
AMERIDATA TECHNOLOGIES, INC.
dated May 20, 1996
TABLE OF CONTENTS
Section Page
------- ----
ARTICLE I
THE OFFER
1.1 The Offer.......................................... 2
1.2 Offer Documents.................................... 2
1.3 Company Actions.................................... 3
1.4 Directors.......................................... 4
ARTICLE II
THE MERGER
2.1 The Merger......................................... 5
2.2 Closing............................................ 5
2.3 Effective Time of the Merger....................... 5
2.4 Effects of the Merger.............................. 6
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock............................ 6
(a) Capital Stock of Sub......................... 6
(b) Cancellation of Treasury Stock and
Parent-Owned Stock........................... 6
3.2 Conversion of Securities........................... 7
3.3 Payment for Shares................................. 7
(a) Paying Agent................................. 7
(b) Payment Procedures........................... 8
(c) Termination of Payment Fund; Interest........ 9
(d) No Liability................................. 9
(e) Withholding Rights........................... 9
3.4 Stock Transfer Books............................... 9
3.5 Options, Warrants and Other Purchase Rights........ 9
3.6 Dissenting Shares.................................. 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company...... 12
(a) Organization, Standing and Power............. 12
(b) Capital Structure............................ 12
(c) Authority; No Violations;
Consents and Approvals..................... 15
(d) SEC Documents; Financial Statements.......... 17
(e) Information Supplied......................... 17
i
<PAGE>
(f) Compliance with Applicable Laws.............. 18
(g) Litigation................................... 18
(h) Taxes........................................ 19
(i) Pension And Benefit Plans; ERISA............. 20
(j) Absence of Certain Changes or Events......... 23
(k) No Undisclosed Material Liabilities.......... 24
(l) Opinion of Financial Advisor................. 24
(m) Vote Required................................ 24
(n) Labor Matters................................ 25
(o) Intangible Property.......................... 26
(p) Environmental Matters........................ 27
(q) Real Property; Other Assets.................. 30
(r) Insurance.................................... 31
(s) Material Contracts........................... 31
(t) Related Party Transactions................... 33
(u) Liens........................................ 33
(v) Brokerage Fees and Commissions; Other Fees... 34
(w) No Excess Parachute Payments................. 34
(x) State Takeover Statutes...................... 34
(y) Pending and Proposed Transactions............ 34
(z) Media Interests.............................. 34
4.2 Representations and Warranties of Parent and Sub... 35
(a) Organization, Standing and Power............. 35
(b) Authority; No Violations;
Consents and Approvals..................... 35
(c) Interim Operations of Sub.................... 36
(d) Information Supplied......................... 36
(e) Brokerage Fees and Commissions............... 36
(f) Financial Capability......................... 37
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company........................... 37
(a) Ordinary Course.............................. 37
(b) Dividends; Changes in Stock.................. 37
(c) Issuance of Securities....................... 37
(d) Governing Documents.......................... 38
(e) No Solicitation.............................. 38
(f) No Acquisitions.............................. 40
(g) No Dispositions.............................. 40
(h) Advice of Changes; SEC Filings............... 40
(i) No Dissolution, Etc.......................... 41
(j) Other Actions................................ 41
(k) Certain Employee Matters..................... 41
ii
<PAGE>
(l) Indebtedness; Advances....................... 41
(m) Material Contracts........................... 42
(n) Accounting................................... 42
(o) Capital Expenditures......................... 42
(p) Tax Matters.................................. 42
(q) Discharge of Liabilities..................... 42
(r) Agreement to Take Action..................... 43
(s) Notices of Certain Events.................... 43
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of the Proxy Statement; Company
Stockholders Meeting; Merger without a Company
Stockholders Meeting............................... 43
6.2 Access to Information.............................. 44
6.3 Legal Conditions to Merger......................... 44
6.4 Fees and Expenses.................................. 45
6.5 Brokers or Finders................................. 45
6.6 Indemnification.................................... 46
6.7 Best Efforts; Notification......................... 46
6.8 Conduct of Business of Sub......................... 47
6.9 Publicity.......................................... 47
6.10 Benefit Plans...................................... 47
6.11 State Takeover Statutes............................ 48
6.12 Warrants........................................... 48
6.13 FCC Matters........................................ 48
6.14 Issuance of Shares................................. 50
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation
to Effect the Merger............................. 50
(a) Stockholder Approval......................... 51
(b) HSR Act...................................... 51
(c) No Injunctions or Restraints................. 51
(d) FCC Approvals and Applications............... 51
7.2 Conditions of Obligations of Parent and Sub........ 51
(a) Payment for Shares........................... 51
(b) Representations and Warranties............... 51
(c) Performance of Obligations of the Company.... 51
(d) Consents, Etc................................ 52
(e) Other Approvals.............................. 52
(f) [Intentionally Omitted]...................... 52
(g) No Litigation................................ 52
iii
<PAGE>
(h) Options and Rights........................... 52
7.3 Conditions of Obligations of the Company........... 53
(a) Representations and Warranties............... 53
(b) Performance of Obligations of Parent and Sub. 53
(c) Government Approvals......................... 53
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination........................................ 53
8.2 Effect of Termination.............................. 55
8.3 Amendment.......................................... 55
8.4 Extension; Waiver.................................. 55
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations and Warranties...... 55
9.2 Notices............................................ 56
9.3 Interpretation..................................... 57
9.4 Counterparts....................................... 57
9.5 Entire Agreement; No Third Party
Beneficiaries; Rights of Ownership................. 57
9.6 Governing Law...................................... 57
9.7 No Remedy in Certain Circumstances................. 57
9.8 Assignment......................................... 57
9.9 Enforcement........................................ 58
SCHEDULES
4.1(a) Subsidiaries
4.1(b)(i) Restricted Stock Award Plan Shares
4.1(b)(ii)(A) Equity Purchase Rights
4.1(b)(ii)(B) Preferred Security Holders
4.1(b)(ii)(C) Company Voting Debt
4.1(b)(ii)(D) Contingent Payouts
4.1(b)(ii)(E) Incomplete Equity Purchase Rights
4.1(b)(iii)(A) Liens and Voting Restrictions with respect to
Subsidiary Stock
4.1(b)(iii)(B) Director Election Rights
4.1(b)(iv) Registration Rights
4.1(c)(ii) Conflicts
4.1(f) Compliance with Laws; Permits
4.1(g) Litigation
4.1(h) Tax Matters
iv
<PAGE>
4.1(i) Employee Benefit Matters
4.1(j) Certain Changes or Events
4.1(k) Undisclosed Material Liabilities
4.1(n) Labor Matters
4.1(o) Intangible Property
4.1(p) OSHA Complaints
4.1(q)(i) Owned Real Property
4.1(q)(ii) Leased Real Property
4.1(q)(iii) Liens on Real Property
4.1(q)(iv) Other Assets
4.1(r) Insurance
4.1(s) Material Contracts
4.1(t) Related Party Transactions
4.1(u) Liens
4.1(v) Fees
4.1(w) Excess Parachute Payments
4.1(y) Pending and Proposed Transactions
5.1(c) Securities to be Issued
5.1(g) Permitted Dispositions
5.1(k) Employee Matters
5.1(o) Capital Expenditures
v
<PAGE>
Glossary of Defined Terms
Defined Terms Defined in Section
- ------------- ------------------
Acquisition Proposal.................................................5.1(e)
Agreement..........................................................preamble
Alex Brown..............................................................1.3
At-Will Employment Agreement.........................................4.1(j)
Balance Sheet.....................................................4.1(q)(i)
Board Percentage........................................................1.4
CERCLA...............................................................4.1(p)
Certificate of Merger...................................................2.3
Certificates.........................................................3.3(b)
Closing.................................................................2.2
Closing Date............................................................2.2
Code............ ...................................................3.3(e)
Company............................................................preamble
Company Common Stock...............................................preamble
Company Employee Benefit Plans....................................4.1(i)(i)
Company ERISA Affiliate...........................................4.1(i)(i)
Company Intangible Property.......................................4.1(o)(i)
Company Intangible Property Licenses............................4.1(o)(iii)
Company Litigation...................................................4.1(g)
Company Order........................................................4.1(g)
Company Pension Plans.............................................4.1(i)(i)
Company Permits......................................................4.1(f)
Company SEC Documents................................................4.1(d)
Company Stockholder Approval....................................4.1(c)(iii)
Company Stockholders Meeting.........................................6.1(b)
Company Voting Debt..............................................4.1(b)(ii)
Confidentiality Agreement...............................................6.2
Constituent Corporations................................................2.1
Control Group..........................................................6.13
DGCL....................................................................2.2
Dissenting Shares.......................................................3.6
Dormant Subsidiary...................................................4.1(a)
Effective Time..........................................................2.3
Employee Options.....................................................3.5(a)
Equity Purchase Rights...............................................3.5(d)
ERISA.............................................................4.1(i)(i)
ERISA Affiliate...................................................4.1(i)(i)
Exchange Act............................................................1.1
FCC.............................................................6.13(a)(ii)
vi
<PAGE>
Foreign Plan......................................................4.1(i)(i)
GAAP............ ...................................................4.1(d)
Governmental Entity.............................................4.1(c)(iii)
HSR Act.........................................................4.1(c)(iii)
Indebtedness.........................................................4.1(s)
Indemnified Parties.....................................................6.6
Injunction...........................................................7.1(c)
IRS..................................................................4.1(h)
Laws.............................................................4.1(c)(ii)
Legal Proceedings ..............................................4.1(p)(xii)
Material Adverse Effect..............................................4.1(a)
Merger.............................................................preamble
Merger Consideration.................................................3.2(a)
Multiemployer Plans...............................................4.1(i)(i)
Multiple Employer Plans...........................................4.1(i)(i)
OSHA...........................................................4.1(p)(i)(A)
Offer................................................................1.1(a)
Offer Consideration..................................................1.1(a)
Offer Documents.........................................................1.2
Options..............................................................3.5(a)
Option/Warrant Consideration.........................................3.5(a)
Other Options........................................................3.5(a)
Parent.............................................................preamble
Paying Agent.........................................................3.3(a)
Payment Fund.........................................................3.3(a)
PBGC............ ...............................................4.1(i)(iv)
Person...............................................................3.3(b)
Preferred Security...................................................3.5(c)
Preferred Stock......................................................4.1(b)
Permitted Investments................................................3.3(a)
Proxy Statement.................................................4.1(c)(iii)
Real Property Leases.............................................4.1(q)(ii)
Right................................................................3.5(b)
Rights Consideration.................................................3.5(b)
SEC..................................................................1.1(b)
Schedule 14D-1..........................................................1.2
Schedule 14D-9..........................................................1.3
Second-Step Merger.................................................preamble
Securities Act...................................................4.1(b)(iv)
Shares.............................................................preamble
Stock Option Plans...................................................3.5(a)
Stockholders Agreement.............................................preamble
Sub................................................................preamble
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Subordinated Debenture...............................................3.5(c)
Subsidiary...........................................................3.1(b)
Superior Proposal ..............................................5.1(e)(iii)
Surviving Corporation...................................................2.1
Terminated Pension Plans..........................................4.1(i)(i)
Violation........................................................4.1(c)(ii)
Warrants..........................................................4.1(b)(i)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated May 20, 1996 (the
"Agreement"), among GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
("Parent"), GAC Acquisition I Corp., a Delaware corporation and an indirect,
wholly-owned subsidiary of Parent ("Sub"), and AMERIDATA TECHNOLOGIES, INC., a
Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have unanimously approved the acquisition of the Company by Parent,
by means of the merger of Sub with and into the Company (the "Merger"), upon the
terms and subject to the conditions set forth in the Agreement;
WHEREAS, to effectuate the acquisition, Parent and the Company
each desires that Parent cause Sub to commence a cash tender offer to purchase
all of the outstanding shares of common stock, par value $.01 per share, of the
Company ("Shares" or "Company Common Stock"), upon the terms and subject to the
conditions set forth in this Agreement and the Offer Documents (as defined in
Section 1.2), and the Board of Directors of the Company has unanimously approved
such tender offer and is recommending to its stockholders that they accept the
tender offer and tender their shares of Company Common Stock pursuant thereto;
and
WHEREAS, Parent and Sub are unwilling to enter into this
Agreement (and effect the transactions contemplated hereby) unless,
contemporaneously with the execution and delivery hereof, certain beneficial and
record holders of the Company Common Stock enter into agreements (collectively,
the "Stockholders Agreement") providing for certain matters with respect to
their Shares, the tender of their Shares and certain other actions relating to
the Offer (as defined in Section 1.1) and the other transactions contemplated by
this Agreement, and in order to induce Parent and Sub to enter into this
Agreement, the Company has approved the execution and delivery of the
Stockholders Agreement, and such stockholders have agreed to execute and deliver
the Stockholders Agreement; and
WHEREAS, it is currently contemplated that immediately
following the consummation of the Merger, the Company will be merged with and
into GAC Acquisition II Corp., a Delaware corporation and a direct, wholly-owned
subsidiary of Parent ("Sub II"), with Sub II continuing as the surviving
corporation (the "Second-Step Merger" and, together with the Merger, the
"Acquisition Mergers");
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to consummation
thereof;
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NOW, THEREFORE, in consideration of the foregoing and the
mutual premises, representations, warranties, covenants and agreements herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
ARTICLE I
THE OFFER
1.1 The Offer. (a) Provided that this Agreement shall not have
been terminated pursuant to Article VIII and none of the events set forth in
Exhibit A hereto shall have occurred and be continuing, as promptly as
practicable (but in any event not later than five business days after the public
announcement of the execution and delivery of this Agreement), Parent shall
cause Sub to commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), an offer to purchase
(the "Offer") all outstanding shares of the Company Common Stock at a price of
$16.00 per share, net to the seller in cash (the "Offer Consideration"). The
obligation of Parent and Sub to commence the Offer, consummate the Offer, accept
for payment and to pay for shares of Company Common Stock validly tendered in
the Offer and not withdrawn shall be subject to those conditions set forth in
Exhibit A hereto, including the condition that a number of Shares representing a
majority of all outstanding Shares on a fully-diluted basis shall have been
validly tendered and not withdrawn prior to the expiration of the Offer.
(b) Sub expressly reserves the right to increase the price per
share payable in the Offer or to make any other changes in the terms and
conditions of the Offer, except that without the prior written consent of the
Company, Sub shall not (i) decrease or change the form of the Offer
Consideration or decrease the number of Shares sought pursuant to the Offer,
(ii) impose additional conditions to the Offer, (iii) extend the expiration date
of the Offer (except as required by law or the applicable rules and regulations
of the SEC and except that Sub may extend the expiration date of the Offer (x)
for up to twenty (20) business days after the initial expiration date or (y) for
longer periods (not to exceed 120 calendar days from the date of commencement)
in the event that any condition to the Offer is not satisfied), or (iv) amend
any term of the Offer in any manner adverse to holders of shares of Company
Common Stock; provided, however, that, except as set forth above, Sub may waive
any condition to the Offer in its sole discretion; and provided further, that
the Offer may be extended in connection with an increase in the consideration to
be paid pursuant to the Offer so as to comply with applicable rules and
regulations of the United States Securities and Exchange Commission (the
"SEC"). Assuming the prior satisfaction or waiver of the conditions to the
Offer, Sub shall accept for payment, and pay for, in accordance with the terms
of the Offer, all shares of Company Common Stock validly tendered and not
withdrawn pursuant to the Offer as soon as practicable after the expiration date
thereof.
1.2 Offer Documents. On the date of commencement of the Offer,
Parent and Sub shall file or cause to be filed with the SEC a Tender Offer
Statement on Schedule
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14D-1 (the "Schedule 14D-1") with respect to the Offer which shall contain the
offer to purchase and related letter of transmittal (such Schedule 14D-1, letter
of transmittal and other ancillary Offer documents and instruments pursuant to
which the Offer will be made, together with any supplements or amendments
thereto, the "Offer Documents") and shall contain (or shall be amended in a
timely manner to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable law, and shall conform in all material
respects with the requirements of the Exchange Act and any other applicable law;
provided, however, that no agreement or representation hereby is made or shall
be made by Parent or Sub with respect to information supplied by the Company in
writing expressly for inclusion in, or with respect to Company information
derived from the Company's public SEC filings which is included or incorporated
by reference in, the Offer Documents. Parent, Sub and the Company each agrees
promptly to correct any information provided by them for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect and Sub further agrees to take all lawful action necessary
to cause the Offer Documents as so corrected to be filed promptly with the SEC
and to be disseminated to holders of Company Common Stock, in each case as and
to the extent required by applicable law. The Company and its counsel shall be
given the opportunity to review and comment upon the Offer Documents to be filed
with the SEC prior to any such filing.
1.3 Company Actions. The Company hereby approves of and
consents to the Offer and represents and warrants that (a) the Company's Board
of Directors (at a meeting duly called and held) has (i) unanimously determined
that each of this Agreement and the transactions contemplated hereby, including
the Offer and the Merger, are fair to and in the best interests of the Company
and its stockholders, (ii) approved this Agreement, the Stockholders Agreement
and the transactions contemplated hereby and thereby, including the Offer and
the Merger, (iii) resolved to elect not to be subject to any state takeover law
that is or purports to be applicable to the Offer, the Merger or the
transactions contemplated by this Agreement or the Stockholders Agreement, (iv)
taken all steps necessary to render Section 203 of the DGCL inapplicable to this
Agreement, the Stockholders Agreement, and the transactions contemplated hereby
and thereby, including the Offer and the Merger and (v) subject to the fiduciary
duties of the Board of Directors applicable from time to time, resolved to
recommend that the holders of the Company Common Stock (the "Stockholders")
accept the Offer and tender all of their Shares pursuant thereto and approve the
Merger, and (b) Alex. Brown & Sons Incorporated ("Alex Brown") has delivered to
the Board of Directors of the Company its written opinion that the Offer
Consideration to be received by the holders of Company Common Stock in the Offer
and the Merger as contemplated in this Agreement is fair, from a financial point
of view, to such holders. The Company hereby consents to the inclusion in the
Offer Documents of the recommendation referred to in this Section 1.3. The
Company hereby agrees to file with the SEC simultaneously with the filing by
Parent and Sub of the Schedule 14D-1, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9") containing such recommendations of the Board of Directors of
the Company in favor of the Offer and
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the Merger and otherwise complying with Rule 14d-9 under the Exchange Act. The
Company covenants that the Schedule 14D-9 shall comply in all material respects
with the Exchange Act and any other applicable law and shall contain (or shall
be amended in a timely manner to contain) all information which is required to
be included therein in accordance with the Exchange Act and the rules and
regulations thereunder and any other applicable law. The Company, Parent and Sub
each agree promptly to correct any information provided by them for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect and the Company further agrees to take all
lawful action necessary to cause the Schedule 14D-9 as so corrected to be filed
promptly with the SEC and disseminated to the holders of Company Common Stock,
in each case as and to the extent required by applicable law. Parent, Sub and
their counsel shall be given an opportunity to review and comment upon the
Schedule 14D-9 and any amendments thereto prior to the filing thereof with the
SEC. In connection with the Offer, the Company shall (or shall cause its
transfer agent to) promptly furnish Parent with mailing labels, security
position listings and all available listings or computer files containing the
names and addresses of the record holders of the Company Common Stock as of the
latest practicable date and shall furnish Parent with such information and
assistance (including updated lists of stockholders, mailing labels and lists of
security positions) as Parent or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of Company Common
Stock. Subject to the requirements of applicable law, and except for such
actions as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, Parent and Sub shall
hold in confidence the information contained in such labels and lists, shall use
such information only in connection with the Offer and the Merger, and, if this
Agreement is terminated in accordance with its terms, shall deliver promptly to
the Company (or destroy and certify to the Company the destruction of) all
copies of such information then in their possession.
1.4 Directors. (a) Promptly upon the purchase by Parent or any
of its Subsidiaries (including Sub) of such number of shares of Company Common
Stock which represents at least a majority of the outstanding shares of Company
Common Stock, and from time to time thereafter, Parent shall be entitled to
designate such number of directors (the "Parent's Designees"), rounded up to the
next whole number as will give Parent representation on the Board of Directors
of the Company equal to the product of (x) the number of directors on the Board
of Directors of the Company (giving effect to any increase in the number of
directors pursuant to this Section 1.4) and (y) the percentage that such number
of Shares so purchased bears to the aggregate number of Shares outstanding (such
number being, the "Board Percentage"), and the Company shall, subject to
Parent's having theretofore provided the Company with the information with
respect to Parent's Designees required pursuant to Section 14(f) of the Exchange
Act, promptly satisfy the Board Percentage by (i) increasing the size of the
Board of Directors of the Company or (ii) securing the resignations of such
number of directors as is necessary to enable Parent's Designees to be elected
to the Board of Directors of the Company (and the Company shall use its best
efforts to cause the then-remaining members of the Company's Board of Directors
to promptly so
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elect Parent's Designees). At the request of Parent, the Company shall take, at
the Company's expense, all lawful action necessary to effect any such election,
including, without limitation, mailing to the Company's stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, unless such information has previously been provided to
the Company's stockholders in the Schedule 14D-9.
(b) Following the election or appointment of Parent's
Designees pursuant to this Section 1.4 and prior to the Effective Time (as
defined in Section 2.3) of the Merger, any amendment or termination of this
Agreement, extension for the performance or waiver of the obligations or other
acts of Parent or Sub hereunder or waiver of the Company's rights hereunder
shall require the concurrence of a majority of directors of the Company then in
office who are directors on the date hereof and who voted to approve this
Agreement; provided that if there shall be no such directors, such actions may
be effected by majority vote of the entire Board of Directors of the Company.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Delaware General
Corporation Law (the "DGCL"), Sub shall be merged with and into the Company at
the Effective Time. At the Effective Time, the separate corporate existence of
Sub shall cease, and the Company shall continue as the surviving corporation and
an indirect wholly owned subsidiary of Parent (Sub and the Company are sometimes
hereinafter referred to as "Constituent Corporations" and, as the context
requires, the Company is sometimes hereinafter referred to as the "Surviving
Corporation"), and shall continue under the name "AMERIDATA TECHNOLOGIES, INC."
2.2 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., New York time, on the third business day following satisfaction or waiver
of the conditions set forth in Article VII (the "Closing Date"), at the offices
of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153,
unless another date, time or place is agreed to in writing by the parties
hereto.
2.3 Effective Time of the Merger. Subject to the provisions of
this Agreement, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, as provided in the DGCL, as soon as
practicable on or after the Closing Date. The Merger shall become effective upon
such filing or at such time thereafter as is provided in the Certificate of
Merger (the "Effective Time").
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2.4 Effects of the Merger. (a) The Merger shall have
the effects as set forth in the applicable provisions of the DGCL.
(b) The directors and the officers of Sub immediately prior to
the Effective Time shall, from and after the Effective Time, be the initial
directors and officers of the Surviving Corporation until their successors have
been duly elected or appointed and qualified, or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of the Sub immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation, until duly amended in accordance with the terms thereof
and the DGCL.
(d) The Bylaws of the Sub as in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by applicable law, the Certificate of
Incorporation or the Bylaws.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or the holder of any capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable shares of Common
Stock, par value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock and all other shares of capital stock of the
Company that are owned by the Company and all shares of Company Common Stock and
other shares of capital stock of the Company owned by Parent, Sub or any other
wholly-owned Subsidiary (as defined below) of Parent or the Company shall be
canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor. As used in this Agreement, the
word "Subsidiary", with respect to any party, means any corporation,
partnership, joint venture or other organization, whether incorporated or
unincorporated, of which: (i) such party or any other Subsidiary of such party
is a general partner; (ii) voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation, partnership, joint venture or other organization is held by such
party or by any one or more of
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its Subsidiaries, or by such party and any one or more of its Subsidiaries; or
(iii) at least 50% of the equity, other securities or other interests is,
directly or indirectly, owned or controlled by such party or by any one or more
of its Subsidiaries, or by such party and any one or more of its Subsidiaries.
3.2 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Sub, the Company or
the holders of any of the shares thereof:
(a) Subject to the other provisions of this Section 3.2, each
share of Company Common Stock issued and outstanding immediately prior to the
Effective Time (excluding shares owned, directly or indirectly, by the Company
or any wholly-owned Subsidiary of the Company or by Parent, Sub or any other
wholly-owned Subsidiary of Parent and excluding Dissenting Shares (as defined in
Section 3.6)) shall be converted into the right to receive the Offer
Consideration, payable to the holder thereof, without any interest thereon (the
"Merger Consideration"), upon surrender and exchange of the Certificates (as
defined in Section 3.3).
(b) All shares of Company Common Stock, when converted as
provided in Section 3.2(a), no longer shall be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
Certificate previously evidencing such Shares shall thereafter represent only
the right to receive the Merger Consideration. The holders of Certificates
previously evidencing Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to the Company Common Stock except
as otherwise provided herein or by law and, upon the surrender of Certificates
in accordance with the provisions of Section 3.3 (but subject to Section 3.6),
such certificates shall represent only the right to receive for their Shares the
Merger Consideration, without any interest thereon.
3.3 Payment for Shares. (a) Paying Agent. Prior to the
Effective Time, Sub shall appoint a United States bank or trust company selected
by Parent and reasonably acceptable to the Company to act as paying agent (the
"Paying Agent") for the payment of the Merger Consideration, and Parent shall
deposit or shall cause to be deposited with the Paying Agent in a separate fund
established for the benefit of the holders of shares of Company Common Stock,
for payment in accordance with this Article III, through the Paying Agent (the
"Payment Fund"), immediately available funds in amounts necessary to make the
payments pursuant to Section 3.2(a) and this Section 3.3 to holders of shares of
Company Common Stock (other than the Company or any wholly-owned Subsidiary of
the Company or Parent, Sub or any other wholly-owned Subsidiary of Parent, or
holders of Dissenting Shares). The Paying Agent shall, pursuant to irrevocable
instructions, pay the Merger Consideration out of the Payment Fund.
From time to time at or after the Effective Time, Parent shall
take all lawful action necessary to make or cause to be made the appropriate
cash payments, if any, to
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holders of Dissenting Shares. Prior to the Effective Time, Parent shall enter
into such appropriate commercial arrangements, if any, as may be necessary to
ensure effectuation of the immediately preceding sentence. The Paying Agent
shall invest portions of the Payment Fund as Parent directs in obligations of or
guaranteed by the United States of America, in commercial paper obligations
receiving the highest investment grade rating from both Moody's Investors
Services, Inc. and Standard & Poor's Corporation, or in certificates of deposit,
bank repurchase agreements or banker's acceptances of commercial banks with
capital exceeding $1,000,000,000 (collectively, "Permitted Investments");
provided, however, that the maturities of Permitted Investments shall be such as
to permit the Paying Agent to make prompt payment to former holders of Company
Common Stock entitled thereto as contemplated by this Section. All earnings on
Permitted Investments shall be paid to Parent. If for any reason (including
losses) the Payment Fund is inadequate to pay the amounts to which holders of
shares of Company Common Stock shall be entitled under this Section 3.3, Parent
shall promptly restore such amount of the inadequacy to the Payment Fund, and in
any event shall be liable for payment thereof. The Payment Fund shall not be
used for any purpose except as expressly provided in this Agreement.
(b) Payment Procedures. As soon as reasonably practicable
after the Effective Time, Parent shall instruct the Paying Agent to mail to each
holder of record (other than the Company or any wholly-owned Subsidiary of the
Company or Parent, Sub or any other wholly-owned Subsidiary of Parent) of a
Certificate or Certificates which, immediately prior to the Effective Time,
evidenced outstanding shares of Company Common Stock (the "Certificates"), (i) a
form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent, and shall be in such
form and have such other provisions as Parent reasonably may specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment therefor. Upon surrender of a Certificate for cancellation to the
Paying Agent together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in respect thereof cash
in an amount equal to the product of (x) the number of shares of Company Common
Stock represented by such Certificate and (y) the Merger Consideration, and the
Certificate so surrendered shall forthwith be canceled. No interest shall be
paid or accrued on the Merger Consideration payable upon the surrender of any
Certificate. If payment is to be made to a Person (as defined below) other than
the Person in whose name the surrendered Certificate is registered, it shall be
a condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the Person requesting
such payment shall pay any transfer or other taxes required by reason of the
payment to a Person other than the registered holder of the surrendered
Certificate or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until surrendered in accordance
with the provisions of this Section 3.3, after the Effective Time each
Certificate (other than Certificates representing Shares owned by the Company or
any wholly-owned Subsidiary of the Company or Parent, Sub or any other
wholly-owned Subsidiary of Parent)
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shall represent for all purposes only the right to receive the Merger
Consideration. For purposes of this Agreement, "Person" means an individual,
corporation, partnership, joint venture, association, trust, unincorporated
organization or other entity.
(c) Termination of Payment Fund; Interest. Any portion of the
Payment Fund which remains undistributed to the holders of Company Common Stock
for six months after the Effective Time shall be delivered to the Company, upon
demand, and any holders of Company Common Stock who have not theretofore
complied with this Article III and the instructions set forth in the letter of
transmittal mailed to such holder after the Effective Time shall thereafter look
only to the Company for payment of the Merger Consideration to which they are
entitled; provided that if, but only if, the Company shall have defaulted in its
obligation to make such payment within a reasonable period of time after receipt
of written request therefor from any such holder, such holder may thereafter
look to Parent for payment of the Merger Consideration to which they are
entitled. All interest accrued in respect of the Payment Fund shall inure to the
benefit of and be paid to Parent.
(d) No Liability. Neither Parent nor the Surviving Corporation
shall be liable to any holder of shares of Company Common Stock for any cash
from the Payment Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) Withholding Rights. Parent or the Company shall be
entitled to deduct and withhold, or cause the Paying Agent to deduct and
withhold, from the consideration otherwise payable pursuant to this Agreement to
any holder of Certificates such amounts as are required to be deducted and
withheld with respect to the making of such payment under the Internal Revenue
Code of 1986, as amended (the "Code"), or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld, (i) such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Certificates in respect of which such deduction and
withholding was made, and (ii) Parent or the Company shall provide, or cause the
Paying Agent to provide, to the holders of such Certificates written notice of
the amounts so deducted or withheld.
3.4 Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company.
3.5 Options, Warrants and Other Purchase Rights.
(a) After the Effective Time, each holder of (i) a then
outstanding option (collectively, the "Employee Options") to purchase Shares
under the Company's 1991 Stock Option Plan and the Option Agreements between the
Company and certain of its officers, directors, employees and consultants (the
"Stock Option Plans"), (ii) a Warrant (as defined in Section 4.1(b)), and (iii)
except as provided in Sections 3.5(b) and (c) below, any other
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option, warrant or other right to acquire (upon purchase, exchange, conversion
or otherwise) shares of Company Common Stock (collectively, the "Other Options"
and, together with the Employee Options, the "Options"), shall, upon exercise of
such Option or Warrant in accordance with its terms, be entitled to receive for
each Share subject to such Option or Warrant, in settlement and cancellation
thereof, an amount (subject to any applicable withholding tax) in cash equal to
the difference between the Offer Consideration and the per Share exercise price
of such Option or Warrant, as the case may be, to the extent such difference is
a positive number (such amount being hereinafter referred to as, the
"Option/Warrant Consideration"); provided, however, that with respect to any
Person subject to Section 16(a) of the Exchange Act, any such amount shall be
paid as soon as practicable after the first date payment can be made without
liability to such Person under Section 16(b) of the Exchange Act. The Company
represents and warrants to Parent and Sub that the Stock Option Plans have been
amended to the extent necessary to give effect to the foregoing. Upon receipt of
the related Option/Warrant Consideration, the Option or Warrant, as the case may
be, shall be canceled. The surrender of an Option or Warrant to the Company in
exchange for the Option/Warrant Consideration shall be deemed a release of any
and all rights the holder had or may have had in respect of such Option or
Warrant.
(b) At the Effective Time, each holder of a right to purchase
Shares under the Company's 1991 Stock Purchase Plan (the "Stock Purchase Plan")
pursuant to any offering under the Stock Purchase Plan (a "Right"), whether or
not then exercisable, shall, in settlement and cancellation thereof, receive for
such Right an amount (subject to any applicable withholding tax) in cash (such
amount being hereinafter referred to as the "Rights Consideration") equal to the
sum of (i) the product of such holder's Accrued Shares (as defined below) with
respect to such offering times the difference between (A) the Offer
Consideration and (B) the lower of (I) 85% of the fair market value of the
Company Common Stock on the effective date of the related offering under the
Stock Purchase Plan (determined in accordance with the Stock Purchase Plan) and
(II) 85% of the fair market value of the Company Common Stock on the date
immediately prior to the public announcement of the Offer (such lower amount
with respect to an offering, the "Applicable Per Share Price"), to the extent
such difference is a positive number, plus (ii) an amount equal to the aggregate
amount in such holder's payroll deduction account with the Company with respect
to such offering at the Effective Time (the "Related Deduction Account Amount");
provided, however, that with respect to any Person subject to Section 16(a) of
the Exchange Act, any such amount shall be paid as soon as practicable after the
first date payment can be made without liability to such Person under Section
16(b) of the Exchange Act. Upon receipt of the related Rights Consideration, the
Right shall be canceled and such receipt shall be deemed a release of any and
all rights the holder had or may have had in respect of such Right. The "Accrued
Shares" of a holder of a Right with respect to any offering under the Stock
Purchase Plan shall mean the amount obtained by dividing (I) the Related
Deduction Account Amount with respect to such offering by (II) the Applicable
Per Share Price with respect to such offering, rounded up to the next whole
share. The Company
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represents and warrants to the Parent and Sub that the Stock Purchase Plan has
been amended to give effect to the foregoing.
(c) After the Effective Time, each holder of an 8% Convertible
Subordinated Debenture due 2003 of the Company (a "Subordinated Debenture")
shall be entitled to receive, upon conversion thereof in accordance with the
terms thereof, in settlement and cancellation thereof, solely an amount (subject
to any applicable withholding tax) in cash equal to the amount receivable upon
the consummation of the Merger by a holder of that number of shares of Company
Common Stock into which the Subordinated Debentures of such holder were
convertible immediately prior to the Merger. The foregoing shall apply whether
such conversion of the Subordinated Debenture occurs upon conversion of any of
the 8% Convertible Fixed Life Aggregated Securities (each, a "Preferred
Security") in accordance with the terms thereof or otherwise. The Company
represents and warrants to Parent and Sub that the Subordinated Debenture and
the Preferred Securities provide, by their terms, for the foregoing.
(d) Prior to the Effective Time, the Company shall use its
commercially reasonable efforts to obtain all necessary consents or releases
from holders of Options, Warrants, Rights, Preferred Securities and Subordinated
Debentures (collectively, the "Equity Purchase Rights") and shall take all such
other lawful action as may be necessary to give effect to the transactions
contemplated by this Section 3.5. Prior to the Effective Time, the Company shall
(i) terminate the Stock Option Plans and Stock Purchase Plan without liability
to the Company or the Surviving Company (other than as contemplated by this
Section 3.5) as of the Effective Time and terminate or cancel as of the
Effective Time the provisions in any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any Subsidiary thereof and (ii) take all action
reasonably necessary to ensure that following the Effective Time no holder of
any Equity Purchase Right or participant in any other plan, program or
arrangement shall have any right thereunder to acquire equity securities of the
Company, the Surviving Corporation or any Subsidiary thereof. The Company shall
take such steps as are reasonably necessary to satisfy Parent that no holder of
an Equity Purchase Right will have the right to acquire any stock or other
interest in the Company, the Surviving Corporation or any Subsidiary thereof as
a result of such Equity Purchase Right on or after the Effective Time.
3.6 Dissenting Shares. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Company Common Stock that are
outstanding immediately prior to the Effective Time and which are held by
stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal for
such shares in accordance with Section 262 of the DGCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such shares instead shall, from and after the
Effective Time, represent only the right to receive payment of the appraised
value of such shares of Company Common Stock held by them in accordance with the
provisions of such Section
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262, except that all Dissenting Shares held by stockholders who shall have
failed to perfect or who effectively shall have withdrawn or lost their rights
to appraisal of such shares of Company Common Stock under such Section 262 shall
thereupon be deemed to have been converted into and to have become exchangeable,
as of the Effective Time, for the right to receive, without any interest
thereon, the Merger Consideration upon surrender, in the manner provided in
Section 3.3, of the Certificate or Certificates that, immediately prior to the
Effective Time, evidenced such shares of Company Common Stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The
Company represents and warrants to Parent and Sub as follows:
(a) Organization, Standing and Power. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, and is duly qualified and in good
standing to conduct business in each jurisdiction in which the business it is
conducting, or the operation, ownership or leasing of its properties, makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify could not reasonably be expected to have a Material Adverse Effect
(as defined below) with respect to the Company. The Company has heretofore made
available to Parent complete and correct copies of its and its Subsidiaries'
respective Certificates of Incorporation and Bylaws. All Subsidiaries of the
Company (other than those that do not have, and have not since January 1, 1996,
had, any business operations or any significant assets or liabilities,
contingent or otherwise (each, a "Dormant Subsidiary")), and their respective
jurisdictions of incorporation or organization are identified on Schedule
4.1(a). As used in this Agreement, a "Material Adverse Effect" shall mean, with
respect to any party, the result of one or more events, changes or effects
which, individually or in the aggregate, would have a material adverse effect on
the business, operations, assets, condition (financial or otherwise) or
prospects of such party and its Subsidiaries, taken as a whole.
(b) Capital Structure. (i) The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock and 10,000,000
shares of preferred stock, $.01 par value ("Preferred Stock"). As of the date of
this Agreement, (A) 22,281,302 shares of Company Common Stock (excluding (I)
64,550 shares of Company Common Stock to be issued pursuant to the Company's
Restricted Stock Award Plan and held in custody by the Company for participants'
accounts and (II) 113,732 shares of Company Common Stock to be issued pursuant
to the Asset Purchase Agreement, dated April 3, 1995, among AmeriData of Texas,
Inc., AmeriData Technologies, MicroComputer Power, Inc., MicroComputer Power of
Virginia, Inc., MicroComputer Power of Texas, Inc., Debra Wexler
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and Victor Grinshtein (the "MCP Shares")) and no shares of Preferred Stock were
issued and outstanding, (B) 2,310,512 shares of Company Common Stock were
reserved for issuance pursuant to the Stock Option Plans, (C) 1,458,041 shares
of Company Common Stock were reserved for issuance pursuant to the Stock
Purchase Plan, (D) 3,521,576 shares were reserved for issuance upon conversion
of the Subordinated Debentures, (E) 2,418,737 Shares were reserved for issuance
pursuant to the warrants listed on Schedule 4.1(b)(ii)(A) hereto under the
heading "Warrants" (the "Warrants"), and (F) 23,074 Shares were held by the
Company. Except as set forth above, as of the date of this Agreement no shares
of capital stock or other voting or equity securities of the Company were
issued, reserved for issuance or outstanding. Other than as set forth on
Schedule 4.1(b)(i), there are no Shares granted, allocated or otherwise awarded
under the Company's Restricted Stock Award Plan (whether subject to any
contingencies or otherwise) that are not already issued by the Company and
outstanding. The Subordinated Debenture is owned by AmeriData Delaware LLC.
(ii) Schedule 4.1(b)(ii)(A) sets forth, as of the
date hereof, a list of (A) each outstanding Employee Option, Other Option and
Warrant, the holder thereof, the date of grant, the number of such Options and
Warrants that are exercisable, the dates upon which such Other Options and
Warrants expire and the exercise prices applicable to such Options and Warrants,
(B) the aggregate number of Shares subject to Rights under the Stock Purchase
Plan with respect to each offering (as such term is used in the Stock Purchase
Plan) under the Stock Purchase Plan, the aggregate amount of each participant's
payroll deduction account with the Company with respect to each such offering,
the amount that is 85% of the fair market value of the Company Common Stock on
the effective date of each offering, and the date of the expiration of the
payroll deduction period (as defined in the Stock Purchase Plan) with respect to
each offering, and (C) each other right to acquire shares of Company Common
Stock pursuant to any other agreement or instrument (other than Preferred
Securities), describing such right and indicating the holder thereof. Schedule
4.1(b)(ii)(B) sets forth (x) the list provided by Continental Stock Transfer &
Trust Company, the Company's transfer agent, of the record holders of the
Preferred Securities, including the amount held by each such holder and (y) each
beneficial holder of Preferred Securities of which the Company is aware. Except
as set forth on Schedule 4.1(b)(ii)(E), the Company has provided to Parent true
and complete copies of all agreements or instruments evidencing each Equity
Purchase Right. Except as set forth on Schedule 4.1(b)(ii)(A) or Schedule
4.1(b)(ii)(C), there are (x) no employment, executive termination or other
agreements providing or which may provide, upon the occurrence of any
contingencies or otherwise, for the issuance of Shares at any time on or after
the date hereof, and (y) no bonds, debentures, notes or other instruments or
evidence of Indebtedness (as defined in Section 4.1(s)) having the right to vote
(or, other than the Subordinated Debentures, convertible into, or exercisable or
exchangeable for, securities having the right to vote) on any matters on which
the Company stockholders may vote ("Company Voting Debt") issued or outstanding.
There are no outstanding stock appreciation rights and, except as set forth on
Schedule 4.1(b)(ii)(D), there are no other outstanding contractual rights the
value of which is derived from the financial performance of the Company or any
of its Subsidiaries or the value of shares of Company Common Stock. All
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rights granted pursuant to Article III of that certain Asset Purchase Agreement,
dated September 9, 1994, among the Company, Mobile Systems Integration, Inc.,
the MSI Group, Inc. and the shareholders named therein (the "MSI Shareholders")
have been validly terminated in accordance with the terms of the MSI Agreement,
and none of the MSI shareholders currently have or will hereafter have any right
to any payment pursuant to Article III of the MSI Agreement.
(iii) All outstanding Shares are validly issued,
fully paid and nonassessable and are not subject to preemptive or other similar
rights. Except as set forth on Schedule 4.1(b)(iii)(A), all outstanding shares
of capital stock of the Subsidiaries of the Company are owned by the Company or
a direct or indirect Subsidiary of the Company, free and clear of all liens,
charges, encumbrances, claims and options of any nature. Except for the Equity
Purchase Rights set forth on Schedule 4.1(b)(ii)(A) and except for changes since
the date hereof resulting from the exercise of Equity Purchase Rights set forth
on Schedule 4.1(b)(ii)(A), there are outstanding: (A) no shares of capital
stock, Company Voting Debt or other voting or equity securities of the Company,
other than the outstanding Shares referred to in Section 4.1(b)(i); (B) no
securities of the Company or any Subsidiary of the Company convertible into, or
exchangeable or exercisable for (or which may in the future be convertible into
or exchangeable or exercisable for), shares of capital stock, Company Voting
Debt or other voting or equity securities of the Company or any Subsidiary of
the Company; and (C) no options, warrants, calls, rights (including preemptive
rights), commitments or agreements to which the Company or any Subsidiary of the
Company is a party or by which it is bound, in any case obligating (or which may
in the future obligate) the Company or any Subsidiary of the Company to issue,
deliver, sell, purchase, redeem or acquire, or cause to be issued, delivered,
sold, purchased, redeemed or acquired, additional shares of capital stock or any
Company Voting Debt or other voting or equity securities of the Company or of
any Subsidiary of the Company, or obligating the Company or any Subsidiary of
the Company to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement. Except for the Stockholders Agreement, there are
not as of the date hereof and there will not be at the Effective Time any
stockholder agreements, voting trusts or other agreements or understandings to
which the Company is a party or by which it is bound relating to the voting or
disposition of any shares of the capital stock of the Company (including any
such agreements or understandings that may limit in any way the solicitation of
proxies by or on behalf of the Company from, or the casting of votes by, the
stockholders of the Company with respect to the Merger) or, except as set forth
on Schedule 4.1(b)(iii)(B), granting to any Person or group of Persons the right
to elect, or to designate or nominate for election, a director to the Board of
Directors of the Company. There are no restrictions on the Company's right or
ability to vote the stock of any of its Subsidiaries.
(iv) Set forth on Schedule 4.1(b)(iv) is a true and complete
list of all agreements or other obligations of the Company or any of its
Subsidiaries requiring the Company or any Subsidiary to register, under the
Securities Act of 1933, as amended (the "Securities Act"), any capital stock,
warrants, options, or other debt or equity securities of the
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Company or any of its Subsidiaries, including incidental registration rights
exercisable by any Person only upon the filing by the Company of a registration
statement (whether on its behalf or on behalf of any other security holder), in
each case indicating the securities so required to be registered, the Persons to
whom such registration rights were granted, the duration of the obligation to
register and maintain effective registration of such securities, and whether
such registration rights, by their terms, continue after the consummation of the
Merger. Except as set forth on Schedule 4.1(b)(iv), neither the Company nor any
of its Subsidiaries has any agreement or other obligation requiring the Company
or any Subsidiary to so register any such securities.
(v) Immediately following the Effective Time no holder of an
Equity Purchase Right or other Person (other than Parent or Sub) shall have any
right, contingent or otherwise, to acquire any capital stock of the Company or
any of its Subsidiaries.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and
authority to enter into this Agreement and the Stockholders Agreement and,
subject, if required with respect to consummation of the Merger, to the Company
Stockholder Approval (as defined in Section 4.1(c)(iii)), to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Stockholders Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company, subject, if required with
respect to consummation of the Merger, to the Company Stockholder Approval. Each
of this Agreement and the Stockholders Agreement has been duly executed and
delivered by the Company and, assuming that such agreement constitutes the valid
and binding agreement of Parent and Sub, constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms except that the enforcement hereof may be limited by (A) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity).
(ii) The execution and delivery of this Agreement and the
Stockholders Agreement and the consummation of the transactions contemplated
hereby (including, without limitation, the Second-Step Merger) and thereby will
not conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation, enhancement or acceleration of any obligation or the loss of a
material benefit under, or give rise to the creation of a lien, pledge, security
interest or other encumbrance on assets or property, or any right of first
refusal with respect to any asset or property (any such conflict, violation,
default, right of termination, cancellation, enhancement or acceleration, loss,
creation or right of first refusal, a "Violation"), pursuant to (A) any
provision of the Certificate of Incorporation or Bylaws of the Company or any of
its
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Subsidiaries, (B) except as set forth on Schedule 4.1(c)(ii) hereto, any loan or
credit agreement, note, mortgage, indenture, lease, Company Employee Benefit
Plan (as defined in Section 4.1(i)) or other agreement, obligation, instrument,
Company Permit (as defined in Section 4.1(f)), concession, franchise or license
to which the Company or any of its Subsidiaries is a party or by which it or any
of its properties or assets are bound, or (C) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in paragraph
(iii) of this Section 4.1(c) are duly and timely obtained or made and, if
required, the Company Stockholder Approval is obtained, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company or
any of its Subsidiaries or their respective properties or assets (collectively,
"Laws"), other than, in the case of clauses (B) and (C) of this Section
4.1(c)(ii), any such conflicts, violations, defaults, rights or liens that
individually or in the aggregate could not reasonably be expected to (W) have a
Material Adverse Effect with respect to the Company, (X) impair in any material
respect the ability of the Company to perform its obligations under this
Agreement, (Y) prevent or impede the consummation of any of the transactions
contemplated by this Agreement or (Z) result in any payment or repurchase
obligation (or the loss of any benefit or right having a value) exceeding,
individually or in the aggregate, $10,000,000.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is required by
or with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby (including, without
limitation, the Second-Step Merger), except for: (A) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and the
expiration or termination of the applicable waiting period thereunder; (B) the
filing with the SEC of (1), if required by applicable law, a proxy or
information statement in definitive form relating to a meeting of the holders of
Company Common Stock to approve the Merger ("Company Stockholder Approval")
(such proxy or information statement as amended or supplemented from time to
time, together with the letter to stockholders, notice of meeting, and form of
proxy, being hereinafter collectively referred to as the "Proxy Statement"), (2)
the Schedule 14D-9 in connection with the Offer, and (3) such reports under and
such other compliance with the Exchange Act and the rules and regulations
thereunder, as may be required in connection with this Agreement and the
transactions contemplated hereby; (C) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware; (D) such filings, consents
and approvals as may be required pursuant to (i) the Competition Act (Canada),
(ii) the Federal Law on Economic Competition of Mexico and (iii) the Austrian
Cartel Act of 1988, as amended; and (E) the Pro Forma Application (as defined
below) shall have been filed with and granted by the Federal Communications
Commission.
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(d) SEC Documents; Financial Statements. The Company has made
available to Parent a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by the Company with
the SEC (the "Company SEC Documents") which are all the documents (other than
preliminary material) that the Company was required to file with the SEC. As of
their respective filing dates (or, in the case of registration statements, their
respective effective dates), the Company SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations thereunder. None of the Company SEC
Documents at the time filed (or in the case of registration statements, their
respective effective dates) contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company has heretofore delivered to Parent (i) the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
March 31, 1996, and (ii) the unaudited statements of consolidated liabilities
and stockholder's equity, consolidated operations and consolidated cash flows of
the Company and its Subsidiaries for the three months ended March 31, 1996 ((i)
and (ii) collectively, the "Interim Financial Statements"). The financial
statements of the Company included in the Company SEC Documents and the Interim
Financial Statements complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved ("GAAP") (except, in the case of
unaudited financial statements, as permitted by Rule 10-01 of Regulation S-X of
the SEC) and fairly present in all material respects in accordance with
applicable requirements of GAAP (subject, in the case of unaudited statements,
to normal, recurring adjustments, none of which will be material) the
consolidated financial position of the Company and its Subsidiaries as of their
respective dates and the consolidated results of operations and the consolidated
cash flows of the Company and its Subsidiaries for the periods presented
therein.
(e) Information Supplied. None of the information relating to
the Company and its Subsidiaries included in the Proxy Statement will, at the
time of (i) the mailing of the Proxy Statement or (ii) the meeting of the
stockholders to which the Proxy Statement relates or at the Effective Time, be
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder. None of the information relating to the Company and its affiliates
supplied in writing by the Company specifically for inclusion in the Offer
Documents will, at the respective times the Offer Documents are filed with the
SEC, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If at any time prior to the Effective Time the Company should
become aware of any event relating to the Company or any of its Subsidiaries
that is required by applicable law to be set forth in an amendment of,
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or supplement to, the Offer Documents, the Company shall promptly so inform the
Sub or the Parent and will furnish to the Sub or the Parent all information
relating to such event that is required under applicable law to be disclosed in
an amendment or supplement to the Offer Documents. The Schedule 14D-9 will
comply as to form in all material respects with the Exchange Act, and shall not,
when filed with the SEC, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that no agreement or
representation hereby is made or shall be made by the Company with respect to
information supplied by Parent or Sub in writing expressly for inclusion in the
Schedule 14D-9.
(f) Compliance with Applicable Laws. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "Company Permits"), except where the
failure to possess the same could not reasonably be expected to have a Material
Adverse Effect with respect to the Company. The Company and its Subsidiaries are
in all material respects in compliance with the terms of the Company Permits.
Except as disclosed on Schedule 4.1(f), the businesses of the Company and its
Subsidiaries are not being conducted (i) in violation of (A) any federal, state
or foreign anti-trust or competition Laws, (B) any federal, state or foreign
Laws regarding government procurement, or (C) the Foreign Corrupt Practices Act
of 1977, as amended (and the Company and its Subsidiaries are in compliance with
all such Laws), and (ii) in material violation of any other Laws (and the
Company and its Subsidiaries are in compliance in all material respects with all
such other Laws). To the knowledge of the Company, no investigation or review by
any Governmental Entity with respect to the Company or any of its Subsidiaries
is pending or threatened.
(g) Litigation. Except as disclosed in Schedule 4.1(g), (i)
there is no suit, action or proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company or any Subsidiary of the
Company ("Company Litigation"), (ii) the Company and its Subsidiaries have no
knowledge (after due inquiry) of any facts which are reasonably likely to give
rise to any Company Litigation, and (iii) there is no judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against the Company or any Subsidiary of the Company ("Company Order"), in each
case which, (A) involves a claim, or related claims arising out of the same
facts or circumstances, for amounts in excess of $1,000,000, (B) involves an
allegation of criminal misconduct or a violation of the Racketeer and Influenced
Corrupt Practices Act, as amended, (C) involves claims for equitable relief, (D)
involves claims made by the Company's ten largest customers and suppliers (based
upon the aggregate dollar amount of purchases made by such customer or from such
supplier during fiscal 1995), or (E) individually or in the aggregate, is
reasonably likely to (I) if adversely determined, result in a Material Adverse
Effect on the Company, (II) prevent, hinder or materially delay its ability to
consummate the transactions contemplated by or perform its obligations under
this Agreement (including the Acquisition Mergers) or (III)
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prevent the consummation of the transactions contemplated by this Agreement
(including the Acquisition Mergers).
(h) Taxes. The Company and each of its Subsidiaries have
timely filed all material tax returns required to be filed by such party (giving
effect to any valid extensions of time), have paid (or the Company has paid on
behalf of any such Subsidiary), or the Company has established an adequate
reserve for the payment of, all taxes required to be paid in respect of all
taxable periods of the Company and its Subsidiaries as to which the applicable
statute of limitations for assessment has not expired, and have properly
withheld and paid over to the appropriate taxing authorities all taxes required
to be so withheld and paid over. The most recent financial statements contained
in the Company SEC Documents filed prior to the date of this Agreement reflect
an adequate reserve for all taxes payable by the Company and its Subsidiaries
accrued through the date of such financial statements. All material deficiencies
for taxes which have been proposed, asserted or assessed against the Company or
any of its Subsidiaries have been fully paid, are reflected as a liability in
such financial statements in accordance with Statement of Financial Accounting
Standards No. 5, are being contested and an adequate reserve therefor has been
established and is reflected in such financial statements in accordance with
Statement of Financial Accounting Standards No. 5 or, to the extent set forth on
Schedule 4.1(h), the Company or such Subsidiary is entitled to indemnification
therefor. There are no liens for taxes (other than for current taxes not yet due
and payable) on the assets of the Company or its Subsidiaries. Except as set
forth on Schedule 4.1(h), no federal or state income tax returns of, or that
include, the Company or any of its Subsidiaries are under examination currently
by the United States Internal Revenue Service (the "IRS") or any state taxing
authority. Except as set forth on Schedule 4.1(h), no waiver of the statute of
limitations for the assessment of any tax against the Company or any of its
Subsidiaries has been granted and remains in effect. The Company has previously
delivered or made available to Parent true and complete copies of its federal
and state income tax returns for each of the taxable years ended December 31,
1993 through December 31, 1994. Except as set forth on Schedule 4.1(h), neither
the Company nor any of its Subsidiaries is a party to or bound by any agreement
providing for the allocation or sharing of taxes with any entity which is not,
either directly or indirectly, a Subsidiary of the Company. Except as set forth
on Schedule 4.1(h), neither the Company nor any of its Subsidiaries has (i)
filed a consent pursuant to or agreed to the application of Section 341(f) of
the Code, (ii) entered into a closing agreement pursuant to Section 7121 of the
Code or (iii) agreed to, or is required to make, any adjustments pursuant to
Section 481(a) of the Code which, in the case of items (ii) and (iii), has
continuing effect. The Company is not a "United States real property holding
corporation" as defined in Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code. For the purpose of
this Agreement, the term "tax" (and, with correlative meaning, the terms "taxes"
and "taxable") shall include all federal, state, local and foreign income,
profits, franchise, gross receipts, payroll, sales, employment, use, property,
capital, transactions, value-added, stamp, customs, withholding, excise and
other taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts.
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(i) Pension And Benefit Plans; ERISA.
(i) Schedule 4.1(i)(i) hereto contains a true and complete
list of (A) all "employee benefit plans", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and all
other employee benefit arrangements or payroll practices, including, without
limitation, severance pay, sick leave or other leave of absence, vacation or
holiday pay, salary continuation for disability, consulting, retirement,
deferred compensation, bonus or other incentive compensation, stock option,
award or purchase, hospitalization, medical insurance, life insurance and
scholarship or other educational assistance programs or agreements maintained by
the Company or any of its Subsidiaries or to which the Company or any of its
Subsidiaries contributed or is obligated to contribute thereunder other than
Foreign Plans (as defined below), "Multiemployer Plans" as defined in Section
4001(a)(3) of ERISA ("Multiemployer Plans") and terminated "Employee Benefit
Plans," as defined in Section 3(2) of ERISA, for which the Company or any of its
Subsidiaries or ERISA Affiliates (as defined below) have no further liability,
whether direct, contingent or otherwise ("Terminated Pension Plans")
(collectively, "Company Employee Benefit Plans"), and (B) all "employee pension
plans", as defined in Section 3(2) of ERISA maintained by the Company or any of
its Subsidiaries or any corporation, trade or business which is under common
control, or which is treated as a single employer with the Company under Section
414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") or to which the Company
or any of its Subsidiaries or any ERISA Affiliate contributed or is obligated to
contribute thereunder other than Multiemployer Plans, Foreign Plans or
Terminated Pension Plans ("Company Pension Plans"). Except as disclosed on
Schedule 4.1(i)(i), none of the Company Employee Benefit Plans or the Company
Pension Plans is or has been subject to Sections 4063 or 4064 of ERISA
("Multiple Employer Plans"). Except as disclosed in Schedule 4.1(i)(i), neither
the Company nor any of its Subsidiaries nor any ERISA Affiliate contributed to
or is obligated to contribute to any Multiemployer Plan. Except as disclosed in
Schedule 4.1(i)(i) or as required by Section 3.5 hereof, there has not been any
amendment in any material respect by the Company or any of its Subsidiaries of
any Company Employee Benefit Plan or Company Pension Plan since December 31,
1995. Except as disclosed on Schedule 4.1(i)(i), there are no Terminated Pension
Plans. For purposes of this Agreement, "Foreign Plan" means each employee
benefit plan, including any statutory benefit, maintained outside of the United
States primarily for the benefit of persons substantially all of whom are
nonresident aliens.
(ii) Except as disclosed on Schedule 4.1(i)(ii), the Company
Pension Plans intended to qualify under Section 401 of the Code so qualify and
the trusts maintained pursuant thereto are exempt from federal income taxation
under Section 501 of the Code, and nothing has occurred with respect to the
operation of the Company Pension Plans which could cause the loss of such
qualification or exemption or the imposition of any material liability (except
for benefits, insurance premiums or administrative expenses), penalty, or tax
under ERISA or the Code.
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(iii) All contributions required by law to have been made
under any of the Company Employee Benefit Plans or the Company Pension Plans to
any funds or trusts established thereunder or in connection therewith have been
made by the due date thereof (including any valid extension) and no accumulated
funding deficiencies (without regard to any waivers granted under Section 412 of
the Code) exist in any of the Company Employee Benefit Plans or the Company
Pension Plans subject to Section 412 of the Code.
(iv) Except as disclosed on Schedule 4.1(i)(iv), there is no
"amount of unfunded benefit liabilities" (as defined in Section 4001(a)(18) of
ERISA) in any of the Company Pension Plans which are subject to Title IV of
ERISA, as calculated in accordance with the actuarial assumptions used by the
Pension Benefit Guaranty Corporation (the "PBGC") to determine the level of
funding required in the event of the termination of such Company Pension Plan.
(v) Except as disclosed in Schedule 4.1(i)(v), there has been
no "reportable event" as that term is defined in Section 4043 of ERISA and the
regulations thereunder with respect to the Company Pension Plans subject to
Title IV of ERISA which would require the giving of notice or any event
requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA.
(vi) True, correct and complete copies of the following
documents, with respect to each of the Company Employee Benefit Plans and the
Company Pension Plans, have been made available or delivered by the Company to
Parent: (A) any plans and related trust documents, and amendments thereto, (B)
the most recent Form 5500 (with Schedules), (C) the most recent actuarial report
and valuation, (D) the most recent Internal Revenue Service determination
letter, (E) summary plan descriptions, (F) written descriptions of all material
non-written agreements relating to the Company Employee Benefit Plans and the
Company Pension Plans and (G) employment, consulting or individual compensation,
severance, deferred compensation or any similar agreement (and any amendments to
such agreements).
(vii) There are no pending actions, claims or lawsuits which
have been instituted or, to the knowledge of the Company or any of its
Subsidiaries, threatened against Company Employee Benefit Plans or the Company
Pension Plans, the assets of any of the trusts under such plans, the plan
sponsor, the plan administrator or any fiduciary of the Company Employee Benefit
Plans or the Company Pension Plans with respect to the operation of such plans
(other than routine benefit claims).
(viii) The Company Employee Benefit Plans and the Company
Pension Plans have been maintained and administered, in all material respects,
in accordance with their terms and with all provisions of ERISA (including
applicable regulations thereunder) and other applicable Federal and state law,
and neither the Company nor any of its Subsidiaries nor, to the Company's best
knowledge, any "party in interest" or "disqualified person" with
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respect to the Company Employee Benefit Plans and the Company Pension Plans has
engaged in a non-exempt "prohibited transaction" within the meaning of Section
4975 of the Code or Section 406 of ERISA.
(ix) None of the Company, any of its Subsidiaries or any
Company ERISA Affiliate has terminated any Company Pension Plan subject to Title
IV as to which there is any remaining liability, or incurred any outstanding
liability under Section 4062 of ERISA to the PBGC or to a trustee appointed
under Section 4042 of ERISA.
(x) Except as disclosed on Schedule 4.1(i)(x), none of the
Company Employee Benefit Plans provide for post-employment continuing health or
medical benefits or coverage for any participant or any beneficiary of a
participant except as may be required under Section 4980B of the Code, and at
the sole expense of the participant or the participant's beneficiary.
(xi) Except as disclosed on Schedule 4.1(i)(xi), none of the
Company, any of its Subsidiaries or any ERISA Affiliate has withdrawn in a
complete or partial withdrawal from any Multiemployer Plan prior to the
Effective Date, nor has any of them incurred any liability due to the
termination or reorganization of a Multiemployer Plan other than any such
withdrawal or liability as to which all liability has been fully satisfied.
(xii) None of the Company, any of its Subsidiaries, any ERISA
Affiliate or any organization to which the Company is a successor or parent
corporation within the meaning of Section 4069(b) of ERISA, has engaged in any
transaction within the meaning of Section 4069 of ERISA.
(xiii) Except as disclosed on Schedule 4.1(i)(xiii) or as
provided in Section 3.5 hereof, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (A)
result in any payment becoming due to any employee or group of employees of the
Company or any of its Subsidiaries, (B) increase any benefits otherwise payable
under any Company Employee Benefit Plan or Company Pension Plan or (C) result in
the acceleration of the time of payment or vesting of any such benefits.
(xiv) None of the Company or any of its Subsidiaries has any
contract, plan, or commitment, to create any additional Company Employee Benefit
Plan or Company Pension Plan or to modify any existing Company Employee Benefit
Plan or Company Pension Plan.
(xv) With respect to any period for which any contribution to
or in respect of any Company Employee Benefit Plan or Company Pension Plan is
not yet due or owing, the Company and each of its Subsidiaries has made due and
sufficient current accruals for such contributions and other payments in
accordance with GAAP and such current accruals
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through March 31, 1996 are duly and fully provided for in the Interim Financial
Statements of such entity for the period then ended.
(xvi) All Foreign Plans are duly registered where required by
all applicable laws, and any regulations thereunder, and no events have occurred
or conditions exist that could materially jeopardize such status. All Foreign
Plans are in material compliance and have been maintained and are properly
funded in accordance with their terms and applicable law in all material
respects. In the aggregate, there exists no unfunded actuarial liabilities or
solvency deficiencies with respect to Foreign Plans. Neither the Company nor any
of its Subsidiaries have removed any actuarial surplus nor has any surplus ever
been used to offset any contributions obligations of the Company or any of its
Subsidiaries under any Foreign Plan.
(j) Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed prior to the date of this Agreement or as set
forth on Schedule 4.1(j), since December 31, 1995, the business of the Company
has been carried on only in the ordinary and usual course and there has not been
(i) any change in its business, operations or financial condition which has
resulted in or reasonably could be expected to result in a Material Adverse
Effect with respect to the Company, (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to any capital stock
of the Company (except for cash distributions payable with respect to the
Preferred Securities in accordance with their present terms), (iii) any split,
combination or reclassification of any of the Company's capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, (iv) any
redemption, repurchase or other acquisition by the Company or any of its
Subsidiaries of any equity security of the Company, (v) other than with respect
to directors, officers and executive employees employed outside of the United
States, (A) any granting by the Company or any of its Subsidiaries to any
director, officer or executive employee of the Company or any of its
Subsidiaries of any increase in compensation, except in the ordinary course of
business consistent with prior practice, as disclosed in Schedule 4.1(j), or as
was required under employment agreements listed on Schedule 4.1(n)(i) hereto as
in effect as of December 31, 1995, (B) any granting by the Company or any of its
Subsidiaries to any such Person of any increase in severance or termination pay
or any agreement or commitment to increase severance or termination pay, except
(x) in the ordinary course of business consistent with past practice, (y) as was
required under employment, severance or termination agreements listed on
Schedule 4.1(n)(i) hereto as in effect as of December 31, 1995 or (z) as
disclosed in Schedule 4.1(j) or (C) any entry by the Company or any of its
Subsidiaries into any employment, severance or termination agreement with any
such Person, other than "at-will" employment agreements terminable by the
Company without penalty or cost at any time, with or without cause, on not more
than 30 days prior notice ("At-Will Employment Agreements") and providing for
total annual compensation (including salary and bonus) of less than $100,000,
(vi) any damage, destruction or loss, whether or not covered by insurance, that
has or reasonably could be expected to have a Material Adverse Effect with
respect to
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the Company, (vii) any change in accounting methods, principles or practices by
the Company, except insofar as may have been required by a change in GAAP or
(viii) any other event that would have required Parent's consent under Section
5.1 had this Agreement been in effect on and after December 31, 1995.
(k) No Undisclosed Material Liabilities. Except as set forth
in the Company SEC Documents filed prior to the date of this Agreement or in the
Interim Financial Statements, and except for liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
March 31, 1996 that are not in the aggregate material, neither the Company nor
any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by GAAP to be set
forth on a consolidated balance sheet of the Company and its Subsidiaries or in
the notes thereto. Except as specifically and individually set forth on Schedule
4.1(k) or the other schedules hereto (specific reference to which shall be made
on Schedule 4.1(k)), as of the date hereof, there are no liabilities of the
Company or any Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, that are reasonably likely to
have a Material Adverse Effect with respect to the Company, other than (i)
liabilities reflected on the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996 and the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 and (ii) liabilities under this Agreement. As
of the date hereof, there is no pending claim by any director or officer of the
Company or any of its Subsidiaries for indemnification by the Company or any of
its Subsidiaries, and no director or officer has indicated to the Company or any
of its Subsidiaries his or her intention to assert any such claim.
(l) Opinion of Financial Advisor. The Company has received the
opinion of Alex Brown dated May 20, 1996, to the effect that, as of the date
hereof, the Offer Consideration to be received by the holders of Company Common
Stock in the Offer and the Merger as contemplated in this Agreement is fair from
a financial point of view to such holders, a signed, true and complete copy of
which opinion has been delivered to Parent, and such opinion has not been
withdrawn or modified.
(m) Vote Required. In the event that Section 253 of the DGCL
is inapplicable and unavailable to effectuate the Merger, the affirmative vote
of the holders of a majority of the outstanding shares of Company Common Stock
is the only vote of the holders of any class or series of the Company's capital
stock or other securities necessary (under applicable law or otherwise) to
approve the Merger and this Agreement and the transactions contemplated hereby.
(n) Labor Matters.
(i) Except as set forth on Schedule 4.1(n)(i) hereto and other
than At-Will Employment Agreements, neither the Company nor any of its
Subsidiaries is a party to any
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employment, severance, consulting, change of control or other compensation
contracts or any indemnification agreements entered into in connection with any
employment or consulting arrangements (collectively, "Employment Agreements"),
or any labor or collective bargaining agreement, in each case involving
expenditures in excess of $100,000 annually. The Company has heretofore made
available to Parent true and complete copies of (A) the Employment Agreements
listed on Schedule 4.1(n)(i) and (B) the labor or collective bargaining
agreements listed on Schedule 4.1(n)(i), together with all amendments,
modifications, supplements and side letters affecting the duties, rights and
obligations of any party thereunder.
(ii) Except as set forth in Schedule 4.1(n)(ii), no employees
of the Company or any of its Subsidiaries are represented by any labor
organization; no labor organization or group of employees of the Company or any
of its Subsidiaries has made a pending demand for recognition or certification,
and, to the Company's knowledge, there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending
or threatened in writing to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority. To the
knowledge of the Company, there are no organizing activities involving the
Company or any of its Subsidiaries pending with any labor organization or group
of employees of the Company or any of its Subsidiaries.
(iii) Except as set forth on Schedule 4.1(n)(iii), there are
no unfair labor practice charges, grievances or complaints pending or, to the
Company's knowledge, threatened in writing by or on behalf of any employee or
group of employees of the Company or any of its Subsidiaries.
(iv) Except as set forth on Schedules 4.1(n)(iii) and
4.1(n)(iv) hereto, there are no complaints, charges or claims against the
Company or any of its Subsidiaries pending, or, to the Company's knowledge,
threatened in writing to be brought or filed, with any Governmental Entity or
arbitrator based on, arising out of, in connection with, or otherwise relating
to the employment or termination of employment of any individual by the Company
or any of its Subsidiaries.
(v) Except as set forth on Schedule 4.1(n)(v) hereto, the
Company and each of its Subsidiaries is in compliance with all laws and orders
relating to the employment of labor, including all such laws and orders relating
to wages, hours, collective bargaining, discrimination, civil rights, safety and
health workers' compensation and the collection and payment of withholding
and/or Social Security taxes and similar taxes except where the failure to so
comply, individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect with respect to the Company.
(vi) Notwithstanding the foregoing, the representations set
forth in clauses (i), (ii), (iii) and (iv) of this Section 4.1(n) shall not
apply to employees of the Company
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employed outside of the United States or any agreements or labor matters with
respect to such non-U.S. Persons.
(o) Intangible Property.
(i) Schedule 4.1(o) sets forth a list of all software utilized
by the Company or any of its Subsidiaries that is not owned by the Company or
any of its Subsidiaries (the "Third Party Software"), other than (A)
commercially available software and (B) software that has been developed by the
Company or such Subsidiaries for use by a customer of such company and that is
not otherwise utilized by the Company or any of its Subsidiaries in its
business. Each material trademark, trade name, patent, service mark, brand mark,
brand name, computer program, database, industrial design and copyright owned,
used or useful in connection with the operation of the businesses of each of the
Company and its Subsidiaries (collectively, the "Company Intangible Property")
is owned by the Company or its Subsidiaries free and clear of any and all liens,
claims or encumbrances. The use of the Company Intangible Property and the Third
Party Software by the Company or its Subsidiaries does not conflict with,
infringe upon, violate or interfere with or constitute an appropriation of any
right, title, interest or goodwill, including, without limitation, any
intellectual property right, trademark, trade name, patent, service mark, brand
mark, brand name, computer program, database, industrial design, copyright or
any pending application therefor of any other Person and there have been no
claims made and neither the Company nor any of its Subsidiaries has received any
notice of any claim or otherwise knows that any of the Company Intangible
Property is invalid or conflicts with the asserted rights of any other Person or
has not been used or enforced or has failed to be used or enforced in a manner
that would result in the abandonment, cancellation or unenforceability of any of
the Company Intangible Property.
(ii) Each of the Company and its Subsidiaries own or have a
right to use all Company Intangible Property and Third Party Software necessary
for the operation of its respective business and has not forfeited or otherwise
relinquished any Company Intangible Property or right to use Third Party
Software.
(iii) Each of the material licenses or other contracts
relating to the Company Intangible Property and Third Party Software
(collectively, the "Company Intangible Property Licenses") is in full force and
effect and is valid and enforceable in accordance with its terms, and there is
no default under any Company Intangible Property License either by the Company
or any of its Subsidiaries or, to the knowledge of the Company, by any other
party thereto.
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(p) Environmental Matters.
(i) For purposes of this Agreement:
(A) "Environmental Costs and Liabilities" means any
and all losses, liabilities, obligations, damages, fines,
penalties, judgments, actions, claims, costs and expenses
(including, without limitation, the reasonable fees,
disbursements and expenses of legal counsel, experts,
engineers and consultants and the costs of investigation and
feasibility studies and Remedial Action (as defined below))
arising from or under any Environmental Law (as defined below)
or any order, agreement or contract with any governmental
authority or other person;
(B) "Environmental Law" means any applicable
federal, state, local or foreign law (including common law),
statute, regulation, code, ordinance, rule, regulation,
governmental order or other legal requirement, and any
administrative interpretation thereof, regulating or
prohibiting Releases (as defined below) or threatened Releases
or pertaining to pollution or the protection of natural
resources, the environment and public and employee health and
safety including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42
U.S.C. ss. 9601 et seq.) ("CERCLA"), the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.),
the Clean Water Act (33 U.S.C. ss. 1251 et seq.), the Clean
Air Act (33 U.S.C. ss. 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. ss. 7401 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. ss. 136
et seq.), and the Occupational Safety and Health Act (29
U.S.C. ss. 651 et seq.) ("OSHA") and the regulations
promulgated pursuant thereto, as such laws have been and may
be amended or supplemented through the Closing Date;
(C) "Hazardous Material" means any substance,
material or waste which is regulated by any public or
governmental authority in the jurisdictions in which the
applicable party or its Subsidiaries conducts business, or the
United States, including, without limitation, any material or
substance or waste which is defined as a "hazardous waste,"
"hazardous material," "hazardous substance," "extremely
hazardous waste" or "restricted hazardous waste," "solid
waste," "contaminant," "toxic waste" or "toxic substance"
under any provision of any Environmental Law and shall also
include petroleum or any petroleum product;
(D) "Release" means any release, spill, effluent,
emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or
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migration of Hazardous Materials into any part of the indoor
or outdoor environment, including, but not limited to, any
property owned, operated or leased by the Company or any of
its Subsidiaries; and
(E) "Remedial Action" means all actions, including,
without limitation, any capital expenditures, required by a
governmental entity or required under any Environmental Law,
or voluntarily undertaken to (I) clean up, remove, remediate,
treat, or in any other way ameliorate or address any Hazardous
Materials in the indoor or outdoor environment, (II) prevent
the Release or threat of Release, or minimize the further
Release of any Hazardous Material so it does not endanger or
threaten to endanger natural resources, or the public health
or welfare of the indoor or outdoor environment, (III) perform
pre-remedial studies and investigations or post-remedial
monitoring and care pertaining or relating to a Release or
threat of Release, or (IV) bring the applicable party into
compliance with any Environmental Law.
(ii) The operations of the Company and its Subsidiaries have
been and, as of the Closing Date, will be, in compliance with all Environmental
Laws, except where the failure to so comply could not reasonably be expected to
result in the Company and its Subsidiaries incurring Environmental Costs and
Liabilities in excess of $250,000 individually or $750,000 in the aggregate with
respect to any of the operations of the Company or its Subsidiaries.
(iii) The Company and its Subsidiaries have obtained and will,
as of the Closing Date, maintain in full force and effect, and be in material
compliance with all material permits, licenses, authorizations or other
approvals required under applicable Environmental Laws for the continued
operations of their respective businesses, except where failure to possess or
comply could not reasonably be expected to result in the Company and its
Subsidiaries incurring Environmental Costs and Liabilities in excess of $250,000
individually or $750,000 in the aggregate or materially interfere with the
anticipated operations of the Company and its Subsidiaries.
(iv) The Company and its Subsidiaries are not subject to any
outstanding orders, agreements or contracts with any Governmental Entity or
other Person respecting (A) Environmental Laws, (B) Remedial Action or (C) any
Release or threatened Release and to the knowledge of the Company none are
threatened.
(v) The Company and its Subsidiaries have not received any
written communication alleging, with respect to any such party, the violation of
or liability under any Environmental Law, which could reasonably be expected to
result in material Environmental Costs and Liabilities.
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(vi) Neither the Company nor any of its Subsidiaries has any
contingent liability in connection with the Release of any Hazardous Material
(whether on-site or off-site) which would reasonably be likely to result in the
Company and its Subsidiaries incurring Environmental Costs and Liabilities in
excess of $250,000 individually or $750,000 in the aggregate.
(vii) There is not now, nor to the knowledge of the Company,
has there been on or in any property owned, operated or leased by the Company or
its Subsidiaries any of the following, the presence of which could reasonably be
expected to result, either individually or in the aggregate, in material
Environmental Costs and Liabilities: (A) any underground storage tanks or
surface impoundments, containing Hazardous Materials; (B) any
asbestos-containing materials; or (C) any polychlorinated biphenyls.
(viii) The Company has delivered to Parent copies of all
environmental investigations, studies, audits, tests, reviews and other
analyses, including soil and groundwater analysis, conducted by or on behalf of,
or that are in the possession custody or control of the Company or any of its
Subsidiaries, in relation to any site or facility owned or leased, at any time,
by the Company or any of its Subsidiaries (collectively the "Sites") or any of
their respective predecessors.
(ix) None of the Sites are subject to any statutory land use
regulation or prohibition under any Environmental Law or any law of any
Governmental Authority relating to the protection of wetlands, woodlands and the
like, which would prevent or significantly impair current or reasonably
anticipated use and development of the Site.
(x) Except as set forth on Schedule 4.1(p) hereto, there have
been no citations, notices or complaints issued to any of the Company or any
Subsidiary by the Occupational Safety and Health Administration or any state
occupational safety and health administration since January 1, 1992.
(xi) None of the operations of the Company or its Subsidiaries
or of any of their predecessors, or, to the knowledge of the Company, of any
owner of premises leased or operated by Company or any Subsidiary involves or
previously involved the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R. parts 260-270 or any
state, local or foreign equivalent and neither the Company nor any of its
Subsidiaries or any of their predecessors, nor any owner of premises leased or
operated by the Company or its Subsidiaries has filed any notice under federal,
state, local or foreign law indicating past or present treatment, storage, or
disposal of, or reporting a Release of, Hazardous Materials.
(xii) There are no judicial, administrative or arbitral
actions, suits, proceedings (public or private) or governmental proceedings
(collectively "Legal Proceedings") pending or, to the knowledge of the Company,
threatened against the Company
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<PAGE>
or its Subsidiaries and, to the knowledge of the Company, there is no
investigation pending or threatened, against the Company or its Subsidiaries
alleging the violation of or seeking to impose liabilities pursuant to any
Environmental Law, except for Legal Proceedings that do not or would not require
disclosure under rules and regulations of the Securities and Exchange Commission
and could not reasonably be expected to result in the Company and its
Subsidiaries incurring Environmental Costs and Liabilities in excess of $250,000
individually or $750,000 in the aggregate.
(xiii) The Company and its Subsidiaries have not caused or
suffered to occur any Release at, under, above, or within any real property
owned or leased by the Company or any Subsidiary.
(q) Real Property; Other Assets.
(i) Schedule 4.1(q)(i) sets forth all of the real property
owned in fee by the Company and its Subsidiaries (the "Owned Real Property").
Each of the Company and its Subsidiaries has good and marketable title to each
parcel of Owned Real Property free and clear of all mortgages, pledges, liens,
encumbrances and security interests, except (A) those reflected or reserved
against in the balance sheet of the Company dated as of December 31, 1995 (the
"Balance Sheet"), (B) taxes and general and special assessments not in default
and payable without penalty and interest, and (C) other liens, mortgages,
pledges, encumbrances and security interests which do not materially interfere
with the Company's use and enjoyment of the Owned Real Property or Leased Real
Property (as defined below), as applicable, or materially detract from or
diminish the value thereof and, if related to a dollar amount, are reflected on
the Balance Sheet (collectively "Permitted Liens").
(ii) Schedule 4.1(q)(ii) sets forth all leases, subleases and
other agreements (the "Real Property Leases") under which the Company or any of
its Subsidiaries uses or occupies or has the right to use or occupy, now or in
the future, any real property (the "Leased Real Property"). The Company has
heretofore delivered to Parent true, correct and complete copies of all Real
Property Leases (including all modifications, amendments and supplements
hereto). Each Real Property Lease is valid, binding and in full force and
effect, all rent and other sums and charges payable by the Company and its
Subsidiaries as tenants thereunder are current in all material respects, and no
termination event or condition or uncured default of a material nature on the
part of the Company or any such Subsidiary or, to the Company's knowledge, the
landlord, exists under any Real Property Lease. Each of the Company and its
Subsidiaries has a good and valid leasehold interest in each parcel of Leased
Real Property free and clear of all mortgages, pledges, liens, encumbrances and
security interests, except for Permitted Liens.
(iii) The Company or one of its Subsidiaries has good and
valid title to all its properties and assets, in each case free and clear of all
liens, except (A) such as are set forth in Schedule 4.1(q)(iii), (B) mechanics',
carriers', workmen's, repairmen's or other
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similar liens arising or incurred in the ordinary course of business, (C) liens
arising under conditional sales contracts and equipment leases with third
parties entered into in the ordinary course of business, (D) liens for taxes
which are not due and payable or which may thereafter be paid without penalty,
(E) liens which secure Indebtedness that is set forth on Schedule 4.1(s) and (F)
other imperfections of title or encumbrances, if any, which do not, individually
or in the aggregate, materially impair the continued use and operation of the
assets to which they relate in the business of the Company and its Subsidiaries
or materially impair the value of such assets. This paragraph (iii) does not
relate to interests in real property, such items being the subject of paragraph
(ii) above.
(iv) Except for its Subsidiaries or as set forth on Schedule
4.1(q)(iv), the Company does not own, directly or indirectly, through any
Subsidiaries or otherwise, any capital stock or other equity interests in any
corporation, partnership, limited liability company, joint venture or other
Person.
(r) Insurance. Set forth on Schedule 4.1(r) is a list of
insurance policies (including information on the premiums (other than premiums
with respect to any insurance policies maintained outside of the United States)
payable in connection therewith and the scope and amount of the coverage
provided thereunder) maintained by the Company or any of its Subsidiaries.
(s) Material Contracts. Set forth in Schedule 4.1(s) is a list
of (i) all loan or credit agreements, notes, bonds, mortgages, indentures and
other agreements and instruments pursuant to which any Indebtedness (as defined
below) of the Company or any of its Subsidiaries in a principal amount in excess
of $100,000 is outstanding or may be incurred, other than pursuant to
performance bonds, performance guarantees or letters of credit securing
performance granted in the ordinary course of business in each case for amounts
not exceeding $5,000,000, indicating (A) with respect to any term or fixed
loans, the respective principal amounts outstanding thereunder as of March 31,
1996, and (B) whether such Indebtedness is prepayable and any applicable
prepayment or similar penalties, (ii) all agreements of the Company or any of
its Subsidiaries involving annual payments in excess of $200,000 or aggregate
payments in excess of $500,000, other than agreements of the type referred to in
clause (iv) of this Section 4.1(s), (iii) (A) the twelve largest U.S. vendor
contracts (measured by dollar purchase amount) of the Company and its
Subsidiaries in the United States for fiscal 1995 and the name of each vendor
agreement pursuant to which the Company or any of its Subsidiaries is currently
making purchases in excess of $500,000 outside the United States; (iv) (A) all
domestic contracts for the delivery of goods or services pursuant to which the
Company and its Subsidiaries recognized revenues during fiscal 1995 of
$1,000,000 or more or, with respect to domestic contracts of AmeriData Computer
Rental Inc. or AmeriData Consulting, Inc., the top ten customers in fiscal year
1995 of each such Subsidiary, and (B) all foreign contracts pursuant to which
the Company or any of its Subsidiaries is receiving payments of $500,000 or
more, (v) all agreements ("Acquisition Agreements") pursuant to which the
Company or any of its Subsidiaries has acquired, or
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agreed to acquire, all or a substantial portion of the assets of or equity
interests in any corporation, partnership or other entity (or any Subsidiary,
division or business thereof), (vi) all agreements pursuant to which the Company
or any of its Subsidiaries has merged with or into, or agreed to merge with or
into, any other Person, (vii) all agreements pursuant to which the Company or
any of its Subsidiaries has disposed of, or agreed to dispose of, any business
or Subsidiary or all or a substantial portion of the assets of any business or
Subsidiary, (viii) all commitments of the Company or any Subsidiary for capital
expenditures in excess of $100,000 individually or $500,000 in the aggregate per
month, excluding MIS and rental inventory purchases, (ix) all agreements of the
Company or any of its Subsidiaries containing an unexpired covenant not to
compete or similar restriction applying to the Company or any of its
Subsidiaries or affiliates or, to the Company's knowledge, any of their
respective officers or directors (other than covenants of such officers or
directors not to compete with the Company or any of its Subsidiaries), (x) any
interest rate, currency or commodity hedging, swap or similar derivative
transaction, (xi) all contracts, agreements or arrangements with holders of
equity interests in Subsidiaries of the Company, (xii) all agreements or
arrangements to which the Company or any Subsidiary is a party providing for the
escrow of any assets (including, without limitation, cash or securities) of the
Company or any of its Subsidiaries or any other Person and (xiii) any other
contract or amendment thereto that would be required to be filed as an exhibit
to a Form 10-K filed by the Company with the SEC as of the date of this
Agreement. Except as set forth in Schedule 4.1(s), each of the agreements listed
in Schedule 4.1(s) and each Employment Agreement is a valid and binding
obligation of the Company or a Subsidiary of the Company, as the case may be,
and, to the Company's knowledge, of each other party thereto, and each such
agreement is in full force and effect and is enforceable by the Company or a
Subsidiary of the Company in accordance with its terms, except that the
enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (B) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity). There are no existing defaults (or
circumstances or events that, with the giving of notice or lapse of time or
both, would become defaults) of the Company or any of its Subsidiaries (or, to
the knowledge of the Company, any other party thereto) under any of the
agreements listed in Schedule 4.1(s) or any Employment Agreement except for
defaults that have not and are not reasonably likely to, individually or in the
aggregate, have a Material Adverse Effect with respect to the Company. Except as
set forth on Schedule 4.1(s) under the heading "Contingent Payments", the
Company has no undischarged obligations (other than contingent indemnification
obligations) for the payment of any deferred consideration pursuant to any
Acquisition Agreement, or any undischarged obligations to make any payment to
any third party that is contingent upon the financial performance of the Company
or any of its Subsidiaries (other than obligations pursuant to employee benefit
plans that are based upon the performance of the particular employees
participating therein).
For purposes of this Agreement, "Indebtedness" means, with
respect to any Person, without duplication, (A) all obligations of such Person
for borrowed money, or with
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respect to deposits or advances of any kind, (B) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (C) all
obligations of such Person upon which interest charges are customarily paid
(other than trade payables incurred in the ordinary course of business), (D) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person, (E) all obligations of
such Person issued or assumed as the deferred purchase price of property or
services (exclud- ing obligations of such Person to creditors for raw materials,
inventory, services and supplies incurred in the ordinary course of such
Person's business), (F) all lease obligations of such Person capitalized on the
books and records of such Person, (G) all obligations of others secured by any
lien on property or assets owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (H) all obligations of such
Person under interest rate, or currency or commodity hedging, swap or similar
derivative transactions (valued at the termination value thereof), (I) all
letters of credit issued for the account of such Person (excluding letters of
credit issued for the benefit of suppliers to support accounts payable to
suppliers incurred in the ordinary course of business) and (J) all guarantees
and arrangements having the economic effect of a guarantee of such Person of any
indebtedness of any other Person.
(t) Related Party Transactions. Except as set forth on
Schedule 4.1(t) hereto or in the Company's proxy statement, dated April 4, 1996,
no director, officer, partner, employee, "affiliate" or "associate" (as such
terms are defined in Rule 12b-2 under the Exchange Act) of the Company or any of
its Subsidiaries (i) has loaned or otherwise advanced money to, or has
outstanding any Indebtedness or other similar obligations to, the Company or any
of its Subsidiaries, in each case in an amount exceeding $60,000; (ii) owns any
direct or indirect interest of any kind in, or is a director, officer, employee,
partner, affiliate or associate of, or consultant or lender to, or borrower
from, or has the right to participate in the management, operations or profits
of, any Person or entity which is (A) a competitor, supplier, customer,
distributor, lessor, tenant, creditor or debtor of the Company or any of its
Subsidiaries, (B) engaged in a business related to the business of the Company
or any of its Subsidiaries or (C) participating in any transaction to which the
Company or any of its Subsidiaries is a party involving an amount in excess of
$60,000 or goods or services having a value in excess of $60,000 or (iii) is
otherwise a party to any contract, arrangement or understanding with the Company
or any of its Subsidiaries for or involving an amount in excess of $60,000 or
goods or services having a value in excess of $60,000.
(u) Liens. Except as set forth on Schedule 4.1(u) and other
than liens, including but not limited to liens under Environmental Law,
mortgages, security interests, pledges and encumbrances which do not materially
interfere with the Company's use and enjoyment of real property or materially
diminish or detract from the value thereof, neither the Company nor any of its
Subsidiaries has granted, created or suffered to exist with respect to any of
its assets, any mortgage, pledge, charge, hypothecation, collateral assignment,
lien (statutory or otherwise), encumbrance or security agreement of any kind or
nature whatsoever.
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(v) Brokerage Fees and Commissions; Other Fees. Except for
Alex Brown (a copy of whose engagement letter with the Company has been
furnished to Parent) and Am- Tech Corporation ("Am Tech") and Triumph Capital
Group, Inc. ("Triumph"), no Person or entity is entitled to receive from the
Company or any of its Subsidiaries any investment banking, brokerage or finder's
fee or fees for financial consulting or other advisory services in connection
with this Agreement or the transactions contemplated hereby based upon
arrangements made by or on behalf of the Company or any of its Subsidiaries. The
aggregate fees required to be paid by the Company or any of its Subsidiaries to
each of Alex Brown, Am Tech and Triumph and each other Person listed on Schedule
4.1(v) in connection with this Agreement and the transactions contemplated
hereby will not exceed the amounts set forth on Schedule 4.1(v) with respect to
each such Person.
(w) No Excess Parachute Payments. Except as set forth in
Schedule 4.1(w), any amount that could be received (whether in cash or property
or the vesting of property) as a result of any of the transactions contemplated
by this Agreement by any employee, officer or director of the Company or any of
its affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or Benefit Plan
currently in effect would not be characterized as an "excess parachute payment"
(as such term is defined in Section 280G(b)(1) of the Code).
(x) State Takeover Statutes. The Board of Directors of the
Company has approved this Agreement and the Stockholders Agreement and the
transactions contemplated hereby and thereby, including the Merger, and such
approval is sufficient to render the provisions of Section 203 of the DGCL
inapplicable to the Merger, this Agreement, the Stockholders Agreement and the
other transactions contemplated by this Agreement. No other state takeover
statute or similar statute or regulation applies or purports to apply to the
Merger, this Agreement, the Stockholders Agreement or the other transactions
contemplated by this Agreement or the Stockholders Agreement.
(y) Pending and Proposed Transactions. Except as set forth on
Schedule 4.1(y), neither the Company nor any of its Subsidiaries has entered
into any agreement, whether oral or written, with respect to, or is engaged in
negotiations with respect to, the acquisition (whether by purchase of assets or
securities, or by merger or otherwise) or disposition of all or a substantial
portion of the business of any Subsidiary or any business or division of the
Company or any of its Subsidiaries.
(z) Media Interests. SBC Technologies, Inc. holds a limited
partner interest in Radio Equity Partners, Limited Partnership (the "REP
Interest"). SBG Communications Corp. owns the non-license assets of the radio
stations WACO-AM and WACO-FM, located in Waco, Texas (the "WACO Stations"), and
SBG Communications of Texas, Inc. is the licensee of, and operates, the WACO
Stations. Sage Broadcasting Corp. of Vermont owns and operates the radio station
WVMX (the "Vermont Station" and, together with the WACO
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Stations, the "Radio Stations"). Except for the Radio Stations and the REP
Interest, neither the Company nor any of its Subsidiaries has any direct or
indirect interest in any radio, television, cable or other business subject to
regulation by the FCC, except SBC Technologies, Inc. holds certain notes issued
by Americus Communications #1 Limited Partnership and Muzzy Broadcasting, LLC,
and two additional promissory notes in the aggregate principal amount of
approximately $440,000 (none of which notes constitute an attributable ownership
interest in a media property within the meaning of or subject to the regulations
of the FCC). Other than the WACO Stations and the Vermont Station and the
licenses, equipment and other assets related thereto, neither SBG Communications
Corp. nor Sage Broadcasting Corp. of Vermont own or operate any other businesses
or material assets or, other than SBG Communications of Texas, Inc., have any
direct or indirect Subsidiaries. Except with respect to the Radio Stations, none
of the Company or any of its Subsidiaries owns or holds any media licenses
issued by the FCC or any state or federal authority requiring the prior approval
of such authority of any transfer of control.
4.2 Representations and Warranties of Parent and Sub.
Parent and Sub represent and warrant to the Company as follows:
(a) Organization, Standing and Power. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parent and Sub. This Agreement
has been duly executed and delivered by each of Parent and Sub and, assuming
this Agreement constitutes the valid and binding agreement of the Company,
constitutes a valid and binding obligation of Parent and Sub enforceable in
accordance with its terms except that the enforcement hereof may be limited by
(A) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (B) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by each of Parent and Sub
will not result in any Violation pursuant to any provision of the Articles of
Incorporation or Bylaws (or comparable governing instruments) of Parent or Sub.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity is required by or
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with respect to Parent or Sub in connection with the execution and delivery of
this Agreement by each of Parent and Sub or the consummation by each of Parent
or Sub of the transactions contemplated hereby, which the failure to obtain or
make would have a material adverse effect on the ability of Parent or Sub to
consummate the transactions contemplated by this Agreement, except for: (A)
filings under the HSR Act; (B) the filing with the SEC of (I) the Schedules
14D-1 and 14F-1, respectively, in connection with the commencement and
consummation of the Offer and (II) such reports under and such other compliance
with the Exchange Act and the rules and regulations thereunder, as may be
required in connection with this Agreement and the transactions contemplated
hereby; (C) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware; and (D) such filings and approvals as may be required
by any foreign pre-merger notification, securities, corporate or other law, rule
or regulation.
(c) Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated hereby.
(d) Information Supplied. None of the information relating to
Parent and its affiliates supplied in writing by Parent specifically for
inclusion in the Schedule 14D-9 will, at the time the Schedule 14D-9 is filed
with the SEC, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. If at any time prior to the Effective Time Parent should
become aware of any event relating to Parent or any of its Subsidiaries that is
required by applicable law to be set forth in an amendment of, or supplement to,
the Schedule 14D-9, Parent shall promptly so inform the Company and will furnish
to the Company all information relating to such event that is required under
applicable law to be disclosed in an amendment or supplement to the Schedule
14D-9. The Schedule 14D-1 will comply as to form in all material respects with
the requirements of the Exchange Act, and shall not, when filed with the SEC,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that no agreement or representation hereby is
made or shall be made by Parent or Sub with respect to information supplied by
the Company in writing expressly for inclusion in, or with respect to Company
information derived from the Company's public SEC filings which is included or
incorporated by reference in, the Schedule 14D-1.
(e) Brokerage Fees and Commissions. Except for Lazard, Freres
& Co. LLC, no Person or entity is entitled to receive from Parent or Sub any
investment banking, brokerage or finder's fee or fees for financial consulting
or other advisory services in connection with this Agreement or the transactions
contemplated hereby based upon arrangements made by or on behalf of Parent or
Sub.
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(f) Financial Capability. Parent has sufficient
available cash and marketable securities to consummate the transactions
contemplated hereby.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Covenants of the Company. During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees
that (except as Parent shall otherwise consent in writing):
(a) Ordinary Course. The Company shall, and shall cause each
of its Subsidiaries to, carry on their businesses in the ordinary course in
substantially the same manner as heretofore conducted and shall use all
reasonable efforts to preserve intact its present business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that its goodwill and ongoing business shall not be impaired in
any material respect at the Effective Time. Without limiting the generality of
the foregoing, the Company shall, and shall cause its Subsidiaries to, comply
with the provisions of Sections 5.1(b) through 5.1(r) below.
(b) Dividends; Changes in Stock. The Company shall not, and
shall not permit any of its Subsidiaries to: (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock, except for
cash dividends or distributions paid on or with respect to the capital stock of
a wholly-owned Subsidiary of the Company and except for cash distributions
payable with respect to the Preferred Securities in accordance with their
present terms; (ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock; or (iii)
redeem, repurchase or otherwise acquire, or propose to redeem, repurchase or
otherwise acquire, or permit any Subsidiary to purchase or otherwise acquire,
any shares of its capital stock.
(c) Issuance of Securities. Except as set forth in Schedule
5.1(c), the Company shall not, and shall not permit any of its Subsidiaries to,
(i) grant any options, warrants or rights to purchase shares of Company Common
Stock, (ii) amend or reprice any Option or Warrant or the Stock Option Plans or
the Rights or the Stock Purchase Plan, or (iii) issue, deliver or sell, or
pledge or otherwise encumber, or authorize or propose to issue, deliver or sell,
or pledge or otherwise encumber, any shares of its capital stock of any class or
series, any Company Voting Debt or any securities convertible into or
exchangeable for, or any rights, warrants or options to acquire, any such
shares, Company Voting Debt or convertible or exchangeable securities, other
than the issuance of Company Common Stock upon (A) the exercise of Options
outstanding on the date of this Agreement in accordance with their present
terms, (B) the exercise of the Warrants outstanding on the date of this
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Agreement in accordance with their present terms, (C) the exercise of Rights
pursuant to the Stock Purchase Plan in accordance with their present terms, and
(D) the conversion of the Subordinated Debentures by the holders thereof in
accordance with their present terms.
(d) Governing Documents. The Company shall not, and
shall not permit any of its Subsidiaries to, amend or propose to amend its
Certificate of Incorporation or Bylaws, or other comparable constituent
documents.
(e) No Solicitation. (i) From and after the date hereof until
the termination of this Agreement, the Company shall not, and shall not
authorize or permit any of its Subsidiaries, or any of its or their officers,
directors, employees, representatives, agents or affiliates (including, without
limitation, any investment banker, financial advisor, attorney, accountant or
other representative retained by the Company or any of its Subsidiaries), to,
directly or indirectly, initiate, solicit or encourage (including by way of
furnishing non-public information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined below),
or enter into or maintain or continue discussions or negotiate with any Person
in furtherance of such inquiries or to obtain or with respect to an Acquisition
Proposal or agree to or endorse any Acquisition Proposal, provided, however,
that prior to the Company Stockholders Meeting (as defined in Section 6.1(b)),
if in the good faith opinion of the Board of Directors of the Company, based on
the advice of outside legal counsel, the failure to proceed in accordance with
clause (A) and/or (B) below of this Section 5.1(e)(i) would violate its
fiduciary duties to the Company's stockholders under applicable law, the Company
may, subject to compliance with Section 5.1(e)(iv), in response to an
unsolicited written bona fide Acquisition Proposal that in the good faith
opinion of the Board of Directors, based on the advice of an independent
nationally recognized financial advisor and outside legal counsel, would
reasonably be expected to result in a Superior Proposal (as defined below), (A)
furnish information with respect to the Company to such Person making such
proposal pursuant to a customary confidentiality agreement with such Person and
(B) participate in negotiations regarding such Acquisition Proposal; provided
that, in the case of clauses (A) and (B) above, the Company has provided a
written notice to Parent of its intention to proceed under such clause (A) or
(B) above. Without limiting the foregoing, it is agreed that any violation of
the restrictions set forth in the preceding sentence by any director or
executive officer of the Company or any of its Subsidiaries or any investment
banker, financial advisor, attorney, accountant or other representative of the
Company or any of its Subsidiaries, acting on behalf or under authority of the
Company or any Subsidiary of the Company, shall be deemed to be a breach of this
Section 5.1(e)(i) by the Company. For purposes of this Agreement, "Acquisition
Proposal" shall mean an inquiry, offer or proposal regarding any of the
following (other than the transactions between the Company, Parent and Sub
contemplated hereunder) involving the Company or any of its Subsidiaries: (w)
any merger, consolidation, share exchange, recapitalization, business
combination, or other similar transaction; (x) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 20% or more of the assets of
the Company and its Subsidiaries, taken as a whole, in a single
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transaction or series of transactions; (y) any tender offer or exchange offer
for or other purchase of 20% or more of the outstanding shares of capital stock
of the Company or the filing of a registration statement under the Securities
Act in connection therewith; or (z) any public announcement of a proposal, plan
or intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
Except as set forth in this Section 5.1(e)(ii), neither the Board of
Directors of the Company nor any committee thereof shall (A) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent or Sub, the
approval or recommendation by such Board of Directors or any such committee of
the Merger or this Agreement, (B) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal or (C) enter into any agreement with respect
to any Acquisition Proposal. Notwithstanding the foregoing, prior to the Company
Stockholders Meeting, if in the good faith opinion of the Board of Directors,
based on the advice of outside counsel, the failure to proceed in accordance
with clause (x), (y) and/or (z) below of this Section 5.1(e)(ii) would violate
its fiduciary duties to the Company's stockholders under applicable law, the
Board of Directors may (subject to the terms of this sentence and the following
sentence) (x) withdraw or modify its recommendation of the Merger or this
Agreement, (y) approve or recommend a Superior Proposal, and (z) cause the
Company to enter into an agreement with respect to a Superior Proposal, in each
case at any time following Parent's receipt of a written notice advising Parent
that the Board of Directors has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
Person making such Superior Proposal; provided that the Company shall not take
any of the actions specified in such clauses (x), (y) or (z) unless the Company
shall have furnished Parent with written notice (a "Section 5.1(e)(i) Notice")
specifying such actions to be taken no later than 12:00 noon New York City time
four business days prior to the date such actions are proposed to be taken and
shall not take any of the actions set forth in clauses (y) or (z) above if,
after taking into account modifications to this Agreement proposed by Parent,
such Acquisition Proposal would not be a Superior Proposal. In addition, if the
Board of Directors or the Company proposes to take any of the actions permitted
by the preceding sentence with respect to any Acquisition Proposal, then the
Company shall, prior to taking such action, pay, or cause to be paid, to Parent
the Termination Payment (as defined in Section 6.4), and, in the case of clauses
(y) and (z), cause the Person making the superior proposal to acknowledge such
obligations.
(iii) The term "Superior Proposal" shall mean any bona fide
Acquisition Proposal that has the following characteristics: (x) it is a
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or readily marketable securities, (A) shares of Company Common Stock
representing 100% of the voting power of (I) the outstanding shares of Company
Common Stock, (II) the shares of Company Common Stock issuable upon (aa) the
conversion of the Subordinated Debentures, (bb) the exercise of the Options
outstanding and (cc) the exercise of the Warrants outstanding, or (B) all or
substantially all the assets of the Company, (y) the terms of such proposal in
the good faith judgment of the
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Board of Directors of the Company (based on the written opinion of an
independent financial advisor of nationally recognized reputation) provide a per
share consideration to the Company's stockholders which is higher than the per
share consideration provided by the Merger (after taking into account any
modifications to this Agreement proposed by Parent) and (z) the transactions
envisioned by such proposal, in the good faith judgment of the Board of
Directors of the Company, based on the advice of an independent nationally
recognized financial advisor and outside legal counsel, is readily financeable
and reasonably likely to be consummated without unreasonable delay or unusual
conditions compared to the transactions contemplated by this Agreement.
(iv) In addition to the obligations set forth in clause (ii)
of this Section 5.1(e), the Company shall immediately advise Parent orally and
in writing of any request for information which may relate to an Acquisition
Proposal or of any Acquisition Proposal, or any inquiry with respect to or which
could lead to any Acquisition Proposal, the material terms and conditions of
such request, Acquisition Proposal or inquiry, and the identity of the Person
making any such request, Acquisition Proposal or inquiry. The Company will keep
Parent fully and timely informed of the status and details (including amendments
or proposed amendments) of any such request, Acquisition Proposal or inquiry.
(f) No Acquisitions. The Company shall not, and shall not
permit any of its Subsidiaries to, acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof, or (ii) any assets that are material, individually or in the
aggregate, to the Company and its Subsidiaries as a whole.
(g) No Dispositions. Other than as set forth on Schedule
5.1(g) hereto and dispositions in the ordinary course of business consistent
with past practice which are not (except for sales of inventory) material,
individually or in the aggregate, to the Company and its Subsidiaries taken as a
whole, the Company shall not, and shall not permit any of its Subsidiaries to,
sell, lease, encumber or otherwise dispose of, or agree to sell, lease (whether
such lease is an operating or capital lease), encumber or otherwise dispose of,
any of its assets.
(h) Advice of Changes; SEC Filings. The Company shall confer
with Parent to the extent reasonably requested by Parent, report on operational
matters and promptly advise Parent orally and in writing of any change or event
having, or which, insofar as reasonably can be foreseen, could have, a Material
Adverse Effect on the Company. The Company shall promptly provide Parent (or its
counsel) with copies of all filings made by the Company with the SEC or any
other state, federal or foreign Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.
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(i) No Dissolution, Etc. The Company shall not authorize,
recommend, propose, adopt or announce an intention to adopt a plan of complete
or partial liquidation or dissolution of the Company or any of its Subsidiaries,
other than the dissolutions of Dormant Subsidiaries.
(j) Other Actions. Except as provided by this Agreement, the
Company will not and will cause its Subsidiaries not to take or agree or commit
to take any action that is reasonably likely to result in any of the Company's
representations or warranties hereunder being untrue in any material respect or
in any of the conditions to the Merger not being satisfied.
(k) Certain Employee Matters. Except as set forth on Schedule
5.1(k) hereto, the Company and its Subsidiaries shall not (without the prior
written consent of Parent): (i) grant any increases in the compensation of any
of its directors, officers or key employees, other than regularly scheduled
increases representing (in the case of all directors and officers, and all key
employees whose annual compensation (including salary and bonus) exceeds
$100,000) an aggregate increase for any such Person of not more than 5%; (ii)
pay or agree to pay any pension, retirement allowance or other employee benefit
not required or contemplated by any of the existing Company Benefit Plans or
Company Pension Plans as in effect on the date hereof to any such director,
officer or key employee, whether past or present; (iii) enter into any new, or
materially amend any existing, employment or severance or termination agreement
with any such director, officer or key employee, other than At-Will Employment
Agreements providing for total annual compensation (including salary and bonus)
of less than $100,000; or (iv) terminate or amend the employment agreements of
Messrs. Poch and McCleary or the employment or advisory agreement with Mr.
Fassler; or (v) except as may be required to comply with applicable law, become
obligated under any new Company Employee Benefit Plan or Company Pension Plan,
which was not in existence on the date hereof, or amend any such plan or
arrangement in existence on the date hereof if such amendment would have the
effect of materially enhancing any benefits thereunder.
(l) Indebtedness; Advances. The Company shall not, and shall
not permit any of its Subsidiaries to, (i) other than Indebtedness under capital
leases, entered into as permitted under Section 5.1(o), assume or incur any
Indebtedness for borrowed money (other than pursuant to credit facilities
existing on the date hereof in accordance with their present terms) or guarantee
any such Indebtedness or issue or sell any debt securities or warrants or rights
to acquire any debt securities of the Company or any of its Subsidiaries or
guarantee any debt securities of others or enter into any lease (whether such
lease is an operating or capital lease) or create any mortgages, liens, security
interests or other encumbrances on the assets or property of the Company or any
of its Subsidiaries in connection with any Indebtedness thereof (other than
security interests arising pursuant to mortgages or other security agreements in
effect on the date hereof covering credit facilities existing on the date
hereof), or enter into any "keep well" or other agreement or arrangement to
maintain the financial condition of another Person, or (ii) make any loans,
advances or
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capital contributions to, or investments in, any other Person, other than to the
Company or any direct or indirect wholly owned Subsidiary of the Company and
other than loans or advances to customers and employees in the ordinary course
of business consistent with past practice.
(m) Material Contracts. The Company shall not, and shall not
permit any of its Subsidiaries to, enter into, modify, rescind, terminate,
waive, release or otherwise amend in any material respect any of the terms or
provisions of any contract, agreement, commitment, arrangement or right listed
on Schedule 4.1(s) hereto or which, if such contract, agreement, arrangement or
right had existed as of the date of this Agreement, would have been required to
be listed on Schedule 4.1(s); provided, however, that the foregoing shall not
limit the right of the Company or any of its Subsidiaries to enter into any
contracts of the type referred to in Section 4.1(s)(iv) in the ordinary course
of business consistent with past practice and involving annual payments of not
more than $5,000,000.
(n) Accounting. The Company will, and will cause each of its
Subsidiaries to, maintain its books and records in the usual manner and
consistent with past practice and not permit a material change in any of its
financial reporting, tax, or accounting practices or policies or in any
assumption underlying such practices or policies, or in any method of
calculating any bad debt, contingency, or other reserve for financial reporting
purposes or for other accounting purposes, except as may be required by GAAP or
applicable law.
(o) Capital Expenditures. Except as set forth on Schedule
5.1(o) and except for capital expenditures for MIS and rental inventory
purchases, the Company shall not make or authorize nor shall the Company permit
any of its Subsidiaries to make or authorize any capital expenditures in excess
of $100,000 individually and $500,000 in the aggregate per month.
(p) Tax Matters. If any income tax return of the Company or
any Subsidiary that has not yet been filed is required to be filed on or prior
to the Effective Time, the Company or its Subsidiaries, as the case may be,
shall prepare and timely file such tax return in a manner consistent with prior
years and all applicable laws and regulations (or shall obtain a valid extension
of time in which to make such filings). The Company shall not, and shall not
permit any of its Subsidiaries to, make any tax election or settle or compromise
any material tax liability.
(q) Discharge of Liabilities. The Company shall not, and shall
not permit any of its Subsidiaries to, pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of any of its liabilities or obligations, or
waive the benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any of its Subsidiaries
is a party.
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(r) Agreement to Take Action. The Company shall not,
and shall not permit any of its Subsidiaries to, authorize any of, or commit or
agree to take any of, the foregoing actions.
(s) Notices of Certain Events. The Company shall
promptly notify Parent of:
(i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions contemplated by this
Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge, threatened against,
relating to or involving or otherwise affecting the Company or any Subsidiary
which, if pending on the date of this Agreement, would have been required to
have been disclosed pursuant to Section 4.1(g) or which relate to the
consummation of the transactions contemplated by this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of the Proxy Statement; Company Stockholders
Meeting; Merger without a Company Stockholders Meeting. (a) As soon as
practicable following the acceptance for payment of and payment for shares of
Company Common Stock by Sub in the Offer, the Company and Parent shall prepare
and file with the SEC the Proxy Statement. The Company shall use its best
efforts to respond to all SEC comments with respect to the Proxy Statement and
to cause the Proxy Statement and the form of proxy, which shall comply as to
form with all applicable laws, to be mailed to the Company's stockholders at the
earliest practicable date.
(b) The Company will, as soon as practicable following the
acceptance for payment of and payment for shares of Company Common Stock by Sub
in the Offer, duly call, give notice of, convene and hold a stockholders meeting
(the "Company Stockholders Meeting") for the purpose of approving this Agreement
and the transactions contemplated hereby. At the Company Stockholders Meeting,
the Board of Directors of the Company will recommend to its stockholders the
adoption and approval of this Agreement and the transactions contemplated
hereby.
(c) Notwithstanding the foregoing clauses (a) and (b), in the
event that Parent or any other Subsidiary of Parent shall acquire at least 90%
of the outstanding shares
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of Company Common Stock in the Offer, the parties hereto agree, at the request
of Sub, to take all necessary and appropriate action to cause the Merger to
become effective, as soon as practicable after the expiration of the Offer,
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL.
(d) Subject to Section 6.1(c) above, Parent shall (i) cause
Sub promptly to submit this Agreement and the transactions contemplated hereby
for approval and adoption by the written consent of its sole stockholder; (ii)
cause the shares of capital stock of Sub to be voted for adoption and approval
of this Agreement and the transactions contemplated hereby; and (iii) cause to
be taken all additional actions necessary for Sub to adopt and approve this
Agreement and the transactions contemplated hereby.
6.2 Access to Information. The Company shall (and shall cause
each of its Subsidiaries to) afford to the officers, employees, accountants,
counsel and other representatives of the Parent access, during normal business
hours and in a manner so as to not unreasonably interfere with the conduct of
the business of the Company during the period prior to the Effective Time, to
all of the personnel, properties, books, contracts, commitments and records
(including, without limitation, tax returns) of the Company and its Subsidiaries
and to use its commercially reasonable efforts to cause the Company's and its
Subsidiaries' independent accountants to provide access to their work papers and
such other information as the Parent or Subsidiary may reasonably request and,
during such period, the Company shall (and shall cause each of its Subsidiaries
to) furnish promptly to the Parent (a) a copy of each report, schedule,
registration statement and other document filed or received by it during such
period pursuant to SEC requirements and (b) all other information concerning its
business, properties and personnel as the Parent may reasonably request. Parent
agrees that it will not, and will cause its representatives not to, use any
information obtained pursuant to this Section 6.2 for any purpose unrelated to
the consummation of the transactions contemplated by this Agreement, and will
hold confidential, and will cause its officers, employees, accountants, counsel,
financial advisors and other representatives and affiliates to hold
confidential, all such information in accordance with the Confidentiality
Agreement, dated February 15, 1996, between GE Capital Technology Management
Services and the Company (the "Confidentiality Agreement").
6.3 Legal Conditions to Merger. Each of the Company, Parent
and Sub will take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on such party with respect to the Offer,
the Merger (including furnishing all information required under the HSR Act and
in connection with approvals of or filings with any other Governmental Entity)
and the Stockholders Agreement and will promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with the Offer, the
Merger and the Stockholders Agreement; provided, however, that Parent need not
so comply if required by the Department of Justice or any other Governmental
Entity to hold separate, sell or otherwise dispose of any Subsidiary of Parent
or the Company or assets or
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properties of any of the foregoing, or to agree to any conditions deemed by
Parent to be adverse to it or the Company (or any of their respective
Subsidiaries). The Company will, and will cause its Subsidiaries to, take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party, required to
be obtained or made by the Company or any of its Subsidiaries in connection with
the Offer, the Merger, the Stockholders Agreement or the taking of any action
contemplated hereby or thereby.
6.4 Fees and Expenses. (a) Except as otherwise provided in
this Section 6.4, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense.
(b) The Company shall immediately pay, or cause to be paid, in
same day funds to Parent the Termination Payment (as defined below) upon demand
if (A) Parent terminates this Agreement in accordance with Section 8.1(d), (B)
the Company terminates this Agreement in accordance with Section 8.1(h) and/or
Section 8.1(j), or (C) Parent or the Company terminates this Agreement in
accordance with Section 8.1(f), 8.1(g) or 8.1(i) and prior to such termination a
bona fide Acquisition Proposal shall have been made. "Termination Payment" shall
mean the sum of (i) all of Parent's out-of-pocket expenses incurred in
connection with the transactions contemplated by this Agreement (the "Expenses")
and (ii) $10,000,000 (the "Termination Fee"); provided that if at or prior to
the time the Termination Payment is payable the Company shall have entered into
a definitive agreement with a third party for such third party to acquire the
Company in a transaction which would qualify to be accounted for, under
applicable guidelines of the SEC, as a pooling of interests transaction but for
the size of the Termination Payment, then the amount of the Termination Payment
shall be reduced to the extent necessary to enable such transaction to qualify
as a pooling of interests (but in no event shall the Termination Payment be
reduced below 1% of the transaction value). The amount of Expenses so payable
shall be the amount set forth in an estimate delivered by Parent upon
termination subject to upward or downward adjustment as provided in the next
sentence. In the event that Parent's actual out-of-pocket expenses exceed such
estimate, the amount of any such excess shall be payable upon demand, and in the
event that Parent's actual expenses are less than the amount of such estimate,
Parent shall promptly refund such lesser amount.
Promptly after the date hereof, the Parent and the Company
shall seek an appropriate determination as to whether any circumstances could
exist so as to require reduction of the Termination Payment as provided in the
foregoing paragraph.
6.5 Brokers or Finders. (a) The Company agrees to indemnify
and hold Parent harmless from and against any and all claims, liabilities or
obligations with respect to any fees, commissions or expenses asserted by any
Person to the extent such fee, commission
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or expense is attributable to any action taken by or on behalf of the Company or
any of its Subsidiaries or affiliates.
(b) Parent agrees to indemnify and hold Company harmless from
and against any and all claims, liabilities or obligations with respect to any
fees, commissions or expenses asserted by any Person to the extent such fee,
commission or expense is attributable to any action taken by or on behalf of
Parent.
6.6 Indemnification. (a) The indemnification obligations set
forth in the Company's Certificate of Incorporation and by-laws, as amended to
the date of this Agreement, shall survive the Merger and shall not be amended,
repealed or otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who on or prior to the Effective Time were directors (including any
members of the Company's Compensation Committee), officers, employees or agents
of the Company (the "Indemnified Parties"). Parent shall cause the Company to
fulfill its indemnification obligations as set forth in this Section 6.6(a).
(b) For a period of two years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the employed
lawyers' errors and omissions liability policy maintained by the Company and its
Subsidiaries (provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous in any material respect to the
Indemnified Parties covered thereby) with respect to matters arising before the
Effective Time, provided that Surviving Corporation shall not be required to pay
an annual premium for such insurance in excess of $60,000, but in such case
shall purchase as much coverage as possible for such amount.
(c) The provisions of this Section 6.6 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his heirs
and his personal representatives and shall be binding on all successors and
assigns of Sub, the Company and the Surviving Corporation.
6.7 Best Efforts; Notification. (a) Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use its
reasonable commercial efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement and the Stockholders Agreement,
subject, as applicable, to the Company Stockholder Approval, including
cooperating fully with the other party, including by provision of information
and making of all necessary filings in connection with, among other things,
approvals under the HSR Act; provided, however, that neither Parent nor Sub need
comply with any requirement by the Department of Justice or any other
Governmental Entity to hold separate, sell or otherwise dispose of any
Subsidiary of Parent or the Company or assets or properties of Parent, the
Company or any of their Subsidiaries or to
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agree to conditions deemed by Parent to be adverse to it or the Company (or any
of their respective Subsidiaries). In case at any time after the Effective Time,
any further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either of
the Constituent Corporations, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
(b) The Company shall give prompt notice to Parent, and Parent
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in this Agreement that is qualified as to materiality
becoming untrue or inaccurate in any respect or any representation or warranty
not so qualified becoming untrue or inaccurate in any material respect
(including in the case of representations or warranties by the Company or
Parent, as applicable, such party's receiving knowledge of any fact, event or
circumstance which may cause any representation qualified as to the knowledge of
such party to be or become untrue or inaccurate in any respect or material
respect, as applicable) or (ii) the failure by it to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
6.8 Conduct of Business of Sub. During the period of time from
the date of this Agreement to the Effective Time, Sub shall not engage in any
activities of any nature except as provided in or contemplated by this
Agreement.
6.9 Publicity. The parties will consult with each other and
will mutually agree upon any press release or public announcement pertaining to
the Offer and the Merger and shall not issue any such press release or make any
such public announcement prior to such consultation and agreement, except as may
be required by applicable law or by the rules of any national securities
exchange or national securities quotation system, in which case the party
proposing to issue such press release or make such public announcement shall use
reasonable efforts to consult in good faith with the other party before issuing
any such press release or making any such public announcement.
6.10 Benefit Plans. Parent shall cause the Surviving
Corporation to take such actions as are reasonably necessary so that, for a
period of not less than one year after the Effective Time, nonunion employees of
the Company and its Subsidiaries who continue their employment after the
Effective Time will be provided employee benefits which in the aggregate are at
least generally comparable to those provided to such employees as of the date
hereof; provided, that it is understood that after the Effective Time (a) with
respect to employees covered by Foreign Plans prior to the Effective Time,
Parent shall cause the Surviving Corporation to provide such employees with
employee benefits which are either comparable to the Foreign Plans or comparable
plans which are offered to similarly situated employees of the Parent, (b),
neither Parent nor the Surviving Corporation will have any
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obligation to issue or adopt any plans or arrangements to provide for the
issuance of shares of capital stock, warrants, options, stock appreciation
rights or other rights in respect of any shares of capital stock of any entity
or any securities convertible or exchangeable into such shares pursuant to any
such plan or program, (c) nothing herein shall require the Surviving Corporation
to maintain any particular plan or arrangement or to employ or to continue to
employ any Person and (d) nothing herein shall prevent or preclude the Surviving
Corporation from continuing any requirements for employee contributions under
any employee benefit plans in the same proportions as the employee-paid portion
under such plans constituted prior to the Effective Time.
6.11 State Takeover Statutes. The Company shall, upon the
request of Parent, take all reasonable steps to assist in any challenge by
Parent to the validity or applicability to the Offer or the Merger of any state
takeover law.
6.12 Warrants. On or prior to the Effective Time, the Company
shall cause effective provisions to be made with respect to the Warrants such
that following the Effective Time, each Warrant shall be exercisable only for
the consideration specified in Section 3.5(a)(iii).
6.13 FCC Matters. (a) Within 7 business days after the
execution of this Agreement, the Company shall create a new holding company
("SBC") to which the capital stock of SBG Communications Corp. and Sage
Broadcasting Corp. of Vermont (the "Radio Licensees") would be contributed by
SBC Technologies, Inc. in exchange for all of the outstanding capital stock of
SBC, all in a manner satisfactory to Parent and reasonably satisfactory to the
Company, so as to provide for two classes of capital stock, Class A voting
shares (the "Voting Stock") representing one percent (1%) of the equity (and 1%
of the total number of shares of outstanding capital stock) of SBC and Class B
non-voting shares (the "Non-Voting Stock") representing ninety-nine percent
(99%) of the equity (and 99% of the total number of shares of outstanding
capital stock) of SBC.
(i) Each holder of Voting Stock shall have one vote per share
of Voting Stock. Each holder of Non-Voting Stock shall have no right to vote
except that such holder shall be entitled to vote (on the basis of one vote per
share of Non-Voting Stock) on all extraordinary matters outside the ordinary
course of business (subject to clause (ii) below), including the following
matters:
(A) the termination or removal of any officer or
director of SBC or any of its Subsidiaries in the event of an act or omission by
such officer or director that constitutes Cause for Termination, which shall
mean fraud, conviction of a felony, dishonesty, gross negligence or willful
misconduct in the performance of such person's duties to SBC or breach of such
person's duty of loyalty or duty of care to SBC or any of its Subsidiaries;
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(B) any amendment of the certificate of
incorporation or bylaws of SBC or any of its Subsidiaries;
(C) the sale of all or a substantial portion of
the assets of SBC or any of its Subsidiaries except for the sale of the assets
owned by SBC Communications of Texas, Inc. pursuant to that certain Asset
Purchase Agreement, dated as of December 4, 1995, among SBG Communications
Corp., SBG Communications of Texas, Inc. and Gulfstar Communications, Inc., as
amended as of January 11, 1996;
(D) the liquidation or dissolution of SBC or any of
its Subsidiaries;
(E) any acquisition by SBC or any of its
Subsidiaries of, or merger of SBC or any of its Subsidiaries with or into,
another Person or business;
(F) any incurrence by SBC or any of its
Subsidiaries of indebtedness, or the granting by SBC or any of its Subsidiaries
of any liens, not in the ordinary course of its business; and
(G) any dividend or distribution by SBC in respect
of its capital stock.
No action of the type referred to in clauses (B) through (F)
above shall be taken without the approval of the holders of Non-Voting Stock;
and SBC shall (and shall cause its Subsidiaries to) take the action described in
clause (A) above upon the affirmative vote of the holders of the Non-Voting
Stock.
(ii) Notwithstanding the foregoing, the holder of the
Non-Voting Stock will not have the rights set forth in Section 6.12(a)(i) above
to the extent that the exercise of such rights would result in the attribution
to such holder of a cognizable interest in SBC under (and within the meaning of)
the regulations of the Federal Communications Commission (the "FCC").
(b) Within 7 business days after the execution of this
Agreement, the Company shall duly prepare and file with the FCC an application
on FCC Form 316 (the "Pro Forma Application") for consent to the pro forma
transfer of control of SBC from the Company to not less than a majority of the
directors of the Company as of the date hereof (the "Control Group"). The
Company shall use its reasonable efforts to cause such application to be
approved as promptly as practicable.
(c) Within 2 business days after the grant of the Pro Forma
Application by the FCC, the Company shall transfer the Voting Stock to the
Control Group (without representation, warranty or recourse) equally among the
Control Group in consideration of $10.00 pursuant to an agreement between SBC,
the Company and the Control Group
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reasonably satisfactory to Parent, which will include without limitation the
following obligations:
(i) Within 2 business days after the transfer of the Voting
Stock to the Control Group, the Control Group shall duly prepare and file with
the FCC an application on FCC Form 315 (the "Long Form Application") for consent
to the transfer of control of SBC to the holder of the Non-Voting Stock
following the consummation of the Offer. The Parent shall cooperate with the
Company in the preparation and filing of the Long Form Application, and the
Company and the Control Group shall use their reasonable efforts to cause such
application to be approved as promptly as practicable (and the Parent shall
reasonably cooperate with such efforts).
(ii) Within 2 business days after the grant of the Long Form
Application by the FCC, the Control Group shall transfer the Voting Stock to the
Company (without representation, warranty or recourse), free and clear of all
liens created by such Control Group member or arising after the acquisition of
such stock by such member.
(iii) Except as provided in clause (ii) above, the Voting
Stock shall be non-transferrable by the Control Group.
(d) If requested by the Company or Parent after the date
hereof, the parties will consider and negotiate in good faith the alternative of
revising the transactions described above so as to (i) in lieu of the creation
of SBC, effect the recapitalization of each of the Radio Licensees such that
their capital stock would consist of Voting Stock and Non-Voting Stock, with the
Voting Stock of each Radio Licensee held by the Control Group and the Non-
Voting Stock of each Radio Licensee held by the Company, and/or (ii) issuing the
Voting Stock to either (x) a limited liability company the members of which are
not less than a majority of the directors of the Company as of the date hereof
reasonably satisfactory to Parent and Company, or (y) any other person or entity
satisfactory to Parent and Company to whom such transfer does not result in a
change of control for purposes of applicable FCC rules and regulations (either
of which will then be deemed to be the Control Group).
6.14 Issuance of Shares. Within 10 business days after the
execution of this Agreement, the Company shall issue (A) the shares granted
pursuant to the Restricted Stock Award Plan and (B) the MCP Shares, which shares
are identified on Schedule 4.1(b)(ii)(A) hereto, such that such shares shall be
legally issued and outstanding.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement and the Merger
shall have been approved and adopted by the affirmative vote of the holders of a
majority of the Shares entitled to vote thereon if such vote is required by
applicable law.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated; and any formal investigations relating to the Merger
that may have been opened by the Department of Justice or the Federal Trade
Commission (by means of a written request for additional information or
otherwise) shall have been terminated.
(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that prior to
invoking this condition, each party shall use all commercially reasonable
efforts to have any such order, injunction, restraint or prohibition vacated.
(d) FCC Approvals and Applications. The FCC shall have
granted the Pro Forma Application.
7.2 Conditions of Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are subject to the
satisfaction of the following conditions, any or all of which may be waived in
whole or in part by Parent and Sub:
(a) Payment for Shares. Sub shall have accepted for payment
and paid for the shares of Company Common Stock tendered in the Offer such that,
after such acceptance and payment, Parent and its affiliates shall own, at
consummation of the Offer, a sufficient number of outstanding shares of the
Company Common Stock to satisfy the Minimum Condition (as defined in Exhibit A),
except if the failure of this condition to occur is caused by the material
breach of this Agreement by Parent or Sub.
(b) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
as of the date of this Agreement and (except to the extent such representations
and warranties expressly speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, and
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Parent shall have received a certificate signed on behalf of the Company by the
chief executive officer and by the chief accounting officer of the Company to
such effect.
(c) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations and agreements,
and complied in all material respects with all covenants, required to be
performed or complied with by it under this Agreement at or prior to the
Effective Time, and Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer and by the chief accounting officer
of the Company to such effect.
(d) Consents, Etc. All consents and approvals (collectively,
"Consents") of third parties as are necessary to cure any Violation of any
agreement arising out of the transactions contemplated hereby shall have been
obtained, except with respect to those agreements listed or referred to on
Schedule 4.1(c)(ii) and such Consents the failure to deliver which could not
reasonably be expected to have a Material Adverse Effect with respect to the
Company.
(e) Other Approvals. Other than the filing provided for by
Section 2.3, all licenses, permits, authorizations, consents, orders,
qualifications or approvals of, or declarations or filings with, or expirations
of waiting periods imposed by, any Governmental Entity (including those
described in Section 4.1(c)(iii) and 4.2(b)(iii)) requisite to consummation of
the Merger and the transactions contemplated thereby, shall have been filed,
occurred or been obtained, as the case may be.
(f) FCC Matters. (i) The transactions contemplated by
Section 6.13 above shall have been consummated on terms reasonably satisfactory
to Parent.
(ii) The Long Form Application shall have been
filed.
(g) No Litigation. There shall not be pending or threatened
any suit, action or proceeding by any Governmental Entity (i) challenging the
acquisition by Parent of any shares of capital stock of the Company, seeking to
restrain or prohibit the consummation of the Offer or the Merger or any of the
other transactions contemplated by this Agreement or seeking to obtain from the
Company, Parent, or any of their respective Subsidiaries any damages that are
material in relation to the Company and its Subsidiaries taken as a whole, (ii)
seeking to prohibit or limit the ownership or operation by the Company, Parent,
or any of their respective Subsidiaries of any material portion of the business
or assets of the Company, Parent or any of their respective Subsidiaries, or to
compel the Company, Parent or any of their respective Subsidiaries to dispose of
or hold separate any material portion of the business or assets of the Company,
Parent or any of their respective Subsidiaries as a result of the Offer or the
Merger or any of the other transactions contemplated by this Agreement, (iii)
seeking to impose limitations on the ability of Parent or Sub to acquire or
hold, or exercise full rights of ownership of, any shares of Company Common
Stock or shares of capital stock
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of the Company or the Surviving Corporation, including, without limitation, the
right to vote such capital stock on all matters properly presented to the
stockholders of the Surviving Corporation, (iv) seeking to prohibit Parent from
effectively controlling in any material respect the business or operations of
the Company or any of its Subsidiaries or (v) which otherwise is reasonably
likely to have a Material Adverse Effect on the Company or a Material Adverse
Effect on Parent.
(h) Options and Rights. On or prior to the date hereof, the
Company shall have caused (i) the Stock Option Plan and the Stock Purchase Plan
to be amended and (ii) the Subordinated Debentures to be amended, in each case
effective not later than the Effective Time, in such manner as to provide that
after the Effective Time, the holders of the Equity Purchase Rights evidenced
thereby shall only be entitled to receive the consideration specified in Section
3.5 hereof.
7.3 Conditions of Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the satisfaction of
the following conditions, any or all of which may be waived in whole or in part
by the Company:
(a) Representations and Warranties. The representations and
warranties of Parent and Sub set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent such
representations and warranties expressly speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and the Company shall have received a
certificate signed on behalf of Parent by an officer of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and
Sub shall have performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Closing Date, and the
Company shall have received a certificate signed on behalf of Parent by an
officer of Parent to such effect.
(c) Government Approvals. Other than the filing provided for
by Section 2.3, all licenses, permits, authorizations, consents, orders,
qualifications or approvals of, or declarations or filings with, or expirations
of waiting periods imposed by, any Governmental Entity (including those
described in Section 4.1(c)(iii) and 4.2(b)(iii)) requisite to consummation of
the Merger and the transactions contemplated thereby, shall have been filed,
occurred or been obtained, as the case may be.
53
<PAGE>
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent:
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent (i) if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of the other set forth in this Agreement which breach has not been cured
within five business days following receipt by the breaching party of notice of
such breach from the other party, or (ii) if any permanent injunction or other
order of a court or other competent authority preventing the consummation of the
Merger shall have become final and non-appealable;
(c) by either the Company or Parent if the Merger shall not
have been consummated on or before December 20, 1996; provided, that the right
to terminate this Agreement under this Section 8.1(c) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before such
date;
(d) by Parent if (i) the Board of Directors or any committee
thereof withdraws or modifies its approval or recommendation of this Agreement
or the Merger or approves or recommends an Acquisition Proposal or resolves to
do any of the foregoing or (ii) the Company shall have entered into an agreement
with respect to an Acquisition Proposal;
(e) by the Company, if Sub shall have failed to commence the
Offer within five business days following the date of the initial public
announcement of the Offer;
(f) by Parent, if the Offer terminates, is withdrawn,
is abandoned or expires by reason of the failure of any condition set forth in
Exhibit A hereto to be satisfied;
(g) by the Company, if the Offer shall have expired or have
been withdrawn, abandoned or terminated without any shares of Company Common
Stock being purchased by Sub thereunder on or prior to the 120th day after the
date of commencement of the Offer pursuant to Section 1.2 hereof;
(h) by the Company if (i) the Board of Directors pursuant to
Section 5.1(e)(ii) withdraws or modifies its approval or recommendation of this
Agreement or the Merger and
54
<PAGE>
(ii) the Company simultaneously with terminating this Agreement pays Parent the
Termination Payment in cash and otherwise complies with the provisions of
Section 5.1(e)(ii);
(i) by Parent or the Company if the Company Stockholder
Approval shall not have been obtained by reason of the failure to obtain the
required vote upon a vote held at a duly held meeting of shareholders or at any
adjournment thereof;
(j) by the Company if (i) the Company enters into a definitive
agreement in accordance with Section 5.1(e)(ii) and (ii) the Company
simultaneously with terminating pays Parent the Termination Payment in cash and
otherwise complies with the provisions of Section 5.1(e)(ii);
(k) by Parent if any of the conditions set forth in Section
7.1 or 7.2 shall become impossible to fulfill (other than as a result of any
breach by Parent of the terms of this Agreement) and shall not have been waived
in accordance with the terms of this Agreement; or
(l) by the Company, if any of the conditions set forth in
Section 7.1 or 7.3 shall become impossible to fulfill (other than as a result of
any breach by the Company of the terms of this Agreement) and shall not have
been waived in accordance with the terms of this Agreement.
8.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
affiliates, officers, directors or shareholders except (a) pursuant to the
second sentence of Section 6.2, and Sections 6.4, 6.5, this Section 8.2 and
Article IX, and (b) to the extent that such termination results from the willful
breach by a party hereto of any of its representations or warranties, or of any
of its covenants or agreements, in each case, as set forth in this Agreement,
other than as provided in the second sentence of Section 9.7.
8.3 Amendment. Subject to applicable law, this Agreement may
be amended, modified or supplemented only by written agreement of Parent, Sub
and the Company at any time prior to the Effective Date with respect to any of
the terms contained herein; provided, however, that, after the Company
Stockholder Approval is obtained, no such amendment or modification shall reduce
the amount or change the form of consideration to be delivered to the
stockholders of the Company.
8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed: (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto; (b) waive any inaccuracies in the representations and
55
<PAGE>
warranties of the other parties contained herein or in any document delivered
pursuant hereto; and (c) waive compliance by the other parties with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. The failure of any party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time.
9.2 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or registered mail, postage prepaid, and shall
be deemed to be given, dated and received when so delivered personally,
telegraphed or telecopied or, if mailed, five business days after the date of
mailing to the following address or telecopy number, or to such other address or
addresses as such Person may subsequently designate by notice given hereunder:
(a) if to Parent or Sub, to:
General Electric Capital Corporation
260 Long Ridge Road
Stamford, CT 06902
Attn: Victor Guaglianone, Esq.
Telephone: (203) 357-4584
Telecopy: (203) 357-4729
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: William M. Gutowitz, Esq.
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
56
<PAGE>
(b) if to the Company, to:
AmeriData Technologies, Inc.
700 Canal Street
Stamford, CT 06902
Attn: President
Telephone: (203) 357-1464
Telecopy: (203) 357-1531
with copies to:
Dewey Ballantine
1301 Sixth Avenue
New York, New York 10019
Attn: Jonathan L. Freedman, Esq.
Telephone: (212) 259-8000
Telecopy: (212) 259-6333
9.3 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents, and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the word "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
9.4 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (together with the Confidentiality Agreement, the
Stockholders Agreement and any other documents and instruments referred to
herein) constitutes the entire agreement (and supersedes all prior agreements
and understandings, both written and oral) among the parties hereto with respect
to the subject matter hereof and, except as provided in Section 6.6, is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
9.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
57
<PAGE>
YORK, WITHOUT REGARD TO ANY APPLICABLE CONFLICTS OF LAW, EXCEPT TO THE EXTENT
THE DGCL SHALL BE HELD TO GOVERN THE TERMS OF THE MERGER.
9.7 No Remedy in Certain Circumstances. Each party agrees
that, should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and enforceability of the
remaining provisions and obligations contained or set forth herein shall not in
any way be affected or impaired thereby. Except as otherwise provided by this
Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant, in each case, to an order or judgment of a court or other competent
authority, such party shall incur no liability or obligation unless such party
did not in good faith seek to resist or object to the imposition or entering of
such order or judgment.
9.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties, except that Sub
may assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to any newly-formed wholly-owned Subsidiary of Parent.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
9.9 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York or in New York state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any Federal court located in the State of New York or
any New York state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, and (b) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court.
58
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
AMERIDATA TECHNOLOGIES, INC.
By: /s/ Gerald A. Poch
-----------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Michael S. Ford
-----------------------------------
GAC ACQUISITION I CORP.
By: /s/ Michael S. Ford
-----------------------------------
59
<PAGE>
EXHIBIT A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered Shares promptly after
expiration or termination of the Offer), to pay for any Shares tendered, and may
postpone the acceptance for payment or, subject to the restriction referred to
above, payment for any Shares tendered, and may amend or terminate the Offer
(whether or not any Shares have theretofore been purchased or paid for) (A)
unless the following conditions have been satisfied: (i) there have been validly
tendered and not withdrawn prior to the time the Offer shall otherwise expire a
number of Shares which constitutes a majority of the Shares outstanding on a
fully-diluted basis on the date of purchase ("on a fully-diluted basis" for
purposes hereof meaning, as of any date, the number of Shares outstanding,
together with Shares the Company is or may be required to issue pursuant to
obligations outstanding at that date under employee stock option or other
benefit plans, options, warrants or convertible or exchangeable securities, or
otherwise) (the "Minimum Condition"); (ii) prior to the time the Offer shall
otherwise expire, Preferred Securities outstanding on the date of the Merger
Agreement having an aggregate liquidation preference of more than 50% of the
aggregate liquidation preference of all Preferred Securities outstanding on the
date of the Merger Agreement shall have been converted by the holders thereof
into Shares; (iii) all regulatory and related approvals of Governmental Entities
have been obtained or made on terms reasonably satisfactory to Sub (including,
without limitation, pursuant to the Competition Act (Canada), the Federal Law on
Economic Competition of Mexico and the Austrian Cartel Act of 1988, as amended);
(iv) any applicable waiting periods under the HSR Act shall have expired or been
terminated prior to the expiration of the Offer; (v) the Company shall have
caused the Stock Option Plan, the Stock Purchase Plan and the Subordinated
Debentures to be amended, in each case effective not later than the Effective
Time, in such manner as to provide that after the Effective Time, the holders of
the Equity Purchase Rights evidenced thereby shall only be entitled to receive
the consideration specified in the Merger Agreement; (vi) the FCC shall have
granted the Pro Forma Application, and the transactions contemplated by the
Merger Agreement with respect thereto shall have been consummated on terms
reasonably satisfactory to Parent; and/or (B) if, at any time on or after the
date of the Merger Agreement and before acceptance for payment of, or payment
for, such Shares any of the following events shall occur or shall be deemed by
Sub to have occurred:
(a) there shall be threatened, instituted or pending by any
United States, Canadian or other court or governmental entity any suit,
action or proceeding (1) challenging the acquisition by Parent or Sub
of any Shares under the Offer or seeking to restrain or prohibit the
making or consummation of the Offer or Merger or seeking to obtain from
the Company, Parent or any of their respective Subsidiaries any damages
that are material in relation to the Company and its Subsidiaries taken
as a
A-1
<PAGE>
whole, (2) seeking to prohibit or limit the ownership or operation by
the Company, Parent or any of their respective subsidiaries of any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken
as a whole, or to compel the Company or Parent to dispose of or hold
separate any material portion of the business or assets of the Company
and its subsidiaries, taken as a whole, or Parent and its subsidiaries,
taken as a whole, as a result of the Offer or any of the other
transactions contemplated by this Agreement, (3) seeking to impose
material limitations on the ability of Parent or Sub to acquire or
hold, or exercise full rights of ownership of, any Shares accepted for
payment pursuant to the Offer, including, without limitation, the right
to vote such Shares on all matters properly presented to the
shareholders of the Company, or (4) seeking to prohibit Parent or any
of its subsidiaries from effectively controlling in any material
respect any material portion of the business or operations of the
Company and its subsidiaries; or
(b) any United States, Canadian or other governmental entity
or authority or United States, Canadian or other domestic or foreign
court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order which is in effect
and which (1) materially restricts, prevents or prohibits consummation
of the Offer, the Merger or any other transaction contemplated by the
Merger Agreement or results in the obligation to pay material damages
as a result of or in connection with the transactions contemplated by
this Agreement, (2) prohibits or limits materially the ownership or
operation by the Company, Parent or any of their Subsidiaries of all or
any material portion of the business or assets of the Company and its
Subsidiaries taken as a whole or compels the Company, Parent, or any of
their Subsidiaries to dispose of or hold separate all or any material
portion of the business or assets of the Parent or any of its
Subsidiaries, or of the Company and its Subsidiaries taken as a whole,
(3) imposes limitations on the ability of Parent, Sub or any other
Subsidiary of Parent to acquire or hold, or to exercise effectively
full rights of ownership of, any Shares, including, without limitation,
the right to vote any Shares acquired by Sub pursuant to the Offer or
otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption
of the Merger Agreement and the transactions contemplated thereby or
(4) requires divestitures by Parent, Sub or any other affiliate of
Parent of any Shares;
(c) the representations and warranties of the Company
contained in the Merger Agreement shall not be true and correct when
made or (except for those representations and warranties that address
matters as of a specific date) shall have ceased to be true as of the
date of consummation of the Offer as though made on and as of such
date;
A-2
<PAGE>
(d) the Company shall not have performed or complied in
all material respects with any of its obligations under the Merger
Agreement to be performed or complied with by it;
(e) the Merger Agreement shall have been terminated in
accordance with its terms;
(f) the Board of Directors of the Company shall have (i)
withdrawn or materially modified or changed (including by amendment of
the Schedule 14D-9) in a manner adverse to Sub its recommendation of
the Offer, the Merger Agreement or the Merger, or (ii) the Board of
Directors shall have approved or recommended an Acquisition Proposal;
(g) all consents of third parties as are necessary in
connection with the transactions contemplated hereby (including
consents necessary to prevent any conflict, violation or breach of any
agreement of the Company or any of its Subsidiaries, other than
conflicts, breaches or violations of the agreements identified on
Schedule 4.1(c)(ii) to the Merger Agreement) shall have been obtained,
except such Consents the failure to deliver which could not reasonably
be expected to have a material adverse effect on the business,
operations, assets, condition (financial or otherwise) or prospects of
the Company and its Subsidiaries, taken as a whole;
(h) other than the filing of the Certificate of Merger with
respect to the Merger as provided for by Section 2.3 of the Merger
Agreement, all licenses, permits, authorizations, consents, orders,
qualifications or approvals of, or declarations or filings with, or
expirations of waiting periods imposed by, any Governmental Entity
requisite to consummation of the Merger and the transactions
contemplated thereby, shall have been filed, occurred or been obtained,
as the case may be;
(i) (1) it shall have been publicly disclosed or Sub shall
have otherwise learned that, except as contemplated by the Stockholders
Agreement, any Person or "group" (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent or its affiliates or any group of
which any of them is a member, shall have acquired beneficial ownership
(determined pursuant to Rule 13d-3 promulgated under the Exchange Act)
of more than 20% of any class or series of capital stock of the group
or otherwise, or shall have been granted an option, right or warrant,
conditional of capital stock of the Company (including the Shares); or
(2) any person or group Company with respect to (A) a merger,
consolidation or other business combination with, or acquisition of a
material portion of the assets of, the Company, or (B) a tender or
exchange offer for Shares;
A-3
<PAGE>
(j) there shall have occurred, developed or come into effect or
existence any event, action, state, condition or major financial
occurrence of national or international consequence or any law,
regulation, action, government regulation, inquiry or other occurrence
of any nature whatsoever which, in the opinion of Sub, materially
adversely affects or involves, or is reasonably likely to materially
adversely affect or involve, (1) the financial markets in the United
States generally, or (2) the financial condition, business, operations,
assets, affairs or prospects of the Company and its Subsidiaries taken
as a whole or the value of the Shares;
which, in the judgment of Sub in any such case, and regardless of the
circumstances (including any action or omission by Parent or Sub) giving rise to
any such condition, makes it inadvisable to proceed with such acceptance for
payment or payment.
The foregoing conditions are for the sole benefit of
Sub and its affiliates and may be asserted by Sub regardless of the
circumstances (including, without limitation, any action or inaction by Sub or
any of its affiliates) giving rise to any such condition or may be waived by
Sub, in whole or in part, from time to time in its sole discretion, except as
otherwise provided in the Agreement. The failure by Sub at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right and may be asserted at any time
and from time to time. Any determination by Sub concerning any of the events
described herein shall be final and binding. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to them in the
Agreement and Plan of Merger among the Parent, Sub and the Company to which this
Exhibit A is attached.
A-4
<PAGE>
Exhibit D
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information concerning stock
ownership of all persons known by the Company to own beneficially 5% or more of
the outstanding shares of the Company's Common Stock, each director, each
executive officer and all executive officers and directors of the Company as a
group, as of December 31, 1995. Except as disclosed in a footnote each person
shown on the table has sole voting power and sole investment power with respect
to the shares shown on the table with respect to such shares.
<PAGE>
Amount and Percent of
Name and Address of Beneficial Nature of Beneficial Outstanding
Owner or Identity of Group Ownership Common Stock
- ---------------------------------- ---------------------- ------------
Leonard J. Fassler (1)(2).................. 638,537 2.9%
Gerald A. Poch (1)(3)...................... 653,098 3.0%
Edward A. Kerbs (4)........................ 75,475 *
c/o Spear, Leeds & Kellogg
120 Broadway
New York, NY 10271
John L. Harvatine (7)...................... 72,433 *
5121 Winnetka Avenue
Minneapolis, MN 55428
Gerald M. LeBow (1)(5)..................... 349,903 1.6%
James K. McCleary (6)...................... 533,136 2.5%
5121 Winnetka Avenue
Minneapolis, MN 55428
Richard H. McDevitt (1)(8)................. 160,792 *
Anthony P. Towell (9)...................... 128,728 *
1468 Ridge Road
Syossett, NY 11791
Richard J. Williams (10)................... 30,000 *
c/o Triumph Capital Group, Inc.
Triumph-Connecticut Limited................ 1,208,750 5.5%
Partnership (TCLP) (12)
City Place I
35th Floor
Hartford, CT 06103
Dawson Samberg............................. 1,168,150 5.4%
Capital Management, Inc. (11)
354 Pequot Avenue
Southport, CT 06490
General Electric Pension Trust (GEPT) (13). 2,101,404 9.7%
3001 Summer Street
Stamford, CT 06902
All officers and directors as a group (14). 2,642,100 11.8%
- -----------------------------
* Less than 1%
(1) c/o AmeriData Technologies, Inc., 700 Canal Street, Stamford, CT 06902.
(2) Includes 202,500 shares subject to options. Does not include 31,041 shares
which are owned by Bernice Fassler, Mr. Fassler's wife, as to which Mr.
Fassler disclaims beneficial ownership.
(3) Includes 202,500 shares subject to options. Does not include 57,835 shares
owned by the Poch Children Trust (Mr. Poch is neither the settler nor
beneficiary of this trust) as to which Mr. Poch disclaims beneficial
ownership.
(4) Includes 67,500 shares subject to options. (Also includes 832 shares
subject to currently exercisable warrants issued to Mr. Kerbs in connection
with the purchase and subsequent exchange of the Company's Floating Rate
Promissory Notes.) Does not include 34,875 shares held by SLK-1987 and
2,625 shares held by SLK-1987(A), general partnerships, certain partners of
which are members of Spear, Leeds & Kellogg, an entity for which Mr. Kerbs
serves as Managing Director. Mr. Kerbs disclaims beneficial ownership of
these shares.
(5) Includes 67,500 shares subject to options. Also includes 1,667 shares
subject to currently exercisable warrants and 14,288 shares issued to the
TMC Pension Trust (the beneficiary of which is Mr. LeBow).
(6) Includes 105,000 shares subject to options. Does not include 182,250 shares
owned by the JCM Charitable Remainder Trust as to which Mr. McCleary
disclaims beneficial ownership.
(7) Includes 60,100 shares subject to options. Also includes 333 shares owned
by Mr. Harvatine's wife as to which Mr. Harvatine disclaims beneficial
ownership.
(8) Includes 63,125 shares subject to options. Also includes 230 shares held by
Mr. McDevitt's wife as to which Mr. McDevitt disclaims beneficial
ownership.
(9) Includes 50,625 shares subject to options. Also includes 48,620 shares held
by Mr. Towell's wife as to which Mr. Towell disclaims beneficial ownership.
(10) Includes 30,000 shares subject to options. Does not include 1,208,750
shares held by TCLP.
(11) Based solely on information on a Schedule 13D dated November 9, 1995
furnished to the Company by Dawson-Samberg Capital Management
("Dawson-Samberg"), Pequot General Partners ("Pequot") DS International and
Pequot Endowment Partners ("DS International") and Pequot Endowment Fund LP
(Pequot Endowment). The Schedule 13D indicates that Dawson-Samberg, Pequot
DS International and Pequot Endowment beneficially own 117,350, 404,600,
373,300 and 267,900 shares, respectively,
2
<PAGE>
which represents approximately .5%, 1.9%, 1.7% and 1.3% of the outstanding
Common Stock, respectively.
(12) Includes 550,000 warrants which are exercisable.
(13) Based solely on information in Amendment No. 2 to Schedule 13G dated
February 10, 1995 furnished to the Company by GEPT, GEPT now beneficially
owns 2,101,404 shares of common stock of the Company representing
approximately 9.7 percent of the outstanding Common Stock.
(14) Includes 848,850 shares subject to options. Also includes 2,499 shares
subject to currently exercisable warrants issued in connection with the
purchase and subsequent exchange of the Company's Floating Rate Promissory
Notes. Does not include 88,876 shares issued to Mr. Fassler's wife and the
Poch Children Trust.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company to the Principal Executive Officer
and the four other most highly compensated executive officers (collectively, the
"named executive officers") for services rendered during the fiscal years ended
December 31, 1993, 1994 and 1995.
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Annual Compensation Securities
------------------------------------------ Underlying
Name and Principal Position Year Salary($) Bonus($) Options
- ------------------------------- ---------- ----------------- ------------ -----------------
<S> <C> <C> <C> <C>
Gerald A. Poch....................................... 1995 311,700 0 150,000(1)
Co-Chairman of the Board, Co- 1994 300,000 470,000 15,000
President and Principal Executive 1993 211,153 100,000 90,000
Officer
Leonard J. Fassler................................... 1995 311,700 0 150,000(1)
Co-Chairman of the Board 1994 300,000 470,000 15,000
1993 221,153 0 90,000
James K. McCleary.................................... 1995 300,000 0 75,000
Co-Chairman of the Board, Co- 1994 300,000 470,000 15,000
President and Chief Executive 1993 100,000(2) 0 15,000
Officer of AmeriData, Inc.
John L. Harvatine.................................... 1995 154,800 38,519 57,500
Vice President and Chief Financial 1994 147,692 63,998 0
Officer 1993 88,286 25,953 2,600
David F. Mitchell.................................... 1995 167,300 0 5,625
President--AmeriData Consulting, Inc. 1994 63,786(3) 0 46,000
</TABLE>
- --------------------------
(1) Includes 75,000 options regranted upon cancellation of option originally
granted in 1993.
(2) Salary from July 1993 upon commencement of his employment with the Company.
(3) Salary from September 1994 upon commencement of his employment with the
Company.
3
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to
individual grants of stock options made during the fiscal year ended December
31, 1995 to each of the named executive officers.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Individual Grants Terms(1)
-------------------------------------------------- -------------------------------------
% of
Total
Options
Number of Granted
Securities to Exercise
Underlying Employees or Base
Options in Fiscal Price Expiration 5% 10%
Name Granted(#) Year ($/Sh) Date Appreciation($) Appreciation($)
- ------- -------------- ----------- ---------- ------------ ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Gerald A. Poch.................. 15,000(2) 1.5 9.625 3/1/06 $102,555 $267,544
60,000(3) 5.9 7.625 5/22/05 287,719 729,137
75,000(4) 7.5 7.625 8/4/04 359,649 911,421
Leonard J. Fassler.............. 15,000(2) 1.5 9.625 3/1/06 102,555 267,544
60,000(3) 5.9 7.625 5/22/05 287,719 729,137
75,000(4) 7.5 7.625 8/4/04 359,649 911,421
James K. McCleary............... 15,000(2) 1.5 9.625 3/1/06 102,555 267,544
60,000(3) 5.9 7.625 5/22/05 287,719 729,137
John L. Harvatine............... 50,000(2) 5.0 10.5 10/30/05 330,170 836,715
7,500(5) .7 7.625 5/22/05 40,284 104,875
David F. Mitchell............... 5,625(5) .6 7.625 5/22/05 30,213 78,656
</TABLE>
- ------------------------------
(1) The indicated dollar amounts are the result of calculations based on the
exercise price of each option and assume five and ten percent annual
appreciation rates set by the Securities and Exchange Commission over the
ten year option period, and, therefore, are not intended to forecast
possible future appreciation, if any, of the Company's stock price.
(2) Each of these stock options vest and become exercisable in equal annual
installments of 25% each on the first through the fourth anniversaries of
the date of grant and expire ten years from the date of grant.
(3) Vest and are exercisable 50% per year commencing on December 31, 1995 and
December 31, 1996.
(4) Reflects options cancelled and regranted. Such options vested in full on
December 31, 1995.
(5) 50% of the options shall vest in 25% increments over four years, the other
50% are performance based and vest on March 31, 1996 if certain objectives
are met. Should optionee fail to meet objectives, the performance based
option shares will vest in 16.66% increments over six years commencing
March 31, 1996.
4
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
The following table sets forth certain information with respect to the
outstanding stock options as of December 31, 1995 for each of the named
executive officers.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-
Shares Underlying Unexercised the-Money Options at
Acquired on Options at 12/31/95($) 12/31/95($)
Exercise(1) Value ---------------------------- ----------------------------
Name (#) Realized(2)($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------- ------------- ----------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Gerald A. Poch................ 120,000 1,189,669 110,625 91,875 $224,831 $281,925
Leonard J. Fassler............ 120,000 1,189,669 110,625 91,875 224,831 281,925
James K. McCleary............. 0 41,250 63,750 60,150 60,225
John L. Harvatine............. 0 1,300 58,800 5,369 20,406
David F. Mitchell............. 0 11,500 40,125 0 11,128
</TABLE>
- ------------------------------
(1) These shares were acquired upon the exercise of options granted from 1991
through 1993.
(2) Market value of underlying securities at exercise date or year-end, as the
case may be, minus the exercise price.
EMPLOYMENT AGREEMENTS
Effective August 1, 1993, the Company entered into employment agreements
with each of Gerald A. Poch, Co-Chairman of the Board, Co-President and
Principal Executive Officer of the Company and Leonard J. Fassler, Co-Chairman
of the Board of the Company, which agreements expire in December 1998. The
agreements, which were amended in January 1994 and amended and restated in March
1995, provide for a base salary at the rate of $250,000 per year through
December 31, 1993, and provide for a base salary at the rate of $300,000 per
year thereafter, subject to cost of living increases and an automobile allowance
not to exceed $500 per month. In January 1994, AmeriData entered into an
employment agreement with James K. McCleary, Co-President and Co-Chairman of the
Board of the Company and Chief Executive Officer of AmeriData, which was amended
in March 1995, and expires in December 1998. The agreement provides for a base
salary at the rate of $300,000 per year, subject to cost of living increases and
an automobile allowance not to exceed $500 per month. In 1995, the base salary
of each of Messrs. Poch and Fassler was increased to $311,700 pursuant to the
cost of living adjustment, which adjustment Mr. McCleary did not utilize in
1995. The agreements of Messrs. Poch, Fassler and McCleary also provide that an
annual bonus pool may be established of up to 10% of the Company's pre-tax
income for the awarding of bonuses to senior management and that Messrs. Poch,
Fassler and McCleary are each entitled to an annual bonus equal to 2.5% of such
income, provided, however, that the annual bonus and salary for each of Messrs.
Poch, Fassler and McCleary for any year shall not exceed an aggregate of $1
million each. The employment agreements provide for the employees to devote
5
<PAGE>
substantially all of their business time to the Company, are automatically
renewable for successive one-year terms unless terminated by either party upon
three months' prior written notice and contain provisions that the employees
will not compete with the Company during the term of their employment or for a
period of two years following termination. Each agreement also contains
provisions that in the event the employee's employment is terminated, except by
reason of termination for cause, the Company will pay severance equal to the
base salary and bonus through the end of the term of the agreement.
The Company is currently compensating Mr. Harvatine at a rate of $175,000
per annum plus a car allowance not to exceed $500 per month. Prior to his
appointment as Chief Financial Officer of the Company in September 1995, the
Company compensated Mr. Harvatine at a rate of $150,000 per annum as well as a
bonus in 1995 of $38,519 and a car allowance on substantially similar terms as
described above. In connection with the acquisition of David Mitchell &
Associates, Inc., AmeriData Consulting, Inc. entered into an employment
agreement dated September 9, 1994 with David F. Mitchell, President of AmeriData
Consulting, Inc., a wholly-owned subsidiary of the Company. The agreement
expires on December 31, 1999 and provides for a base salary of up to $250,000
per year, subject to annual increases at the discretion of the Board of
Directors, and an automobile allowance not to exceed $500 per month. The
agreement provides that Mr. Mitchell is entitled to an annual bonus equal to 10%
of the pre-tax income of AmeriData Consulting, Inc. and its subsidiaries
commencing in 1996. The agreement also provides that in the event Mr. Mitchell's
employment is terminated, except by reason of termination for cause, the Company
will pay Mr. Mitchell his base salary and bonus for the remainder of the
employment term. Pursuant to the acquisition agreements, the Company also agreed
to pay Mr. Mitchell additional purchase price upon the achievement of certain
earnings in 1994 and 1995. Accordingly, in February 1995, Mr. Mitchell
received $500,000 for 1994 performance. In addition, Mr. Mitchell may receive
an additional purchase price adjustment upon the determination of 1995
performance, which is currently being reviewed.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
INTRODUCTION
This report discusses the Company's 1995 compensation policies and the
manner in which compensation was determined for the Company's executive
officers, including the Principal Executive Officer and the other named
executive officers.
The Compensation Committee consists of Messrs. Kerbs, Towell and Williams,
each a non-employee director. The Compensation Committee was formed to conduct
annual reviews of the compensation of the Company's senior executives and to
administer the Plans. During 1995, the Compensation Committee approved certain
amendments to the
6
<PAGE>
1991 Stock Option Plan. The Compensation Committee reviews and approves the
annual incentive bonus payments to executive officers, the employment
arrangement with executive officers and the grant of options to executive
officers and employee directors. The Compensation Committee has engaged Towers
Perrin, an Executive Compensation consulting firm, to assist in such review.
The Company's compensation policy for executive officers is designed to
provide competitive compensation based on individual contributions and
achievements and overall corporate performance in order to attract and retain
qualified executives. The performance of each senior executive is examined
annually by the Compensation Committee based on a review of such officer's
achievements, including financial and strategic management, performance of key
responsibilities, development of shareholder equity, and other characteristics
critical to the overall success and competitiveness of the Company. The Company
attempts to align each executive's compensation with the interests of the
Company's shareholders by linking executive compensation to Company performance
with a compensation package consisting of a base salary, bonuses and stock
options, in each case to reward individual contributions to the Company's
success.
BASE SALARY
Base salary is established at a level sufficient to attract and retain
highly qualified executives in a competitive environment and within the
Company's internal salary structure. Messrs. Poch's, Fassler's and McCleary's
salaries are subject to the terms of individual employment agreements that were
effective with respect to Messrs. Poch and Fassler on August 1, 1993, as amended
in January 1994, and Mr. McCleary on January 1, 1994, and each as amended and
restated in March 1995 and each of which expire in December 1998. See the
information under the heading "Employment Agreements." Such employment
agreements do not provide for future increases in base salary through 1998 other
than annual cost of living adjustments. In 1993 and 1994, there was no such
adjustment and the initial cost of living adjustment of $11,700 was effective in
1995 for Messrs. Poch and Fassler. The average increase in base salaries for
executive officers of the Company from 1994 to 1995 was 3.9%. The base salary of
the Principal Executive Officer, Mr. Poch, was increased from $300,000 in 1994
to $311,700 in 1995 pursuant to the terms of his employment agreement, which
provides for a cost of living adjustment.
7
<PAGE>
INCENTIVE BONUS
Pursuant to their individual employment agreements, Messrs. Poch, Fassler
and McCleary were each entitled to an annual bonus equal to 2.5% of the
Company's pre-tax income. However, Messrs. Poch, Fassler and McCleary elected
not to receive a bonus for their 1995 performance. Mr. Harvatine received a
bonus of $38,519 prior to his appointment as Chief Financial Officer pursuant to
the AmeriData Technologies, Inc. employee bonus plan.
STOCK OPTION GRANTS
The most significant form of long-term incentive compensation for
executives of the Company is grants of stock options under the Company's 1991
Stock Option Plan. The Company believes that such grants reinforce an
executive's long-term perspective on the Company's performance since such
compensation most directly reflects the financial performance of the Company and
increases in shareholder value.
Stock Options under the 1991 Stock Option Plan are granted to executive
officers at the fair market value of the Company's Common Stock on the date of
grant, and the majority of which grants do not vest more than 25 percent each
year and are exercisable for periods ranging from five to ten years. The grant
of appropriate levels of stock options exercisable over time is expected to
encourage equity appreciation by providing a direct incentive to executives to
achieve long-term success for the Company. As set forth on the table entitled
"Option Grants in Last Fiscal Year," the named executive officers received
grants of options to purchase an aggregate of 323,125 shares of Common Stock
in 1995 under the Company's 1991 Stock Option Plan. In addition, 157,500 options
granted in 1993 to Messrs. Fassler, McDevitt and Poch were canceled and
regranted as described under the heading "Compensation Committee Report on 1995
Cancellation and Regrant of Options". Mr. Mitchell received a grant of 5,625
options and Mr. Harvatine received a grant of 7,500 options in May 1995 and a
grant of 50,000 options at the commencement of his role as Chief Financial
Officer with the Company. Exercise prices of options granted to directors and
executive officers range from $7.62 to $9.62 per share, in each case
representing the fair market value of the Company's Common Stock on the date of
grant. The options are generally exercisable for ten years from their respective
dates of grant. Options with respect to 369,050 shares were vested on December
31, 1995. The balance generally vest in equal annual installments of 25 percent
each on the first through the fourth anniversaries of the date of grant other
than 180,000 options granted in May 1995, which options vest in 50 percent
installments on the anniversary of the last day of the calendar year in which
they were granted, and 13,125 options, as to which 50 percent vest in 25 percent
increments over four years and 50 percent vest on March 31, 1996 if certain
objectives are met and, if such objectives are not met, these options vest in
16.6 percent
8
<PAGE>
increments over six years. In 1995, the Principal Executive Officer received
options for 15,000 shares, none of which were vested on December 31, 1995 and
options for 60,000 shares, 50 percent of which vested on December 31, 1995, in
addition to the 75,000 options cancelled and regranted as discussed below. The
determination of the amounts and vesting of the options granted to executives of
the Company in 1995 was approved by the Compensation Committee based on its
subjective judgment as to the respective contributions of each executive to the
Company during 1995 and the expected future contribution of each executive
during the term of the option. In making such grants in 1995, the Compensation
Committee considered the number of options previously granted to each executive.
On March 1 of each year commencing in 1995, the Stock Option Plan provides for
an automatic grant of 15,000 options to each non-employee director. The formula
grant to the non-employee directors was approved by the Company's shareholders
at the Annual Meeting held in May 1994. Similar grants to the inside directors
were approved by the Compensation Committee in March 1996. Any similar grants to
employee directors or other grants of options under the Stock Option Plan is
subject to the approval of the Compensation Committee.
COMPENSATION COMMITTEE REPORT ON 1995 CANCELLATION AND
REGRANT OF OPTIONS
During the 1995 fiscal year, the Compensation Committee felt that
circumstances had made it necessary for the Company to implement an option
cancellation/regrant program pursuant to which outstanding options in an
aggregate amount of 157,500 held by certain of the Company's long-standing
executive officers under the Option Plan were canceled, and new options for the
same number of shares were granted with a lower exercise price per share equal
to the market price of the Company's Common Stock on the date of grant.
The Compensation Committee determined that this program was necessary
because equity incentives are a significant component of the total compensation
package of executive employees and play a substantial role in the Company's
ability to retain the services of individuals essential to the Company's
long-term financial success. Prior to the implementation of the program, the
market price of the Company's Common Stock had fluctuated as a result of market
factors which affected stock prices throughout the industry and which the
Compensation Committee believed did not necessarily reflect the market's
particular assessment of the Company's progress in revenue growth, customer
satisfaction and marketing. The Compensation Committee felt that the Company's
ability to retain such key employees would be significantly improved by
restoring the value to their options in the form of regranted options at the
market price of the Company's Common Stock on the date of grant. Accordingly, on
May 19, 1995, the Compensation Committee approved the cancellation of stock
options granted to certain of the Company's founding executive officers, Messrs.
Fassler, Poch and McDevitt with an exercise price of $13.17, together with a
regrant of a new option for the same
9
<PAGE>
number of shares with an exercise price of $7.625, which exercise price was
equal to the market price of the Company's Common Stock on such date. Each
regranted option covered the same number of shares subject to the higher-priced
option at the time of cancellation and is on substantially similar terms to the
old grant, which was fully vested as of December 31,1993 except that the
regranted options vested in full on December 31, 1995. The lower exercise prices
in effect under the regranted options make those options valuable once again to
the executive officers critical to the Company's financial performance. No other
option grants, including without limitation the automatic option grants to the
non-employee directors, were eligible for participation in the cancellation and
regrant program.
10
<PAGE>
TEN-YEAR INFORMATION REGARDING REPRICING,
REPLACEMENT OR CANCELLATION
AND REGRANT OF OPTIONS
As discussed in the Compensation Committee Report on 1995 Cancellation and
Regrant of Options, the Company implemented an option cancellation/regrant
program with respect to stock options granted in 1993 to certain of the founding
key executive officers for a total of 157,500 shares effective on May 19,1995
and options held by those employees with an exercise price of $13.17 were
canceled in exchange for new options for the same number of shares with an
exercise price of $7.625 per share.
The following table sets forth information with respect to each of the
Company's executive officers concerning his participation in the option
cancellation/regrant program which was effected on May 19, 1995.
<TABLE>
<CAPTION>
Length of
Number of Market Price Exercise Original
Securities of Stock at Price at Option Term
Underlying Time of Time of Remaining at
Options Repricing or Repricing or New Date of
Repriced or Amendment Amendment Exercise Repricing or
Name and Principal Position Date Amended ($) ($) Price ($) Amendment
- ------------------------------- ----------- -------------- ------------- ------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gerald A. Poch--Co-
Chairman of the Board,
Co-President and
Principal Executive
Officer......................... 5/19/95 75,000 7.625 13.17 7.625 9 years
Leonard J. Fassler--Co-
Chairman of the Board........... 5/19/95 75,000 7.625 13.17 7.625 9 years
Richard H. McDevitt--Vice
President, Treasurer
and Principal
Accounting Officer.............. 5/19/95 7,500 7.625 13.17 7.625 9 years
</TABLE>
DEDUCTIBILITY CAP ON EXECUTIVE COMPENSATION
Beginning in 1994, a new federal tax law disallows corporate deductibility
for certain compensation paid in excess of $1 million to the Principal Executive
Officer and the four other most highly paid executive officers of publicly held
companies. "Performance-based compensation," as defined in the tax law, is not
subject to the deductibility limitation provided shareholder approval and other
requirements are met. Prior to the election of the Compensation Committee,
executive option grants were determined by the entire Board of Directors. Some
of the options previously granted to such executives by the entire Board of
Directors may be subject to the deductibility limitation to the extent that
exercises of options (or sales of shares received upon the exercise of incentive
stock options), together with other disqualified compensation exceeds $1 million
in any year for such executive officers. It is the Company's general intention
to make efforts to maximize the deductibility of compensation paid to its
officers under
11
<PAGE>
the new law. At the Company's Annual Meeting held in May 1995, the shareholders
approved amendments to the Company's 1991 Stock Option plan to allow grants of
stock options, of up to 75,000 shares per year to any person, that are exempt
from the deductibility limits imposed by the new law. During 1995, the Company
did not exceed the $1 million deductibility cap with respect to any officer
covered by the new law.
The Compensation Committee hereby submits this report.
EDWARD A. KERBS
ANTHONY P. TOWELL
RICHARD J. WILLIAMS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Each member of the Company's Compensation Committee participated in
deliberations concerning executive officer compensation.
Mr. McCleary currently serves as Co-Chairman of the Board of Directors and
Co-President of the Company and has an employment agreement with the Company as
described under the heading "Employment Agreements." Additionally, the Company
leases AmeriData's headquarters and warehouse facilities from Mr. McCleary and
his wife, Carol A. E. McCleary, pursuant to a sixteen year lease providing for a
base monthly rent of approximately $44,000.
12
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph summarizes the cumulative return experienced by the
Company's shareholders from October 29, 1991 through December 31, 1995, compared
to the Standard and Poor's 500 index; a composite peer group index consisting of
the Hambrecht & Quist indexes for Computer Software-Information Technology
Companies, Computer Hardware-Personal Computer Manufacturers, and
Communications-Networking Companies. The returns set forth are based on the
Company's Common Stock price beginning on October 29, 1991, at which date the
stock was at its initial public offering price, and the two composite indices at
October 29, 1991. The comparison assumes $100 was invested on October 29, 1991
in the Company's Common Stock and in each of the foregoing indices. The Company
has not paid dividends on its Common Stock since October 29, 1991.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG AMERIDATA TECHNOLOGIES, INC., THE S&P 500 INDEX AND A PEER GROUP
Ameridata Peer Group S&P 500
--------- ----------- ---------
1991 100 1991 100 1991 100
1992 126 1992 108 1992 104
1993 289 1993 148 1993 117
1994 1216 1994 165 1994 128
1995 632 1995 206 1995 130
1996 608 1996 319 1996 179
* $100 INVESTED ON 10/29/91 IN STOCK OR INDEX--INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
13
<PAGE>
DIRECTORS' COMPENSATION
In 1995, all of the members of the Company's Board of Directors received
stock options to purchase 15,000 shares of the Company's Common Stock under the
Company's 1991 Stock Option Plan. Commencing in 1995, non-employee directors
received $500 per each Compensation or Audit Committee meeting attended. On
March 1st of each year, non-employee directors receive automatic grants of
options to purchase 15,000 shares of the Company's Common Stock. Such options
vest at a rate of 25 percent per year and may be exercised at a price equal to
the fair market value of the Common Stock on the date of grant. Similar grants
of options to the inside directors were approved in March 1996 by the
Compensation Committee. The options are generally exercisable for a period of
ten years and expire three months after retirement (or resignation) or one year
following death or disability. In addition, Mr. Towell received approximately
$15,000 in connection with services rendered to the Company's United Kingdom
subsidiary.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
All of the executive officers and directors of the Company filed the
required forms pursuant to Section 16 of the Securities Exchange Act of 1934, as
amended for the year ended December 31, 1995. However, each of Messrs. Poch,
Fassler, McCleary and Harvatine filed a late Form 5, and Messrs. Poch and
Fassler reported the repricing discussed under the heading "Compensation
Committee Report on 1995 Cancellation and Regrant of Options" on such Form and
Mr. Harvatine filed a later Form 3.
For a description of certain other relationships and transactions see the
heading "Compensation Committee Interlocks and Insider Participation."
14
<PAGE>
PROPOSAL TWO: AMENDMENT TO THE 1991 STOCK OPTION PLAN
The Board of Directors of the Company has approved an amendment to the
AmeriData Technologies, Inc. 1991 Stock Option Plan (the "Stock Option Plan"),
subject to shareholder approval, to increase the number of shares available for
grant under the Stock Option Plan from 2,875,000 to 4,050,000. This amendment
will only be implemented if the approval of the Company's shareholders is
obtained. The following is a summary of the material features of the Stock
Option Plan, as well as the amendment proposed for approval.
The Company has adopted the Stock Option Plan to provide incentive to
employees, including officers, directors and consultants of the Company to
encourage such individuals' proprietary interest in the Company, to encourage
such individuals to remain in the employ of the Company and to attract to the
Company individuals of experience and ability. Any employee may be granted stock
options that qualify as "incentive stock options" (the "Incentive Stock
Options") under Section 422 of the Code and any employee, officer, director,
consultant of, or other person rendering services to the Company may be granted
options which do not qualify under such section (the "Nonqualified Options").
Currently, the group of directors and employees eligible for the grant of stock
options under the Stock Option Plan would include seven directors, six executive
officers and approximately 2,100 other employees of the Company. The Stock
Option Plan was adopted by the Board and became effective on June 10, 1991 and
will expire June 10, 2001. Prior to such date, the Board or the Compensation
Committee may discontinue the Stock Option Plan, in which event any options then
outstanding shall remain in effect until they have been exercised, terminated or
expired by their respective terms. In addition, the Board or the Compensation
Committee may amend or modify the Stock Option Plan in any respect at any time
prior to its termination, except that no amendment to the Stock Option Plan
which (i) modifies the requirements as to eligibility and participation under
the Stock Option Plan, (ii) increases the maximum number of shares that may be
issued under the Stock Option Plan, (iii) materially increases the benefits
accruing to participants, or (iv) amends the provisions of the Stock Option Plan
relating to the eligibility, amount, price or timing of grants of options to
non-employee directors more than once every six months, except that this
restriction (iv) shall apply solely to the extent necessary to satisfy the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934, shall be
effective without the approval of the shareholders of the Company. No revision
or amendment of the Stock Option Plan that adversely affects any Option
theretofore granted may be made without the consent of the optionee or its
permitted transferee.
The Stock Option Plan is administered by the Compensation Committee
appointed by the Board, consisting of not less than two members. A person may
serve on the Compensation Committee only if he is a nonemployee director of the
Company. The Compensation Committee shall from time-to-time, at its discretion,
determine who shall be granted options, the number of shares of Common Stock to
be granted to each optionee, the designation of such options as Incentive Stock
Options or Nonqualified Options and the exercise prices thereof. All such
determinations and the interpretation and construction by the Compensation
Committee of any provisions of the Stock Option Plan or any option granted
thereunder is binding and conclusive upon optionees.
Each option granted under the Stock Option Plan will provide an exercise
price determined by the Compensation Committee provided, however, that the
exercise price (i) in the case of an Incentive Stock Option granted to an
employee who is not a 10% shareholder of the Company, shall not be less than the
fair market value of the shares of Common Stock to which the option relates on
the date of grant, (ii) in the case of an Incentive Stock Option granted to an
employee who is a 10% shareholder of the Company, shall not be less than 110% of
the fair market value of the shares of Common Stock to which the option relates
on the date of grant, and (iii) in the case of a Nonqualified Stock Option,
shall not be granted at less than the par value of the shares of Common Stock to
which the option relates.
15
<PAGE>
The Compensation Committee, in its discretion, determines the period over
which an option will become exercisable. No Incentive Stock Option granted to an
employee who is not a 10% shareholder of the Company shall be exercisable after
the expiration of 10 years from its date of grant and no Incentive Stock Option
granted to an employee who is a 10% shareholder of the Company shall be
exercisable after the expiration of 5 years from its date of grant. The
Compensation Committee may, in its sole discretion at any time and from time to
time for any part or all of an option, accelerate the date on which an option
becomes exercisable. The aggregate fair market value of shares of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by the same optionee during any calendar year (under the Stock Option Plan and
all other plans maintained by the Company) shall not exceed $100,000. Once an
option or any portion of an option becomes exercisable, such option or portion
may be exercised at any time prior to its expiration or termination. Payment of
the aggregate option price (plus applicable withholding taxes) may generally be
made either (i) in cash or cash equivalent, (ii) at the discretion of the
Compensation Committee, in shares of Common Stock owned by the optionee and
valued at their fair market value on the date of exercise or (iii) a combination
of these methods of payment.
In the event of an optionee's termination of employment (other than for
death or permanent or total disability or, in the case of a Nonqualified Option,
retirement), the optionee's right to exercise an option shall terminate three
months after the date of termination of employment. In the event of an
optionee's termination of employment by reason of death or permanent or total
disability or, in the case of a Nonqualified Option, retirement, the right to
exercise an option shall terminate one year after the date of such termination
of employment. Options granted under the Stock Option Plan are not assignable or
otherwise transferable except by will or the laws of descent and distribution.
Certain restrictions, relating to the satisfaction of applicable security laws,
apply to the exercise of stock options and resale of Common Stock acquired upon
the exercise of a stock option under the Stock Option Plan.
Each nonemployee director of the Company shall receive a grant of an
option to purchase 15,000 shares of Common Stock on each March 1. Each such
option granted to a nonemployee director shall be a Nonqualified Option and
shall be the only options granted under the Stock Option Plan to nonemployee
directors. The exercise price of each share of Common Stock subject to an option
granted to a nonemployee director shall be 100% of the fair market value of a
share of Common Stock on the date of grant. Each option granted to a nonemployee
director shall vest and become exercisable in cumulative annual installments,
each of which shall relate to 25% of the total number of shares subject to such
option, on each of the first through the fourth anniversary of the date of grant
if such Nonemployee Director is a member of the Board on such anniversary.
During fiscal year 1995, options to purchase Common Stock were granted
under the Stock Option Plan to the named executive officers of the Company as
set forth on the table under the heading "Option Grants in Last Fiscal Year." In
1995, 480,625 shares of Common Stock subject to options, including 157,500
repriced options were granted to all current executive officers as a group at an
average weighted exercise price of $8.22 per share, 45,000 shares of Common
Stock were granted to all current directors of the Company who are not
executives as a group at an average weighted exercise price of $9.625, and
645,075 shares of Common Stock subject to options were granted to all employees
of the Company at an average weighted exercise price of $8.01 per share,
including all current officers who are not named executive officers, as a group.
With the exception of options to be granted to nonemployee directors, stock
option to be granted in the future under the Stock Option Plan are granted at
the discretion of the Compensation Committee and are not currently determinable,
however, it is anticipated that grants will be made to the employee directors by
the Compensation Committee in an amount similar to the grants to the
non-employee directors.
An optionee will not generally recognize any taxable income upon the grant
of a Nonqualified Option because, under current Treasury regulations pursuant to
Section 83 of the Code, the fair market value of an option at the time it is
granted is ordinarily not considered to be "readily ascertainable." However,
upon exercise of a Nonqualified Option, an optionee must recognize ordinary
income in an amount equal to the excess of the fair market value of the Common
Stock at the time of exercise over the exercise price. Upon the subsequent
disposition of the Common Stock, the optionee will realize a capital gain or
loss, depending on whether the selling price exceeds the fair market value of
the Common Stock on the date of exercise. The optionee's holding period in the
Common Stock, for capital gains and losses purposes, begins on the date of
exercise.
An optionee's tax basis in the shares received on exercise of a
Nonqualified Option will be equal to the amount of consideration paid by the
optionee on exercise, plus the amount of ordinary income recognized as a result
of the receipt of such shares. The Company will be entitled to a deduction for
federal income tax purposes at the same time as
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<PAGE>
the optionee recognizes taxable income in an amount equal to the taxable income
recognized by the optionee and reported to the Internal Revenue Service.
Under Section 422 of the Code, no taxable income is realized by the
optionee upon the grant or exercise of an Incentive Stock Option, provided that
the optionee is continuously employed by the Company (or its parent or
subsidiary corporations) during the period beginning on the date of grant of the
option and generally ending on the date three months before the date of exercise
of the option. However, the exercise of an Incentive Stock Option may result in
alternative minimum tax liability for the optionee. If no disposition of shares
of Common Stock issued to an optionee pursuant to the exercise of an Incentive
Stock Option is made by the optionee within two years from the date of grant of
the option nor within one year after the transfer of such shares of Common Stock
to the optionee, then upon the disposition of such shares of Common Stock, any
amount realized in excess of the exercise price will be taxed to the optionee as
long-term capital gain, and no deduction will be allowed to the Company for
federal income tax purposes. The grant of an Incentive Stock Option and the
optionee's exercise of the Incentive Stock Option will not result in federal
income tax consequences to the Company.
If the shares of Common Stock acquired upon the exercise of an Incentive
Stock Option are disposed of prior to the expiration of either the two-year or
one-year holding period described above (a "disqualifying disposition"),
generally the optionee will realize ordinary income in the year of disposition
in an amount equal to the excess (if any) of the fair market value of the Common
Stock at exercise (or, if less, the amount realized in an arms-length sale of
such shares) over the exercise price thereof, and the Company will be entitled
to deduct such amount. Any further gain realized will be taxed as short-term or
long-term capital gain and will not result in any deduction by the Company.
The closing price of the Common Stock on the New York Stock Exchange on
April 8, 1996 was $9.50 per share.
A total of 2,875,000 shares of Common Stock have been reserved to date for
issuance under the Stock Option Plan (subject to adjustments in the event of
certain changes with respect to the Common Stock). As of March 15, 1996, almost
all of the shares authorized for issuance were subject to stock options
previously granted under the Stock Option Plan. In order to allow the Stock
Option Plan to continue to provide incentives to employees and other eligible
persons, in February 1996 the Compensation Committee amended the Stock Option
Plan, subject to shareholder approval, to increase to 4,050,000 (subject to
adjustment in the event of certain changes with respect to the Common Stock) the
number of shares of Common Stock reserved for issuance to officers, employees
and directors of the Company and to consultants and persons providing services
to the Company.
The Board of Directors recommends a vote FOR the following resolution
which will be presented at the meeting:
"RESOLVED, that the Stock Option Plan be amended to increase the number of
shares of Common Stock reserved for issuance to persons who are officers,
employees, or directors of the Company or who are consultants to or render
services to the Company under the Stock Option Plan from 2,875,000 shares
to 4,050,000 shares be, and hereby is, approved."
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STOCKHOLDERS AGREEMENT
AGREEMENT, dated May 20, 1996, among General Electric Capital Corporation,
a New York corporation ("Parent"), GAC Acquisition I Corp., a Delaware
corporation and an indirect wholly-owned subsidiary of Parent ("Sub"), and the
other parties signatory hereto (each a "Stockholder", and collectively, the
"Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, Sub and AmeriData Technologies,
Inc., a Delaware corporation (the "Company"), are entering into an Agreement and
Plan of Merger (as such agreement may hereafter be amended from time to time,
the "Merger Agreement"; capitalized terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement), pursuant to
which, among other things, Sub will be merged with and into the Company (the
"Merger");
WHEREAS, in furtherance of the Merger, Parent and the Company have agreed
that as soon as practicable (and not later than five business days) after the
first public announcement of the execution and delivery of the Merger Agreement,
Sub will commence a cash tender offer to purchase all outstanding shares of
Company Common Stock (as defined in Section 1), including all of the Shares (as
defined in Section 2) Beneficially Owned (as defined in Section 1) by the
Stockholders; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholders agree, and the Stockholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" as within the meaning of Section 13(d)(3) of
the Exchange Act.
(b) "Company Common Stock" shall mean at any time the common stock, $.01
par value, of the Company.
<PAGE>
(c) "Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
2. Tender of Shares.
(a) Each Stockholder hereby agrees to validly tender (and not to withdraw)
pursuant to and in accordance with the terms of the Offer, not later than the
fifth business day after commencement of the Offer pursuant to Section 1.1 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of shares
of Company Common Stock set forth opposite such Stockholder's name on Schedule I
hereto (the "Existing Shares"), as well as any shares of Company Common Stock
acquired by such Stockholder after the date hereof and prior to the termination
of this Agreement, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution or otherwise (collectively with the Existing
Shares, the "Shares"); provided, however, that with respect to any Shares the
tender of which would result in liability under Series 16(b) of the Exchange
Act, such tender need not take place until such tender may be made without
liability under Section 16(b) of the Exchange Act. Each Stockholder hereby
acknowledges and agrees that Sub's obligation to accept for payment and pay for
Shares in the Offer is subject to the terms and conditions of the Offer.
(b) Each Stockholder hereby agrees to permit Parent and Sub to publish and
disclose in the Offer Documents and, if approval of the Merger by the Company's
shareholders (other than Parent or any of its wholly-owned subsidiaries) is
required under applicable law, in the Proxy Statement (including all documents
and schedules filed with the SEC) his or its identity and ownership of Company
Common Stock and the nature of his or its commitments under this Agreement.
3. Provisions Concerning Company Common Stock. Each Stockholder hereby
agrees that during the period commencing on the date hereof and continuing until
the first to occur of the Effective Time or termination of the Merger Agreement
in accordance with its terms, at any meeting of the holders of Company Common
Stock, however called, or in connection with any written consent of the holders
of Company Common Stock, such Stockholder shall vote (or cause to be voted) the
Shares held of record or Beneficially Owned by such Stockholder, whether now
owned or hereafter acquired, (i) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval of the terms
thereof and each of the other actions contemplated by the Merger Agreement and
this Agreement and any actions required in furtherance thereof and hereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or this Agreement (before giving effect
to any materiality or similar qualifications contained therein); and (iii)
except as otherwise agreed to in writing in advance by Parent, against the
following actions (other than the Merger and the transactions contemplated by
the Merger Agreement): (A) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or its
subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (C) (1) any
change in a majority of the persons who constitute the Board of Directors of the
Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's Certificate of Incorporation or Bylaws; (3) any other
2
<PAGE>
material change in the Company's corporate structure or business; or (4) any
other action involving the Company or its subsidiaries which is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by this
Agreement and the Merger Agreement. Such Stockholder shall not enter into any
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions and agreements contained in this
Section 3.
4. Other Covenants, Representations and Warranties. Each Stockholder
severally and not jointly hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is either (i) the record and
Beneficial Owner of, or (ii) the Beneficial Owner but not the record holder of,
the number of Shares set forth opposite such Stockholder's name on Schedule I
hereto. On the date hereof, the Existing Shares set forth opposite such
Stockholder's name on Schedule I hereto constitute all of the shares of
securities issued by the Company owned of record or Beneficially Owned by such
Stockholder. Such Stockholder has sole voting power and sole power to issue
instructions with respect to the matters set forth in Sections 2 and 3 hereof,
sole power of disposition, sole power of conversion, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Existing Shares set forth
opposite such Stockholder's name on Schedule I hereto, with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) Power; Binding Agreement. Such Stockholder has the legal capacity,
power and authority to enter into and perform all of such Stockholder's
obligations under this Agreement. The execution, delivery and performance of
this Agreement by such Stockholder will not violate any other agreement to which
such Stockholder is a party including, without limitation, any voting agreement,
shareholders agreement or voting trust. This Agreement has been duly and validly
executed and delivered by such Stockholder and constitutes a valid and binding
agreement of such Stockholder, enforceable against such Stockholder in
accordance with its terms, except as such enforceability may be limited by (A)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity regardless of whether
enforceability is considered in a proceeding law or in equity. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which such Stockholder is Trustee whose consent is required for the
execution and delivery of this Agreement or the consummation by such shareholder
of the transactions contemplated hereby.
(c) No Conflicts. Except for filings under the Hart-Scott Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), if applicable, (A) no
filing with, and no permit, authorization, consent or approval of, any state or
federal public body or authority or any other Person is necessary for the
execution of this Agreement by such Stockholder and the consummation by such
Stockholder of the transactions contemplated hereby and (B) none of the
execution and delivery of this Agreement by such Stockholder, the consummation
by such Stockholder of the transactions contemplated hereby or compliance by
such Stockholder with any of the provisions hereof shall (1) conflict with or
result in any breach of any applicable organizational documents applicable to
such Stockholder, (2) result in a violation or breach of, or constitute (with or
without notice or lapse of time
3
<PAGE>
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which such Stockholder is a party or by which such
Stockholder or any of such Stockholder's properties or assets may be bound, or
(3) violate any order, writ, injunction, decree, judgment, order, statute, rule
or regulation applicable to such Stockholder or any of such Stockholder's
properties or assets.
(d) No Encumbrances. Except as applicable in connection with the
transactions contemplated by Section 2 hereof, such Stockholder's Shares and the
certificates representing such Shares are now, and at all times during the term
hereof will be, held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever, except for any such encumbrances arising
hereunder and except for the liens on up to an aggregate of $350,000 in value of
shares and an aggregate of $500,000 in value of shares held by Mr. Poch and Mr.
Fassler, respectively, arising out of such Shares being held in margin accounts.
The transfer by each Stockholder of his or its Shares to Sub in the Offer or
upon exercise of the Stock Option shall pass to and unconditionally vest in Sub
good and valid title to the number of Shares set forth opposite such
Stockholder's name on Schedule I hereto, free and clear of all claims, liens,
restrictions, security interests, pledges, limitations and encumbrances
whatsoever, except for those created by any action or inaction of Parent or Sub.
(e) No Finder's Fees. Other than existing financial advisory and investment
banking arrangements and agreements entered into by the Company, no broker,
investment banker, financial adviser or other person is entitled to any
broker's, finder's, financial adviser's or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of such Stockholder.
(f) No Solicitation. No Stockholder shall, in his or its capacity as such,
directly or indirectly, solicit (including by way of furnishing information) or
respond to the making of any proposal by any person or entity (other than Parent
or any affiliate of Parent) with respect to his or its Shares or with respect to
the Company that constitutes an Acquisition Proposal, except that a Stockholder
may take actions in his capacity as a director of the Company to the extent
permitted by the Merger Agreement. If any Stockholder receives any such inquiry
or proposal, then such Stockholder shall promptly inform Parent of the existence
thereof. Each Stockholder will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing.
(g) Restriction on Transfer, Proxies and Non-Interference. Except as
applicable in connection with the transactions contemplated by Section 2 hereof,
no Stockholder shall (i) directly or indirectly, offer for sale, sell, transfer,
tender, pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of such Stockholder's Shares or
any interest therein; (ii) except as contemplated by this Agreement, grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting
4
<PAGE>
agreement with respect to any Shares; or (iii) take any action that would make
any representation or warranty of such Stockholder contained herein untrue or
incorrect in any material respect or have the effect of preventing or disabling
such Stockholder from performing such Stockholder's obligations under this
Agreement.
(h) Waiver of Appraisal Rights. Each Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that such Stockholder may
have.
(i) Reliance by Parent. Such Stockholder understands and acknowledges that
Parent is entering into, and causing Sub to enter into, the Merger Agreement in
reliance upon such Stockholder's execution and delivery of this Agreement.
(j) Further Assurances. From time to time, at the other party's reasonable
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as may
be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
5. Stop Transfer; Changes in Shares. Each Stockholder agrees with, and
covenants to, Parent that such Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of such Stockholder's Shares, unless
such transfer is made in compliance with this Agreement (including the
provisions of Section 2 hereof). In the event of a stock dividend or
distribution, or any change in the Company Common Share by reason of any stock
dividend, split-up, recapitalization, combination, exchange of shares or the
like, the term "Shares" shall be deemed to refer to and include the Shares as
well as all such stock dividends and distributions and any shares into which or
for which any or all of the Shares may be changed or exchanged.
6. Termination. Except as otherwise provided herein, the covenants and
agreements contained herein with respect to the Shares shall terminate upon the
earlier of (x) the Effective Time and (y) the first anniversary of the date
hereof; provided, however, that the provisions of Sections 4(f), 4(g)(i) and
4(g)(ii) shall terminate upon any earlier termination of the Merger Agreement.
7. Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director of the Company makes any agreement or
understanding herein in his or her capacity as such director.
8. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement constitute
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
5
<PAGE>
(b) Certain Events. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Stockholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by operation of law or
otherwise without the prior written consent of the other party, provided that
Parent may assign, in its sole discretion, its rights and obligations hereunder
to any direct or indirect wholly owned subsidiary of Parent, but no such
assignment shall relieve Parent of its obligations hereunder if such assignee
does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, with respect to any
one or more Stockholders, except upon the execution and delivery of a written
agreement executed by Parent and such Stockholder or Stockholders; provided that
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any shareholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added shareholder shall be treated as a
"Stockholder" for all purposes of this Agreement.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Stockholders: At the addresses set forth on Schedule I hereto
copy to: Dewey Ballantine
1301 Sixth Avenue
New York, New York 10019
Attention: Jonathan Freedman, Esq.
If to Parent: General Electric Capital Corporation
260 Long Ridge Road
Stamford, CT 06927
Attention: Victor Guaglianone, Esq.
6
<PAGE>
copy to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000 (telephone)
(212) 310-8007 (telecopier)
Attention: William M. Gutowitz, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect hereof
at law or in equity, or to insist upon compliance by any other party hereto with
its obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
(j) No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
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<PAGE>
(l) Descriptive Headings. The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(m) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same Agreement.
8
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and each Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Michael S. Ford
Name: Michael S. Ford
Title: President
GAC ACQUISITION I CORP.
By: /s/ Michael S. Ford
Name: Michael S. Ford
Title: President
/s/ Gerald A. Poch
GERALD A. POCH
/s/ Leonard J. Fassler
LEONARD J. FASSLER
/s/ James K. McCleary
JAMES K. MCCLEARY
AGREED TO AND ACKNOWLEDGED
(with respect to Section 5):
AMERIDATA TECHNOLOGIES, INC.
By: /s/ Gerald A. Poch
Name: Gerald A. Poch
Title: Co-President
9
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SCHEDULE I TO
STOCKHOLDERS AGREEMENT
Percentage of Out-
Name and Address Number of standing Common Stock
of Stockholder Shares Owned (to nearest hundredth)
- ---------------- ------------ ----------------------
Gerald A. Poch 653,098 2.846
c/o AmeriData Technologies, Inc.
700 Canal Street
Stamford, CT 06902
Leonard J. Fassler 633,537 2.760
c/o AmeriData Technologies, Inc.
700 Canal Street
Stamford, CT 06902
James McCleary 533,136 2.323
c/o AmeriData Technologies, Inc.
5121 Winnetka Avenue
Minneapolis, MN 55428
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<PAGE>
EXHIBIT F
[Letterhead, Alex. Brown]
May 20, 1996
AmeriData Technologies, Inc.
700 Canal Street
Stamford, CT 06902
Members of the Board:
AmeriData Technologies, Inc. ("AmeriData" or the "Company"), General
Electric Capital Corporation ("Buyer") and GAC Acquisition I Corp., a Delaware
corporation and wholly-owned subsidiary of Buyer (the "Merger Sub"), have
proposed to enter into an Agreement and Plan of Merger dated as of May 20, 1996
(the "Agreement"). Pursuant to the Agreement, the Merger Sub will commence a
tender offer to purchase all outstanding shares of the common stock, $.01 par
value per share (the "Common Stock"), of AmeriData at a price of $16 per share,
net to the seller in cash (the "Offer"). The Agreement also provides that
following such Offer, Merger Sub will be merged with and into AmeriData (the
"Merger"), and that each then outstanding share of Common Stock, other than
shares held directly or indirectly by the Company or any wholly-owned subsidiary
of the Company or by Buyer, Merger Sub or any other wholly-owned subsidiary of
Buyer or as to which dissenters rights have been perfected, will be converted
into the right to receive $16 per share in cash. You have requested our opinion
as to whether the consideration to be received by the holders of the Common
Stock pursuant to the Offer and the Merger is fair, from a financial point of
view, to such holders.
Alex. Brown & Sons Incorporated ("Alex. Brown"), as a customary part of its
investment banking business, is engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for estate, corporate and other
purposes. Alex. Brown previously served as initial purchaser in connection with
the Company's sale of convertible fixed life aggregated securities. Alex. Brown
regularly publishes research reports regarding the computer products and
services distribution industry and the businesses and securities of publicly
owned companies in that industry in general, and regarding the Company in
particular. In the ordinary course of business, we may actively trade the
securities of the Company and Buyer (and the ultimate parent of Buyer) for our
own account and the account of our customers and, accordingly, may at any time
hold a long or short position in securities of the Company and Buyer.
In connection with our opinion, we have reviewed certain publicly available
financial information concerning AmeriData and certain internal financial
analyses and other information furnished to us by AmeriData. We have also held
discussions with members of the senior management of AmeriData regarding the
business and prospects of the Company. In addition, we
<PAGE>
have (i) reviewed the reported price and trading activity for the Common Stock,
(ii) compared certain financial and stock market information for AmeriData with
similar information for certain other computer products and services
distribution companies whose securities are publicly traded, (iii) reviewed the
financial terms of certain recent business combinations in the computer products
and services distribution industry and considered such other factors as we
deemed appropriate.
We have not independently verified the information described above and for
purposes of this opinion have assumed the accuracy, completeness and fairness
thereof. With respect to information relating to the prospects of AmeriData, we
have assumed that such information reflects the best curently available
estimates and judgments of management of AmeriData as to the likely future
financial performance of AmeriData. In addition, we have not made an independent
evaluation or appraisal of the assets of AmeriData, nor have we been furnished
with any such evaluation or appraisal. Our opinion is based on market, economic
and other conditions as they exist and can be evaluated as of the date of this
letter.
We have been retained by the Board of Directors of the Company as financial
advisor solely for the purpose of rendering this opinion and accordingly, we
have not been requested to and have not provided any other services in
connection with the Merger. In arriving at our opinion, we were not authorized
to solicit, and did not solicit, interest from any party with respect to the
acquisition of the Company or any of its assets, nor did we have discussions or
negotiate with any parties, including Buyer, in connection with the Merger.
Our opinion expressed herein was prepared for the use of the Board of
Directors of AmeriData and does not constitute a recommendation to the Company's
stockholders as to whether they should tender Common Stock owned by them. We
hereby consent, however, to the inclusion of this opinion as an exhibit in any
filing made with the Securities and Exchange Commission or in materials required
to be distributed to stockholders of AmeriData in connection with the Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date of this letter, the consideration to be received by the holders of the
Common Stock pursuant to the Offer and the Merger as contemplated in the
Agreement is fair, from a financial point of view, to such holders.
Very truly yours,
/s/ Alex. Brown & Sons Incorporated
-----------------------------------
ALEX. BROWN & SONS INCORPORATED
<PAGE>
EXHIBIT G
[AMERIDATA TECHNOLOGIES, INC. LETTERHEAD]
May 24, 1996
Dear Stockholder:
On behalf of the Board of Directors of AmeriData Technologies, Inc., I
am pleased to inform you that on May 20, 1996, AmeriData Technologies,
Inc. entered into an Agreement and Plan of Merger with General Electric
Capital Corporation ('Parent') and GAC Acquisition I Corp., an indirect
wholly-owned subsidiary of Parent ('Purchaser'), pursuant to which
Purchaser has commenced today a tender offer to purchase all of the
outstanding shares (the "Shares") of AmeriData Technologies, Inc.'s
common stock at $16.00 per share in cash (the 'Offer'). The tender
offer is currently scheduled to expire at 12:00 a.m. midnight, New York
City time, on Friday, June 21, 1996.
Following the successful completion of the Offer, upon approval by
stockholder vote, if required, Purchaser will be merged with and into AmeriData
Technologies, Inc. (the 'Merger'), and all shares not purchased pursuant to the
Offer will be converted into the right to receive in cash $16.00 per share or
such higher price as may be offered pursuant to the Offer, without interest.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF AMERIDATA TECHNOLOGIES, INC.
STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
AMERIDATA TECHNOLOGIES, INC. STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES OF AMERIDATA TECHNOLOGIES, INC. COMMON STOCK PURSUANT TO THE OFFER.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the enclosed
Solicitation/ Recommendation Statement on Schedule 14D-9 which is being
filed with the Securities and Exchange Commission. Among other things,
the Board considered the opinion of its financial advisor, Alex. Brown &
Sons Incorporated ('Alex. Brown'), that the consideration to be received
by the holders of the Shares pursuant to the Offer and the Merger is
fair, from a financial point of view, to such holders. The enclosed
Schedule 14D-9 describes the Board's decision and contains other
important financial information relating to that decision. I urge you to
read it carefully.
Accompanying this letter, in addition to the Schedule 14D-9 and Alex.
Brown's fairness opinion, is the Offer to Purchase, together with related
materials including a letter of transmittal for use in tendering the shares.
These documents set forth the terms and conditions of the Offer and provide
instructions as to how to tender your shares. I urge you to read the enclosed
materials carefully and consider all factors set forth therein before making
your decision with respect to the Offer.
I, personally, along with the entire Board of Directors, management and
employees of AmeriData Technologies, Inc., thank you for the support you have
given AmeriData Technologies, Inc.
Sincerely,
Gerald A. Poch
Co-Chairman and Co-President
<PAGE>
Exhibit H
[LETTERHEAD OF ALEX. BROWN]
May 1, 1996
PERSONAL AND CONFIDENTIAL
AmeriData Technologies, Inc.
700 Canal Street
Stamford, CT 06902
Attn: Gerald A. Poch, Co-Chairman of the Board, President and Chief Executive
Officer
Dear Sir:
This letter is to confirm our understanding of the basis upon which Alex.
Brown & Sons Incorporated ("Alex. Brown") is being engaged by AmeriData
Technologies, Inc. ("AmeriData" or "the Company") to provide a fairness opinion
in connection with a proposed sale of the Company to a subsidiary of General
Electric Company (the "Sale").
Services
1. We will, as requested by the Board of Directors, render our opinion as to
the fairness, from a financial point of view, of the consideration
payable to the Company's stockholders in connection with the Sale. The
nature and scope of the investigation which we would conduct in order to
be able to render our opinion will be such as we would consider
appropriate but as are customary in this setting, and such opinion will
be subject to customary assumptions and qualifications. Our opinion will
be in written form. Such opinion shall be solely for the use of the Board
of Directors in considering the Sale. Subject to the next succeeding
sentence the Company may not publish or refer to such opinion (either in
its entirety or through excerpts or summaries) or disclose the existence
of our engagement hereunder to describe or characterize the advice
provided by us to the Company without prior written approval of Alex.
Brown, which approval shall not be unreasonably withheld. Alex. Brown
consents to AmeriData's reference to and insertion of a copy of our
fairness opinion in its filings with the Securities and Exchange
Commission and mailing to stockholders to the extent required by law,
provided that such disclosure is reviewed and approved in advance by
Alex. Brown, which approval shall not be unreasonably withheld or
delayed.
ALEX. BROWN & SONS INCORPORATED
ONE THIRTY-FIVE EAST BALTIMORE STREET BALTIMORE, MARYLAND 21202
TELEPHONE: 410-727-1700 TELEX: 198186
<PAGE>
Mr. Gerald A. Poch May 1, 1996
AmeriData Technologies, Inc. Page 2
Fees
2. The Company agrees to compensate Alex. Brown for its services under this
letter as follows:
(i) Upon execution of this letter, a non-contingent retainer fee of
$50,000.
(ii) Upon delivery of the opinion described above, a fee of $600,000.
The retainer fee will be credited against this opinion fee. If
the Board of Directors requests Alex. Brown to render any
additional opinion(s) with respect to amended or revised terms of
the Sale or with respect to the Sale at a different point in
time, Alex. Brown will be paid an additional fee of $100,000 per
opinion. All fees payable with respect to the delivery of any
opinion shall be paid at the time of the delivery of such
opinion.
(iii) In addition to any fees that may be payable to Alex. Brown
hereunder and regardless of whether the Sale is consummated, the
Company shall reimburse Alex. Brown (a) for all reasonable
travel, legal and other out-of-pocket expenses incurred in
performing the services hereunder, and (b) for all reasonable
travel, legal and other out-of-pocket expenses incurred by Alex.
Brown in assisting the Company to prepare for, or defend against,
any action, suit, proceeding or claim brought or threatened to be
brought arising out of or based upon our services hereunder and
in providing evidence, producing documents or otherwise
participating in any such action, suit, proceeding or claim. To
the extent officers of Alex. Brown assist in, or provide
testimony (whether in trial or in deposition) for any action,
suit or proceeding related to, or arising from, Alex. Brown's
engagement hereunder, the Company will pay Alex. Brown its
customary per diem charges for the services of such officers as
described in Addendum B hereto.
Other
3. In consideration of our services hereunder, the Company agrees to
indemnify and hold harmless Alex. Brown and each of its directors,
officers, agents, employees and controlling persons (within the meaning
of the Securities Act of 1933, as amended) to the extent and as provided
in Addendum A attached hereto and incorporated herein by reference. In
addition, neither Alex. Brown nor any indemnified person shall have any
liability to the Company related to or arising from the engagement
described in this letter, except for liability for losses, claims,
damages or expenses incurred by the Company which are finally judicially
determined to have arisen primarily from Alex. Brown's gross negligence
or willful misconduct. The provisions of this Section 3 and Addendum A
incorporated herein by reference shall survive the termination of our
engagement under this letter and shall be binding upon any successors or
assigns of the Company.
<PAGE>
Mr. Gerald A. Poch May 1, 1996
AmeriData Technologies, Inc. Page 3
4. This engagement will extend for three (3) months from the date hereof and
shall renew automatically thereafter on a month-to-month basis unless
either party has given written notice to the other that it desires to
terminate this engagement, provided, however, that in any such event the
Company shall be responsible for the payment of fees owed and
reimbursement of expenses incurred as referred to in Section 2 through
the date of termination.
5. The terms and provisions of this letter are solely for the benefit of the
parties hereto and the other indemnified persons and their respective
successors, assigns, heirs and personal representatives, and no other
person shall acquire or have any right by virtue of this letter. In this
connection it is understood that Alex. Brown is being engaged solely to
provide the services described herein to the Company and that Alex. Brown
is not acting as an agent or fiduciary of, and shall have no duties or
liability to, the equity holders of the Company or any third party in
connection with the engagement hereunder.
6. If any provision of this letter is determined to be invalid or
unenforceable in any respect, such determination will not affect such
provision in any other respect or any other provision of this letter,
which will remain in full force and effect. This letter shall be governed
by, and construed in accordance with, the laws of the state of Maryland
without regard to the principle of conflicts of law and may be amended,
modified or supplemented only by a written instrument executed by the
parties hereto.
If the foregoing letter is in accordance with your understanding of the
terms of our agreement, please sign and return to us the enclosed copy of
this letter.
Very truly yours,
Alex. Brown & Sons Incorporated
By: /s/ Alfred R. Berkeley III
-----------------------------
Alfred R. Berkeley III
Managing Director
Accepted and Agreed:
AmeriData Technologies, Inc.
By: /s/ Gerald A. Poch
----------------------------------------
Gerald A. Poch
Co-Chairman of the Board, President and Chief Executive Officer
<PAGE>
Mr. Gerald A. Poch May 1, 1996
AmeriData Technologies, Inc. Page 4
ADDENDUM A
In connection with the engagement of Alex. Brown & Sons Incorporated
("Alex. Brown") as a financial advisor, pursuant to a separate engagement letter
(the "Letter") between Alex. Brown and the Company (as defined in the Letter),
the Company agrees to indemnify and hold harmless Alex. Brown and each of its
directors, officers, agents, employees and controlling persons (within the
meaning of the Securities Act of 1933, as amended) against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) related to
or arising out of Alex. Brown's engagement and will reimburse Alex. Brown and
each other person indemnified hereunder for all legal and other expenses as such
expenses are incurred in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding whether or not in
connection with pending or threatened litigation in which Alex. Brown or any
other indemnified person is a party; provided, however, that the Company will
not be liable in any such case for losses, claims, damages, liabilities or
expenses that a court of competent jurisdiction shall have found in a final
judgment to have arisen primarily from the gross negligence or willful
misconduct of the person seeking indemnification.
In case any proceeding shall be instituted involving any person in respect
of whom indemnity may be sought, such person (the "indemnified party") shall
promptly notify the Company, but failure to so notify the Company will not
relieve it from any liability which it may have hereunder or otherwise, except
to the extent such failure materially prejudices the Company's rights. The
Company, upon the request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the Company may designate in such proceeding and shall pay
as incurred the fees and expenses of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel at its own expense, except that the Company shall pay as they are
incurred the fees and expenses of counsel retained by the indemnified party in
the event that (i) the Company and the indemnified party shall have mutually
agreed to the retention of such counsel or, (ii) the named parties to any such
proceeding (including any impleaded parties) include both the Company and the
indemnified party and representation of both parties by the same counsel would
be inappropriate, in the reasonable opinion of the indemnified party, due to
actual or potential differing interests between them.
The Company shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there is a final judgment for the plaintiff, the Company agrees to indemnify the
indemnified party to the extent set forth herein. In addition the Company will
not, without the prior written consent of Alex. Brown, settle or compromise or
consent to the entry or any judgment in any pending or threatened claim, action,
suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not Alex. Brown or any indemnified party is an actual or potential
party to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of Alex. Brown and each
other indemnified party hereunder from all liability arising out of such claim,
action, suit or proceeding.
<PAGE>
Mr. Gerald A. Poch May 1, 1996
AmeriData Technologies, Inc. Page 5
In the event a claim for indemnification hereunder is determined to be
unenforceable by a final judgment of a court of competent jurisdiction, then the
Company shall contribute to the aggregate losses, claims, damages or liabilities
to which Alex. Brown or its officers, directors, agents, employees or
controlling persons may be subject in such amount as is appropriate to reflect
the relative benefits received by each of the Company and the party seeking
contribution on the one hand and the relative faults of the Company and the
party seeking contribution on the other, as well as any other relevant equitable
considerations.
This indemnification shall apply to the engagement as set forth in the
Letter and any modification of the engagement and the indemnification provided
herein shall survive termination of Alex. Brown's engagement and shall be
binding upon any successors or assigns of the Company.
Acknowledged and Agreed:
AmeriData Technologies, Inc.
By: __________________________
__________________________
Date: ________________________
<PAGE>
Mr. Gerald A. Poch May 1, 1996
AmeriData Technologies, Inc. Page 6
ADDENDUM B
SCHEDULE OF PER DIEM CHARGES
Managing Directors $4,500
Principals 3,500
Vice Presidents 2,500
<PAGE>
EXHIBIT I
As amended through 5/22/95
AMERIDATA TECHNOLOGIES, INC.
1991 STOCK OPTION PLAN
1. Purpose. The purpose of the 1991 Stock Option Plan of AmeriData
Technologies, Inc. is to provide incentive to employees, including officers,
directors and consultants of the Corporation, as defined below, to encourage
such individuals' proprietary interest in the Corporation, to encourage such
individuals to remain in the employ of the Corporation, and to attract to the
Corporation individuals of experience and ability.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Committee appointed by the Board in
accordance with Section 4 of the Plan.
(d) "Common Stock" shall mean the Common Stock of the Company, $.01
par value per share.
(e) "Company" shall mean AmeriData Technologies, Inc., a Delaware
corporation.
(f) "Corporation" shall mean and include the Company and any parent or
subsidiary corporation thereof, within the meaning of Section 424 of the Code.
(g) "Disability" shall mean the condition of an Employee who is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve (12) months, all within the meaning of Section 22(e)(3) of
the Code.
(h) "Employee" shall mean any individual (including an officer or a
director) who is an employee of the Corporation (within the meaning of Section
422(a)(2) of the Code and regulations thereunder).
<PAGE>
(i) "Exercise Price" shall mean the price per Share of Common Stock,
determined by the Board or Committee, at which an Option may be exercised.
(j) "Fair Market Value" of a Share of Common Stock as of a specified
date shall mean the closing price of a Share on the principal securities
exchange on which such Shares are traded on the day immediately preceding the
date as of which Fair Market Value is being determined, or on the next preceding
date on which such Shares are traded if no Shares were traded on such
immediately preceding day, or if the Shares are not traded on a securities
exchange, Fair Market Value shall be deemed to be the average of the high bid
and the low asked prices of the Shares in the over-the-counter market on the day
immediately preceding the date as of which Fair Market Value is being determined
or on the next preceding date on which such high bid and low asked prices were
recorded. If the Shares are not publicly traded, Fair Market Value shall be
determined by the Board or Committee. In no case shall Fair Market Value be less
than the par value of a Share of a Common Stock, and in no event shall Fair
Market Value be determined with regard to restrictions other than restrictions
which, by their terms, will never lapse.
(k) "Incentive Stock Option" shall mean an Option described in Code
Section 422(b).
(l) "Nonemployee Director" shall mean any member of the Board who is
not an employee of the Corporation.
(m) "Nonstatutory Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(n) "Option" shall mean a stock option granted pursuant to the Plan.
(o) "Optionee" shall mean a person to whom an Option has been granted.
(p) "Plan" shall mean this AmeriData Technologies, Inc. 1991 Stock
Option Plan, as amended from time to time.
(q) "Purchase Price" shall mean the Exercise Price times the number of
whole Shares with respect to which an Option is exercised.
(r) "Share" shall mean one share of Common Stock.
(s) "Ten Percent Shareholder" shall mean any Employee who, at the time
of the grant of an Option, owns (or is deemed to own, under Sections 422(b)(6)
and 424(d) of the
2
<PAGE>
Code) more than ten percent of the total combined voting power of all classes of
outstanding stock of the Corporation.
3. Effective Date. This Plan was approved by the Board of the Company on
June 10, 1991 which date is the effective date of the Plan.
4. Administration. The Plan shall be administered by the Board or a
Committee appointed by the Board consisting of not less than two members. The
Board may from time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, however caused, shall be filled by the
Board. The Board or the Committee shall from time to time at its discretion
determine who shall be granted Options, the number of Shares to be optioned to
each, the designation of such Options as Incentive Stock Options or Nonstatutory
Stock Options, and the exercise price thereof. All such determinations and the
interpretation and construction by the Board or the Committee of any provisions
of the Plan or of any Option granted thereunder shall be binding and conclusive
on all Optionees and their legal representatives and beneficiaries.
5. Eligibility. Any Employee may be granted Incentive Stock Options under
the Plan and any Employee or officer, director, consultant of, or other person
rendering services to, the Corporation may be granted Nonstatutory Stock Options
under the Plan if, in each instance, the Board or Committee determines that such
person performs services of special importance to the management, operation and
development of the business of the Corporation.
6. Stock. The stock subject to Options granted under the Plan shall be
Shares of authorized but unissued or reacquired Common Stock. The aggregate
number of Shares which may be issued under Options exercised under this Plan
shall not exceed two million eight hundred and seventy five thousand
(2,875,000). The number of Shares subject to Options outstanding under the Plan
at any time may not exceed the number of Shares remaining available for issuance
under the Plan. In the event that any Option outstanding under the Plan expires
for any reason or is terminated, the Shares allocable to the unexercised portion
of such Option shall again be available for grant of Options under the Plan.
The limitations established by this Section 6 shall be subject to
adjustment upon the occurrence of the events specified and in the manner
provided in Section 9 hereof.
7. Terms and Conditions of Options. Options granted pursuant to the Plan
shall be evidenced by written agreements in such form as the Board or the
Committee shall
3
<PAGE>
from time to time determine, which agreements shall comply with and be subject
to the following terms and conditions:
(a) Date of Grant. Each Option shall specify its effective date (the
"date of grant"), which shall be the date specified by the Board or Committee in
its action relating to the grant of the Option, but which date shall not be
earlier than the date of the determination by the Board or Committee to grant
such Option nor more than ten days after such date.
(b) Number of Shares. Each Option shall state the number of Shares to
which it pertains and shall provide for the adjustment thereof in accordance
with the provisions of Section 9 hereof. Notwithstanding the foregoing, the
number of Shares underlying Options that may be granted during any specific
calendar Year to any particular Optionee is limited to 75,000 Shares.
(c) Exercise Price. Each Option shall state the Exercise Price, which
price shall be determined by the Board or Committee, provided, however, that the
Exercise Price (i) in the case of an Incentive Stock Option granted to an
Employee who is not a Ten Percent Shareholder, shall not be less than the par
value nor less than the Fair Market Value of the Shares to which the Option
relates on the date of grant, (ii) in the case of an Incentive Stock Option
granted to an Employee who is a Ten Percent Shareholder, shall not be less than
the par value nor less than 110% of the Fair Market Value of the Shares to which
the Option relates on the date of grant, and (iii) in the case of a Nonstatutory
Stock Option granted to any Employee or officer or director of the Corporation,
shall not be less than the par value of the Shares to which the Option relates.
The Exercise Price of an Option shall be subject to adjustment in accordance
with Section 9 hereof.
(d) Exercise of Options and Medium and Time of Payment. To exercise an
Option, the Optionee shall give written notice to the Company specifying the
number of Shares to be purchased and accompanied by payment in cash or by cash
equivalent of the full Purchase Price therefor, or, in the discretion of the
Committee, through the delivery to the Company of Shares of Common Stock with a
Fair Market Value equal to the Purchase Price or through a combination of cash,
cash equivalent and, in the discretion of the Committee, Shares, and the amount
of any withholding tax obligation of the Corporation as described in Section
14(a) hereof. Any Shares so delivered shall be valued at their Fair Market Value
on the date on which the Option is exercised. No Share shall be issued until
full payment therefor has been made.
4
<PAGE>
(e) Term and Exercise of Options; Nontransfer- ability of Options.
Subject to Section 10 hereof, Options may be exercised as determined by the
Board or Committee and as stated in the written agreement evidencing the Option,
provided, however, that no Incentive Stock Option granted to an Employee who is
not a Ten Percent Shareholder shall be exercisable after the expiration of ten
(10) years from its date of grant, and no Incentive Stock Option granted to any
Employee who is a Ten Percent Shareholder shall be exercisable after the
expiration of five (5) years from its date of grant. Notwithstanding the
foregoing, the Committee may, in its sole discretion at any time or from time to
time for any part or all of any Option, accelerate the date on which an Option
becomes exercisable. In addition, the aggregate fair market value (determined at
the time an Incentive Stock Option is granted) of Shares with respect to which
Incentive Stock Options are exercisable for the first time by the same Optionee
during any calendar year (under this Plan and all other plans maintained by the
Corporation) shall not exceed $100,000. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee and shall not be assignable or
transferable. In the event of the Optionee's death, no Option shall be
transferable by the Optionee otherwise then by will or by the laws of descent
and distribution.
(f) Termination of Employment. In the event that an Optionee shall
cease to be employed by the Corporation for any reason, such Optionee (or the
heirs or legatees of such Optionee, if applicable) shall have the right, subject
to the restrictions of the Subsection (e) hereof, to exercise the Option at any
time within three (3) months after such termination of employment (twelve (12)
months if the termination was due to the death or Disability of the Optionee or,
in the case of a Nonstatutory Stock Option, retirement) to the extent that, on
the day preceding the date of termination of employment, the Optionee's right to
exercise such Option had accrued pursuant to the terms of the option agreement
pursuant to which such Option was granted, and had not previously been exercised
or expired.
For this purpose, employment will be treated as continuing intact while the
Optionee is on military leave, sick leave or other bona fide leave of absence
(to be determined in the sole discretion of the Board and, in the case of an
Optionee who has received an Incentive Stock Option, only to the extent
permitted under Section 422 of the Code and the regulations promulgated
thereunder). Moreover, in the case of an Optionee who has been granted an
Incentive Stock Option, employment shall, in no event, be deemed to continue
beyond the ninetieth (90) day after the Optionee ceased active employment,
unless the Option's reemployment rights are guaranteed by statute or by
contract.
5
<PAGE>
(g) Rights as a Shareholder. An Optionee or a transferee of a deceased
Optionee shall have not rights as a shareholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 9.
(h) Modification, Extension and Renewal of Options. Subject to the
terms and conditions and within the limitations of the Plan, the Board or
Committee may modify, extend or renew outstanding Options granted under the
Plan, or accept the cancellation of outstanding Options (to the extent not
theretofore exercised) for the granting of new Options in substitution therefor.
Notwithstanding the foregoing, however, no modification of an Option shall,
without the consent of the Optionee, alter or impair any rights or obligations
under any Option theretofore granted under the Plan. Moreover, in the case of
any modification, extension or renewal of an Incentive Stock Option, all of the
requirements set forth herein shall apply in the same manner as though a new
Incentive Stock Option had been granted to the Optionee on the date of such
modification, extension or renewal, but only if such modification, extension or
renewal is treated, under Section 424(h) of the Code, as the granting of a new
option.
(i) Identification of Option. Each Option granted under the Plan shall
clearly identify its status as an Incentive Stock Option or Nonstatutory Stock
Option.
(j) Other Provisions. The option agreements authorized under the Plan
shall contain, in addition to those provisions provided in Section 7(e) hereof,
such other provisions not inconsistent with the terms of the Plan, including,
without limitation, restrictions upon the exercise of any Option, and
restrictions upon the transfer of Shares received upon exercise of Options, as
the Board or Committee shall deem advisable.
8. Term of Plan. Options may be granted pursuant to the Plan until June 10,
2001, which is ten years from the effective date of the Plan.
9. Recapitalization. Subject to any required action by the shareholders of
the Company and the last sentence of subsection 7(h) hereof, the number of
Shares covered by this Plan as provided in Section 6, the number of Shares
covered by each outstanding Option, and the Exercise Price thereof shall be
proportionately adjusted for any increase or decrease in the number of issued
shares resulting
6
<PAGE>
from a subdivision or consolidation of Shares, stock split, or
the payment of a stock dividend.
Subject to any required action by the shareholders of the Company and the
last sentence of Subsection 7(h) hereof, if the Company shall be the surviving
corporation in any merger or consolidation, each outstanding Option shall
pertain and apply to the securities to which a holder of the number of Shares
subject to the Option would have been entitled. A dissolution or liquidation of
the Company or a merger or consolidation in which the Company is not the
surviving corporation shall cause each outstanding Option to terminate, unless
the agreement of merger or consolidation shall otherwise provide, provided that
each Optionee shall, in such event, have the right immediately prior to such
dissolution or liquidation, or merger or consolidation in which the Company is
not the surviving corporation to exercise the Option in whole or in part,
subject to limitations on exercisability of Options under Section 7 hereof to
the extent the Option is exercisable without regard to this sentence at the date
of such dissolution, liquidation, merger or consolidation.
In the event of a change in the Common Stock as presently constituted,
which is limited to a change of all of its authorized shares with par value into
the same number of shares with a different par value, or without par value, the
shares resulting from any such change shall be deemed to be Shares of Common
Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments shall be made by the Board or Committee, whose
determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided in this Section 9, the Optionee
shall have no rights by reason or any subdivision or consolidation of shares of
stock of any class, stock split, or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, merger, or consolidation or spin-off of
assets or stock of another corporation, and any issue by the Company of shares
of stock of any class or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to the Option.
The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
7
<PAGE>
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
10. Securities Law Requirements. No Shares shall be issued upon the
exercise of any Option unless and until the Company has determined that: (i) it
and the Optionee have taken all actions required to register the Shares under
the Securities Act of 1933 or perfect an exemption from the registration
requirements thereof (including the furnishing by the Optionee of an appropriate
investment letter); (ii) any applicable listing requirement of any stock
exchange on which the Common Stock is listed has been satisfied; and (iii) any
other applicable provision of state or Federal law has been satisfied.
11. Amendment of the Plan. The Board or Committee may, insofar as permitted
by law, from time to time, with respect to any Shares at the time not subject to
Options, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever except that the term of the Plan shall not be extended and, without
approval of the shareholders of the Company, no such revision or amendment
shall:
(a) Increase the number of Shares subject to the Plan;
(b) Change the designation in Section 5 of the Plan of the class of
Employees eligible to receive Options;
(c) Solely to the extent necessary to satisfy the requirements of Rule
16b-3 under the Securities Exchange Act of 1934, as amended, amend the
provisions of the Plan relating to the eligibility, amount, price or
timing of grants of Options to Nonemployee Directors more than once
every six (6) months; or
(d) Amend this Section 11 to defeat its purpose.
Notwithstanding the foregoing, no revision or amendment of the Plan shall in any
manner adversely affect any Option theretofore granted without the consent of
the Optionee or its permitted transferee.
12. Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to the exercise of an Option will be used for
general corporate purposes.
13. No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.
8
<PAGE>
14. Withholding.
(a) Nonstatutory Options. Whenever Shares are to be delivered upon
exercise of a Nonstatutory Option, the Corporation shall be entitled to require
as a condition of delivery that the Optionee remit to the Corporation an amount
sufficient to satisfy the Corporation's federal, state and local withholding tax
obligations with respect to the exercise of the Option.
(b) Incentive Stock Options. The acceptance of Shares upon exercise of
an Incentive Stock Option shall constitute an agreement by the Optionee (unless
and until the Corporation shall notify the Optionee that it is relieved, in
whole or in part, of its obligations under this Section 14(b)) (i) to notify the
Corporation if any or all of such Shares are disposed of by the Optionee within
two years from the date the Option was granted or within one year form the date
the Shares were transferred to the Optionee pursuant to his exercise of the
Option, and (ii) to remit to the Corporation, at the time of and in the case of
any such disposition, an amount sufficient to satisfy the Corporation's federal,
state and local withholding tax obligations with respect to such disposition,
whether or not, as to both (i) and (ii), the Optionee is in the employ of the
Corporation at the time of such disposition.
15. Governing Law. The Plan shall be governed by the laws of the State of
Connecticut.
16. Options Granted to Nonemployee Directors. Notwithstanding any other
provision of the Plan, the following provisions shall apply to each Option
granted to a Nonemployee Director.
(a) Grant of Option. Each Nonemployee Director shall receive a grant
of an Option to purchase 15,000 Shares of Common Stock on each March 1. Each
Option granted to a Nonemployee Director shall be a Nonstatutory Stock Option.
(b) Exercise Price. The Exercise Price of each Share of Common Stock
subject to an Option granted to a Nonemployee Director shall be 100% of the Fair
Market Value of a Share of Common Stock on the date of grant.
(c) Vesting, Term of Option. Each Option granted to a Nonemployee
Director shall vest and become exercisable in cumulative annual installments,
each of which shall relate to 25% of the total number of shares subject to of
such Option, on each of the first through the fourth anniversary of the date of
grant if such Nonemployee Director is a member of the Board on such anniversary.
No Option
9
<PAGE>
granted shall be exercisable after the expiration of ten (10) years from its
date of grant. With respect to Options granted to Nonemployee Directors, the
terms "be employed by the Corporation" and "employment" as used in Section 7(f)
of the Plan shall be replaced with the terms "serve on the Board" and "service
on the Board".
(d) Option Exercise. Payment of the Exercise Price of each Option
granted to a Nonemployee Director shall be made (i) in cash or by cash
equivalent, (ii) in Common Stock (not subject to limitations on transfer) valued
at the Fair Market Value of such Common Stock on the trading date immediately
preceding the date of exercise or (iii) by a combination of such cash and such
Common Stock.
(e) Other Plan Provisions Apply. To the extent not inconsistent with
the provisions of this Section 16, the terms and provisions of the Plan shall
apply to Options granted pursuant to Section 16(a) hereof; provided, however
that neither the Board nor the Committee shall have any discretionary authority
with respect to the eligibility, amount, price or timing of any Option granted
pursuant to the Plan to any Nonemployee Director.
10
<PAGE>
EXHIBIT J
EMPLOYEE SAVINGS PLAN, INC.
Effective January 1, 1996
February 8, 1996
<PAGE>
AmeriData Technologies, Inc. Employee Savings Plan
TABLE OF CONTENTS
PAGE
SECTION 1 Definitions.............................................. 1
1.1 "Account" or "Accounts".................................. 1
1.2 "Affiliate".............................................. 1
1.3 "After-Tax Contributions Accounts"....................... 1
1.4 "Appropriate Form"....................................... 2
1.5 "Beneficiary" or "Beneficiaries"......................... 2
1.6 "Board".................................................. 2
1.7 "Code"................................................... 2
1.8 "Company"................................................ 2
1.9 "Company Matching Contributions"......................... 2
1.10 "Company Matching Contributions Account"................. 2
1.11 "Compensation"........................................... 2
1.12 "Employee"............................................... 3
1.13 "Employer Contributions"................................. 3
1.14 "Entry Date"............................................. 3
1.15 "ERISA".................................................. 4
1.16 "401(k) Contributions"................................... 4
1.17 "401(k) Contributions Account"........................... 4
1.18 "GEIM.................................................... 4
1.19 "Investment Fund" or "Investment Funds".................. 4
1.20 "Mutual Fund" ........................................... 4
1.21 "Normal Retirement Date"................................. 4
1.22 "Participant"............................................ 4
1.23 "Participating Employer"................................. 5
1.24 "Plan"................................................... 5
1.25 "Plan Administrator"..................................... 5
1.26 "Prior Employer Contributions Accounts".................. 5
1.27 "Rollover Account"....................................... 5
1.28 "Rollover Contributions"................................. 6
1.29 "Service"................................................ 6
1.30 "Total and Permanent Disability"......................... 9
1.31 "Trust Agreement"........................................ 10
1.32 "Trust Fund"............................................. 10
1.33 "Trustee"................................................ 10
1.34 "Valuation Date"......................................... 10
1.35 "Year"................................................... 10
SECTION 2 Eligibility and Participation............................ 11
2.1 Participation............................................ 11
2.2 Resumption of Participation after Suspension............. 12
2.3 Termination of Participation............................. 12
i
<PAGE>
PAGE
SECTION 3 Employer Contributions................................... 14
3.1 Company Matching Contributions........................... 14
3.2 401(k) Contributions..................................... 14
3.3 Payment and Crediting of Contributions under
Sections 3.1 and 3.2..................................... 17
3.4 Limitation on Employer Contributions..................... 17
3.5 Limitations on 401(k) Contributions...................... 17
3.6 Contribution Percentage Limitation for
Company Matching Contributions.......................... 27
3.7 Statutory Limitations.................................... 32
3.8 Return of Employer Contributions......................... 36
SECTION 4 Investment of Contributions.............................. 38
4.1 Investment Funds......................................... 38
4.2 Responsibility for Investments........................... 40
4.3 Investment of Contributions.............................. 41
4.4 Change in Investment of Future Contributions............. 42
4.5 Transfers Between Investment Funds....................... 42
4.6 Establishment of Trust Fund.............................. 43
4.7 Voting of Shares held in the Common Stock
Fund.................................................... 43
SECTION 5 Vesting and Forfeitures.................................. 44
5.1 Vesting.................................................. 44
5.2 Forfeitures.............................................. 44
SECTION 6 Accounts................................................. 46
6.1 Separate Accounts........................................ 46
6.2 Valuation of Investment Funds............................ 46
SECTION 7 Withdrawals During Employment............................ 49
7.1 Hardship Withdrawals..................................... 49
7.2 Other Withdrawals........................................ 53
7.3 General Rules............................................ 53
SECTION 8 Loans.................................................... 56
8.1 Amount of Loans.......................................... 56
8.2 Security for Loan........................................ 57
8.3 Interest Rate............................................ 57
8.4 Repayment of Loans....................................... 57
8.5 Default on Loan.......................................... 59
8.6 Manner of Making Loans................................... 61
8.7 Accounting for Loans..................................... 62
ii
<PAGE>
PAGE
SECTION 9 Payment of Benefits...................................... 64
9.1 General.................................................. 64
9.2 Optional Forms of Payment................................ 68
9.3 Statutory Joint and Survivor Annuity..................... 70
9.4 Death Prior to Commencement of Benefits.................. 74
9.5 Beneficiary.............................................. 74
9.6 Small Benefits........................................... 76
9.7 Form of Payment.......................................... 77
9.8 Limitation of Assignment................................. 77
9.9 Limitation of Rights..................................... 77
9.10 Distributions on Behalf of Incapacitated
Persons................................................. 78
9.11 Determination as to Payment of Benefits by
the Plan Administrator.................................. 78
9.12 Income Tax Withholding................................... 79
9.13 Inability to Locate Payee................................ 79
9.14 Limitations on Certain Distributions..................... 80
9.15 Termination of Employment as a Result of the
Sale of Assets or Stock.................................. 80
SECTION 10 Reemployment............................................. 82
SECTION 11 Administration of the Plan............................... 85
11.1 Powers and Duties of the Plan Administrator.............. 85
11.2 Plan Expenses............................................ 87
SECTION 12 The Trust Fund........................................... 88
SECTION 13 Amendment or Termination of the Plan..................... 89
13.1 Amendment of the Plan.................................... 89
13.2 Termination of the Plan.................................. 89
13.3 Termination of the Trust Fund............................ 90
13.4 Partial Termination of the Plan.......................... 90
13.5 Mergers, Consolidations and Transfers.................... 91
13.6 Withdrawal by a Participating Employer................... 91
SECTION 14 Rollover Contributions................................... 93
14.1 Rollover Contributions to the Plan....................... 93
14.2 Direct Rollovers from the Plan........................... 94
SECTION 15 Top-Heavy Provisions..................................... 97
15.1 General.................................................. 97
15.2 Definitions.............................................. 97
15.3 Vesting.................................................. 98
15.4 Minimum Allocation....................................... 99
15.5 Change in Section 415 Limitations........................100
iii
<PAGE>
PAGE
SECTION 16 Construction of Plan.....................................101
APPENDIX A
Special Provisions Applicable to Participants in
Allcom Plan..................................................... A-1
APPENDIX B
Special Provisions Applicable to Participants in
Cleary Plan..................................................... B-1
APPENDIX C
Special Provisions Applicable to Participants in
Computer Communications Plan.................................... C-1
APPENDIX D
Special Provisions Applicable to Participants in
Comstor Plan.................................................... D-1
APPENDIX E
Special Provisions Applicable to Participants in
PDI Plan........................................................ E-1
APPENDIX F
Special Provisions Applicable to Participants in
Scott Data Plan................................................. F-1
APPENDIX G
Special Provisions Applicable to Participants in
Mericom Plan.................................................... G-1
APPENDIX H
Special Provisions Applicable to Participants in
Forsythe Plan................................................... H-1
APPENDIX I
Special Provisions Applicable to Participants in
Bohdan Plan..................................................... I-1
APPENDIX J
Special Provisions Applicable to Participants in
ACR Plan........................................................ J-1
iv
<PAGE>
PAGE
APPENDIX K
Special Provisions Applicable to Participants in
Mitchell Plan................................................... K-1
APPENDIX L
Special Provisions Applicable to Participants in
Abacus Plan..................................................... L-1
APPENDIX M
Special Provisions Applicable to Participants in
the Micro Recovery Plan......................................... M-1
APPENDIX N
Special Provisions Applicable to Participants in
Microcomputer Plan.............................................. N-1
v
<PAGE>
SECTION 1
Definitions
The following words and phrases when used herein shall have the
meanings set forth below.
1.1 "Account" or "Accounts" means, singly or collectively, as the case
may be, a Participant's Company Matching Contributions Accounts, 401(k)
Contributions Accounts, Rollover Accounts, After-Tax Contributions Accounts and
Prior Employer Contributions Accounts.
1.2 "Affiliate" means any corporation or other trade or business that
together with any Participating Employer is deemed a single employer under
section 414(b) or 414(c) or 414(m) of the Code. Any such entity will be
considered an Affiliate under the Plan (i) during any such period of affiliated
status, and (ii) to the extent specifically provided elsewhere in the Plan,
during any period preceding a period of such affiliated status.
1.3 "After-Tax Contributions Accounts" means the account of a
Participant in each Investment Fund which is to be credited (in accordance with
an Appendix to the Plan) with shares, units or amounts (as the case may be),
attributable to amounts transferred to the Plan from another plan that has been
merged into the Plan, that relate to after-tax contributions made on his behalf.
<PAGE>
1.4 "Appropriate Form" means the form provided or prescribed by the
Plan Administrator for the particular purpose.
1.5 "Beneficiary" or "Beneficiaries" means the person or persons who,
under Section 9, are to receive any death benefits payable on behalf of a
Participant under the Plan upon death prior to benefit commencement. A
Beneficiary shall include a fiduciary, whether individual or corporate.
1.6 "Board" means the Board of Directors of the Company.
1.7 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
1.8 "Company" means AmeriData Technologies, Inc.
1.9 "Company Matching Contributions" means the matching contributions
made by a Participating Employer on behalf of a Participant under Section 3.1.
1.10 "Company Matching Contributions Account" means the account of a
Participant in each Investment Fund which is to be credited with shares, units
or amounts (as the case may be) attributable to Company Matching Contributions
made on his behalf to such Investment Fund.
1.11 "Compensation" means wages as defined in section 3401(a) of the
Code for purposes of income tax withholding at the source, but determined
without regard to any rules that limit the remuneration included in wages based
on the nature or location of the employment or the services performed.
Notwithstanding the foregoing, compensation shall
2
<PAGE>
include any amount which is not includable in the gross income of the
Participant under section 125, 402(a)(8), 402(h) or 403(b) of the Code pursuant
to a salary reduction agreement. A Participant's Compensation for any year shall
not, however, exceed the maximum amount permissible under section 401(a)(17) of
the Code. In determining the Compensation of a Participant for purposes of this
limitation and any similar limitation elsewhere in the Plan, the rules of
section 414(q)(6) of the Code shall apply, except that in applying such rules,
the term "family" shall include only the spouse of the Participant and any
lineal descendants of the Participant who have not attained age 19 before the
close of the year. If, as a result of the application of such rules, the
limitation is exceeded, then the limitation shall be prorated among the affected
individuals in proportion to each such individual's compensation as determined
prior to the application of this limitation.
1.12 "Employee" means a person who is employed as a common-law
employee by a Participating Employer (and who is not in a unit covered by a
collective bargaining agreement, unless such agreement expressly provides for
participation in the Plan), subject to the provisions of Section 1.29.
1.13 "Employer Contributions" means Company Matching Contributions and
401(k) Contributions.
1.14 "Entry Date" means January 1, April 1, July 1 and October 1 of
each Year.
3
<PAGE>
1.15 "ERISA" means the Employee Retirement Income Security Act of
1974, as it may be amended from time to time.
1.16 "401(k) Contributions" means the contributions made by a
Participating Employer on behalf of a Participant under Section 3.2.
1.17 "401(k) Contributions Account" means the account of a Participant
in each Investment Fund which is to be credited with shares, units or amounts
(as the case may be) attributable to 401(k) Contributions made on his behalf to
such Investment Fund.
1.18 "GEIM" means GE Investment Management Incorporated.
1.19 "Investment Fund" or "Investment Funds" means, singly or
collectively, as the case may be, the investment funds provided for under
Section 4.1.
1.20 "Mutual Fund" shall mean any mutual fund managed by GEIM which is
a registered investment company and in which the assets of any of the Investment
Funds are invested pursuant to Section 4.1.
1.21 "Normal Retirement Date" means the first day of the month
coincident with or next following the Participant's 65th birthday. Any
termination of employment by a Participant on or after such date, other than by
death, shall be considered a retirement under the Plan.
1.22 "Participant" means a person who has become covered by the Plan
as provided in Section 2 and whose participation has not terminated thereunder.
4
<PAGE>
1.23 "Participating Employer" means, collectively or individually, as
the context may indicate, the Company and any Affiliate that shall be designated
by the Board as a Participating Employer and that shall have adopted the Plan.
Any such Affiliate shall be considered a Participating Employer under the Plan
only during its actual period of participation, unless otherwise specifically
provided in any Appendix to the Plan.
1.24 "Plan" means the Sage Technologies, Inc. Employee Savings Plan,
as it may be amended from time to time. The Plan is hereby designated as a
profit sharing plan, but Employer Contributions due under the Plan shall be made
whether or not the Participating Employers have current or accumulated profits.
1.25 "Plan Administrator" means the person designated by the Board to
administer the Plan.
1.26 "Prior Employer Contributions Accounts" means the account of a
Participant in each Investment Fund which is to be credited (in accordance with
an Appendix to the Plan) with shares, units or amounts (as the case may be),
attributable to amounts transferred to the Plan from another plan that has been
merged into the Plan, that relate to employer contributions made on his behalf.
1.27 "Rollover Account" means the account of a Participant in each
Investment Fund which is to be credited with shares, units or amounts (as the
case may be)
5
<PAGE>
attributable to Rollover Contributions made by him to such Investment Fund.
1.28 "Rollover Contributions" means the Rollover Contributions made by
a Participant under Section 14.
1.29 "Service" means employment as an Employee, subject to the
following:
(a) An Employee's Service shall include the period from the date of
commencement of his employment as an Employee to the date of termination of
such employment, subject to the provisions of this Section 1.29.
(b) An Employee shall not be treated as having terminated Service
during any period he is (i) on a leave of absence approved by a
Participating Employer, (ii) absent on account of service in the United
States Armed Forces, to the extent that service credit for such period is
required by applicable law, or (iii) absent on account of illness but has
not yet terminated employment on account of Total and Permanent Disability.
However, an Employee who is absent under (i) above shall be considered to
terminate Service on the first anniversary of the date such absence begins
or, if earlier, on such date as he quits, is discharged, retires or dies.
During a period of unpaid absence described above, an Employee may not
become a Participant of the Plan, nor may contributions be made by him or
on his behalf to the Plan. Notwithstanding the foregoing, during any period
of paid leave of absence (not in excess of two years), an
6
<PAGE>
Employee shall be treated for purposes of the Plan as though he were
actively employed.
(c) Any Employee shall receive Service credit for any period of
employment with a predecessor to a Participating Employer to the extent
required by section 414(a)(1) of the Code or under regulations prescribed
pursuant to section 414(a)(2) of the Code.
(d) Any period during which an individual is employed by an Affiliate
that is not a Participating Employer, either before or after employment
covered by the Plan, shall be treated as employment as an Employee for all
purposes of the Plan. However, no person may become a Participant during
any such period or have contributions made by him or on his behalf for any
such period. Subject to the foregoing, if an Employee transfers from
employment with the Participating Employer to employment with an Affiliate,
his employment hereunder will not be deemed terminated until such time as
he shall cease to be employed by any Affiliate. In the event that an
Employee shall during any period be employed at the same time by a
Participating Employer and one or more Affiliates that are not
Participating Employers, he shall be treated for all purposes of the Plan
as though his employment during such period were entirely with the
Participating Employer. In this case, however, any
7
<PAGE>
compensation from the Affiliate shall be taken into account for Plan
purposes only to the extent specifically provided in the Plan.
(e) Any period during which an individual is employed by a
Participating Employer other than as an Employee, either before or after
employment covered by the Plan, shall be treated as employment as an
Employee for all purposes of the Plan, except that no person may become a
Participant or elect to have contributions made by him or on his behalf
during any such period.
(f) In the case of any person who is a "leased employee" of a
Participating Employer, the entire period during which the individual
performed services for the Participating Employer or an Affiliate shall be
treated in the same manner as a period of employment with an Affiliate
other than a Participating Employer, assuming such period is not being
taken into account under any other provision of the Plan. A person who is
performing services for a Participating Employer, and is not a common-law
employee of the Participating Employer or an Affiliate, shall be considered
a "leased employee" if:
(i) such services are provided pursuant to an agreement between
the Participating Employer and any other entity (hereinafter referred
to as the "leasing organization"),
(ii) such person has performed the services for the Participating
Employer or an Affiliate (or a
8
<PAGE>
related Company within the meaning of section 144(a)(3) of the Code)
on a substantially full-time basis for a period of at least one year,
and
(iii) such services are of a type historically performed, in the
business field of the Participating Employer, by employees.
Notwithstanding the foregoing, a person shall not be considered a
leased employee if (A) he is covered by a plan maintained by the leasing
organization that constitutes a safe harbor plan under section 414(n)(5) of
the Code and (B) leased employees do not constitute more than 20 percent of
the Participating Employer's non- highly compensated work force. In
applying the provisions of this subparagraph (f) above, the Participating
Employer may rely upon a written certification by the leasing organization
that an individual is covered by a plan of the type described.
(g) A Participant's number of years of Service shall equal the total
number of calendar months during which he has any Service divided by 12.
1.30 "Total and Permanent Disability" means a physical or mental
injury or disorder as a result of which a Participant becomes entitled to
long-term disability benefits under a long-term disability benefits program
maintained by his Participating Employer. A Participant's employment shall be
considered to terminate on account of Total and Permanent Disability on the
first day of the month next following the
9
<PAGE>
commencement of payment of long-term disability benefits to him.
1.31 "Trust Agreement" means any trust agreement which the Company has
entered into or adopted for purposes of funding benefits under the Plan as
described in Section 4.6, collectively referred to as the "Trust Agreements".
1.32 "Trust Fund" means the trust fund established and maintained
under any Trust Agreement.
1.33 "Trustee" means the trustee under any Trust Agreement,
collectively referred to as the "Trustees".
1.34 "Valuation Date" means each business day on which the shares of
the Mutual Funds are valued in accordance with the usual procedures of GEIM.
1.35 "Year" means the plan year, which shall be the calendar year,
except that the first plan year shall begin on December 1, 1993 and end on
December 31, 1993.
10
<PAGE>
SECTION 2
Eligibility and Participation
2.1 Participation. Each person who is an Employee on December 1, 1993,
or on such later date as his Employer shall become a Participating Employer,
shall be eligible to participate in the Plan as of the first payroll period that
begins on or after such date. Each other person who becomes an Employee shall be
eligible to participate in the Plan as of the first payroll period that begins
on or after the Entry Date next following his completion of three months of
Service and attainment of age 20-1/2.
An Employee may become a Participant as of the first payroll period
for which he is eligible for participation, or as of the first payroll period
that begins after any subsequent Entry Date, by filing the Appropriate Form with
the Plan Administrator at least 30 days in advance, or within such other period
as the Plan Administrator may require.
Notwithstanding the foregoing, if any person becomes an Employee on
account of an acquisition designated in writing by the Chief Executive Officer
of the Company as a "Covered Acquisition" under this Section, such person shall
be eligible to become a Participant on such earlier date as shall be designated
by such officer.
Notwithstanding the foregoing, an Employee may become a Participant
solely for purposes of making Rollover Contributions prior to having satisfied
the eligibility requirements for participation in the Plan for other purposes.
11
<PAGE>
2.2 Resumption of Participation after Suspension. If a Participant's
active participation in the Plan has been suspended in accordance with Section
1.29 during a period of employment other than as an Employee or with an
Affiliate and he again becomes an Employee, he may resume active participation
in the Plan as of the first payroll period following his resumption of Employee
status, or as of the first payroll period that begins after any subsequent Entry
Date. In order to resume such participation, such Participant shall file the
Appropriate Form with the Plan Administrator at least 30 days in advance, or
within such other period as the Plan Administrator may require.
2.3 Termination of Participation. The participation of a Participant
shall cease at such time as neither he nor his Beneficiary is entitled to any
benefits under the Plan.
If a person retires or otherwise terminates employment and is not
reemployed by a Participating Employer thereafter, the rights of such person,
and his Beneficiaries and others claiming rights under the Plan in his place, to
retirement or other benefits under the Plan shall be governed by the applicable
provisions of the Plan as in effect on or before the date such person retired or
terminated employment, except to the extent the provisions of the Plan
specifically provide otherwise or as otherwise required by law.
12
<PAGE>
A Participant who receives the full value of his interest in the Plan
upon his termination of employment shall thereupon cease to be a Participant.
13
<PAGE>
SECTION 3
Employer Contributions
3.1 Company Matching Contributions. The Participating Employers shall
contribute as a Company Matching Contribution for each Year, on behalf of each
Participant eligible to share therein, such percentage as the Board shall
determine (prior to the close of the Year) of the 401(k) Contributions made on
behalf of such eligible Participant that are not in excess of 6% of his
Compensation for the Year.
A Participant shall be entitled to share in the Company Matching
Contribution for any Year only if such Participant (i) is employed by a
Participating Employer on the last day of the Year or (ii) is not thus employed
on the last day of the Year because he died, retired or terminated employment on
account of a Total and Permanent Disability during the Year.
If the Board shall so determine, all or a portion of the Company
Matching Contribution for any Year shall be contributed in shares of the
Company's Common Stock (rather than in cash), with the number of shares thus
contributed to be based on the dollar amount due and the current market value of
the Company's Common Stock on the date of contribution (as determined in
accordance with Section 4.1).
3.2 401(k) Contributions. A Participant may elect to have his salary
for each payroll period reduced by a whole percentage from 1% to 15% of his
Compensation, in order to have 401(k) Contributions made on his behalf by his
14
<PAGE>
Participating Employer, effective as of the payroll period in which his
participation begins, or as of the first payroll period that begins after any
subsequent Entry Date. Notwithstanding the foregoing, an Employee who becomes a
Participant on the first payroll period beginning after December 1, 1993, may
elect an extra salary reduction for such payroll period in an amount equal to
the amount by which his Compensation for the next preceding payroll period would
have been reduced (based on his salary reduction election for the first payroll
period beginning after December 1, 1993) if the Plan had been in effect for such
next preceding payroll period. Each Participating Employer shall make a 401(k)
Contribution for each payroll period, on behalf of each of its Employees who has
elected a salary reduction hereunder, in the same amount as the Employee's
reduction in salary for such payroll period.
Any salary reduction election shall be made by written notice filed
with the Plan Administrator on the Appropriate Form at least 30 days prior to
the effective date of such election, or within such other period as the Plan
Administrator may require. Any such reduction shall be accomplished through a
ratable reduction in the Employee's pay for each payroll period that the
election is in effect. In the event that, for administrative reasons, actual
reductions in pay cannot be commenced in the payroll period in which an election
is to become effective, any reductions missed shall be made up through a pro
rata increase in the remaining
15
<PAGE>
reductions to be made during the Year. The amount of such increase shall be
based on the assumption that the Employee will continue to be employed as an
Employee during the remainder of the Year. If such employment in fact terminates
during the Year, there will be no further make-up of such missed reductions.
Subject to the limits set forth in this Section 3, a Participant may
increase or decrease the rate of his salary reductions effective as of the first
payroll period commencing on or after January 1, April 1, July 1 or October 1 of
any Year, by filing written notice with the Plan Administrator on the
Appropriate Form at least 30 days prior to the effective date of such increase
or decrease, or within such other period as the Plan Administrator may require;
provided, however, that a Participant may not make more than two such elections
during any Year. Except as provided herein, no change may be made in the rate of
salary reductions.
A Participant may elect to suspend his salary reductions, effective as
of any payroll period, by filing written notice with the Plan Administrator on
the Appropriate Form at least 30 days prior to the effective date of such
election, or within such other period as the Plan Administrator may require.
Such Participant may thereafter resume his salary reductions as of the first
payroll period beginning after the second Enrollment Date following such
suspension, by giving at least 30 days advance written notice to the Plan
Administrator on the Appropriate Form, or giving
16
<PAGE>
such notice within such other period as the Plan Administrator
may require.
3.3 Payment and Crediting of Contributions under Sections 3.1 and 3.2.
Amounts due as Company Matching Contributions under Section 3.1 for any Year
shall be remitted to the Trustee as soon as practicable after the end of the
Year with respect to which they are made. Amounts due as 401(k) Contributions
under Section 3.2 for any payroll period shall be remitted to the Trustee as
soon as practicable after the end of the month for which they are due.
Contributions shall be credited to Participants' Accounts as of the earliest
practicable Valuation Date on or following the date such amounts are actually
invested in the Investment Funds, in accordance with the customary procedures of
the Trustee.
3.4 Limitation on Employer Contributions. Notwithstanding the
foregoing provisions of this Section 3, the contributions made by any
Participating Employer hereunder for any calendar year shall in no event exceed
the amount deductible by it for Federal income tax purposes for such calendar
year.
3.5 Limitations on 401(k) Contributions. Notwithstanding the foregoing
provisions of this Section 3, the following limits on 401(k) Contributions shall
apply.
A. Dollar Limit. The total amount of 401(k) Contributions
contributed on behalf of any Participant for any calendar year shall not exceed
$8,994, or such other amount as may be the maximum annual amount permitted under
section
17
<PAGE>
402(g) of the Code or other applicable law for such year, less any amount
previously contributed or to be contributed during such year as elective
deferrals pursuant to section 401(k) of the Code to another profit sharing or
stock bonus plan maintained by a Participating Employer or an Affiliate during
such year. Any salary reduction election made by a Participant shall be
cancelled to the extent necessary to conform to such limit on the maximum amount
of 401(k) Contributions. The amount as to which such salary reduction election
is cancelled shall be paid to the Participant in cash.
If, despite the foregoing, the aggregate elective deferrals pursuant
to section 401(k) of the Code contributed during any calendar year for any
Participant under the Plan and under other profit sharing or stock bonus plans
maintained by a Participating Employer or an Affiliate nevertheless exceed the
maximum dollar amount permitted under section 402(g) of the Code, the amount of
any such excess for the calendar year shall be distributed to the Participant
from such plans no later than April 15 of the next following calendar year. If
the Participant shall have made such contributions to more than one such plan,
such distribution shall be made on a pro rata basis from the Plan and each such
other plan, unless the Participant notifies the Plan Administrator, in a
notarized writing not later than March 1 following the close of the calendar
year, that such distribution should be made from the Plan and each such other
18
<PAGE>
plan in some other proportion. In any case of excess deferrals as described
above, the Participant shall be deemed to have notified the Plan that excess
deferrals have been contributed on his behalf and shall be deemed to have
designated such deferrals as excess deferrals.
In addition, if a Participant notifies the Plan Administrator, in a
notarized writing not later than March 1 following the close of the calendar
year, that more than the maximum dollar amount permitted under section 402(g)
has been contributed as 401(k) Contributions on his behalf for such calendar
year as a result of his participation in a qualified retirement plan of another
employer and he designates the amount which constitutes an excess deferral under
the Plan, the amount of any such excess 401(k) Contributions to the Plan for the
calendar year shall be distributed to the Participant from his Accounts not
later than April 15 of the next following calendar year.
Any amount to be distributed from the Plan for any calendar year in
accordance with the foregoing provisions of this Part A shall be adjusted to
reflect gain or loss during such calendar year considered allocable to the
excess 401(k) Contribution, but not gain or loss since the end of such calendar
year. For this purpose, the gain or loss considered allocable to an excess
401(k) Contribution shall equal the total net gain or loss for the calendar year
in the Participant's 401(k) Contributions Accounts, multiplied by a fraction the
numerator of which is the amount of the
19
<PAGE>
Participant's excess 401(k) Contributions for the calendar year and the
denominator of which is the sum of the aggregate balance in such Accounts at the
beginning of such calendar year plus the aggregate of all 401(k) Contributions
made to the Participant's Accounts for such calendar year.
The amount of excess 401(k) Contributions that is to be distributed
hereunder to a Participant from his Accounts with regard to any calendar year
shall be reduced by the amount of any excess 401(k) Contributions previously
distributed to such Participant under Part B of this Section 3.5 for such
calendar year. In the event any such reduction shall be applicable, to the
extent required by Treasury Regulations issued under section 402(g) or 401(k) of
the Code, such prior distribution of excess 401(k) Contributions under Part B
shall be treated as though it had been a distribution of excess 401(k)
Contributions under this Part A.
Any Company Matching Contributions that are made with respect to any
401(k) Contributions distributed hereunder shall be forfeited as of December 31
of the calendar year for which they were made. Such Company Matching
Contributions shall be adjusted to reflect gain or loss in a manner comparable
to the procedure described above. For purposes of determining whether Company
Matching Contributions must be forfeited, in connection with a distribution of
401(k) Contributions for any period under this Section 3.5(A) or under Section
3.5(B) it shall be assumed that Company Matching Contributions for such period
related to 401(k) Contributions
20
<PAGE>
for the Participant remaining in the Plan, to the extent thereof.
B. Deferral Percentage Limit. In no event shall a Participating
Employer make 401(k) Contributions for Participants for any Year that would
result in a violation of the deferral percentage limitation set forth below. The
deferral percentage for eligible Employees who are "highly compensated
employees" (the "Highly-Paid Group") shall not exceed the greater of (a) or (b)
below:
(a) the deferral percentage for the eligible Employees who are not in
the Highly-Paid Group, times 1.25, or
(b) the deferral percentage for the eligible Employees who are not in
the Highly-Paid Group, times 2.0, but only if the deferral percentage for
the eligible Employees who are in the Highly-Paid Group does not exceed the
deferral percentage for eligible Employees who are not in the Highly-Paid
Group by more than 2.0 percentage points.
The deferral percentage for each of the above groups of eligible
Employees for any Year shall be the average of the ratios, calculated separately
for each eligible Employee in the particular group, of:
(i) the aggregate amount of the 401(k) Contributions paid to the Plan
on his behalf for such Year, to
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<PAGE>
(ii) the eligible Employee's Compensation paid by the Participating
Employer and its Affiliates for such Year, for those periods during which
he is an eligible Employee.
In applying the foregoing limitation at any time with regard to a
particular Year, to the extent required by applicable Treasury Regulations
issued under section 402(g) or 401(k) of the Code, 401(k) Contributions for such
Year previously distributed to a Participant pursuant to Part A of this Section
3.5, including 401(k) Contributions considered to have been thus distributed
pursuant to the terms of such Part A, shall nevertheless be taken into account
without regard to the fact that they have been distributed, except that 401(k)
Contributions thus distributed pursuant to Part A to a Participant who is not in
the Highly-Paid Group in order to conform to the requirements of section
401(a)(30), i.e., excess deferrals pursuant to section 401(k) of the Code
contributed to plans maintained by a Participating Employer or an Affiliate,
shall not be taken into account for purposes of the foregoing limitation.
Notwithstanding the foregoing, if a Participating Employer aggregates
two or more plans for the purpose of satisfying section 410(b) of the Code
(other than section 410(b)(2)(A)(ii)), such plans shall be treated as one plan
for purposes of the deferral percentage limitation described above.
22
<PAGE>
For purposes of this Section, the term "highly compensated employee"
shall be defined as provided in section 414(q)(1) through (12) of the Code. To
the extent and in the manner provided in Regulation 1.414(q)-1T Q&A-14, the
Company may elect to make the look-back year calculation for a determination
year on the basis of the calendar year ending with or within the applicable
determination year (or, in the case of a determination year that is shorter than
twelve months, the calendar year ending with or within the twelve-month period
ending with the end of the applicable determination year).
The following special rules shall apply in calculating the deferral
ratio for any eligible Employee who is a "highly compensated employee":
(i) If any such Employee is eligible to have contributions under
section 401(k) of the Code made on his behalf under any other plan
maintained by a Participating Employer or an Affiliate for any Year, such
deferral ratio shall be calculated for him for such Year as though such
contributions made on his behalf under any such other plan were made under
this Plan. Such deferral ratio shall likewise be calculated for such Year
as though any other employer contributions required to be taken into
account under such other plan in applying the deferral rate requirement
under section 401(k)(3) of the Code were made under this Plan. In addition,
such deferral ratio shall be calculated for such Year as
23
<PAGE>
though any compensation required to be taken into account in applying the
test under section 401(k)(3) of the Code under such other plan that is not
otherwise taken into account under this Part B were paid by the
Participating Employer to such Employee.
(ii) In determining the above ratio for any Employee in the
Highly-Paid Group, the 401(k) Contributions and the Compensation of such
Employee shall include such Contributions and Compensation of all of the
Employee's "family members" covered under Code section 414(q)(6), with such
family group to be considered a single highly compensated employee for
purposes hereof. Such family members shall be disregarded in determining
the deferral percentage for the eligible Employees who are not in the
Highly-Paid Group. For purposes of the foregoing, (i) Contributions shall
include contributions required to be taken into account in applying the
deferral rate requirement under Code section 401(k)(3) under any other plan
of the Participating Employer or its Affiliates and (ii) Compensation shall
include compensation paid by any Affiliate of a Participating Employer.
The Plan Administrator shall reduce the maximum rate of 401(k)
Contributions that may be elected by Participants who are in the Highly-Paid
Group to the extent necessary to ensure that the foregoing limitations set forth
in this Part B of Section 3.5 are not exceeded. In the event that as a
24
<PAGE>
result of any such decrease in the maximum permissible rate of 401(k)
Contributions, a salary reduction election made by a Participant cannot be fully
effectuated during any Year, the Participant's salary reduction election shall
be cancelled to the extent necessary to conform to such decrease. The amount as
to which such reduction election is cancelled shall be paid to him in cash.
No Participant may elect a rate of salary reduction for any Year which
the Plan Administrator determines is likely to result in a deferral percentage
that exceeds the limitations of this Section 3.5. To enforce this requirement,
at least once each Year, the Plan Administrator shall review the salary
reduction elections made for such Year to determine whether the deferral
percentage limitations of this Section 3.5 will be satisfied.
To the extent that despite the foregoing any 401(k) Contributions are
made for Participants in the Highly-Paid Group for any Year in violation of the
deferral percentage limit set forth above, such excess contributions, determined
in accordance with section 1.401(k) - (f)(2) of the Treasury Regulations, and
taking into account any applicable rules relating to family aggregation, shall
be distributed by the Plan to Participants by March 15 of the Year next
following the Year for which such excess contributions were made, to the extent
practicable, and in no event later than December 31 of the Year next following
the Year for which such excess contributions were made; provided, however, that
to the extent
25
<PAGE>
required under applicable Treasury Regulations issued under section 401(k) of
the Code, any distribution required to be made to a Participant under this
paragraph shall be reduced by any excess 401(k) Contributions previously
distributed, including 401(k) Contributions considered to have been previously
distributed, to the Participant pursuant to Part A of this Section 3.5.
The amount distributed to any Participant pursuant to the foregoing
with regard to excess contributions for any Year shall be adjusted to reflect
gain or loss during such Year considered allocable to such excess 401(k)
Contributions, but not gain or loss since the end of such Year. For this
purpose, the gain or loss considered allocable to excess 401(k) Contributions
shall equal the total net gain or loss for the Year in the Participant's 401(k)
Contributions Accounts, multiplied by a fraction the numerator of which is the
amount of the Participant's excess 401(k) Contributions for the Year and the
denominator of which is the sum of the aggregate balance in such Accounts at the
beginning of such Year plus the aggregate of all 401(k) Contributions made to
the Participant's Accounts for such Year. Any amounts distributed to a
Participant pursuant to this Section 3.5, including Part A hereof, or Section
3.6 shall be taken pro rata from a Participant's Investment Funds under the
Plan. Any Company Matching Contributions that were made in regard of any 401(k)
Contributions required to be thus distributed, adjusted for gain or loss in a
manner comparable to the
26
<PAGE>
procedure described above, shall be forfeited as of December 31 of the Year for
which they were made.
The deferral percentages for eligible Employees in the Highly-Paid
Group and for eligible Employees who are not in the Highly-Paid Group shall be
determined in accordance with any requirements established by applicable
Treasury Regulations.
3.6 Contribution Percentage Limitation for Company Matching
Contributions. Notwithstanding the foregoing, in no event shall Company Matching
Contributions be made on behalf of Participants for any Year in violation of the
special limitations regarding contribution percentages set forth below.
The contribution percentage for eligible Employees in the Highly-Paid
Group shall not exceed the greater of (a) or (b) below:
(a) the contribution percentage for eligible Employees who are not in
the Highly-Paid Group, times 1.25, or
(b) the contribution percentage for eligible Employees who are not in
the Highly-Paid Group, times 2.0, but only if the percentage for eligible
Employees in the Highly-Paid Group does not exceed the contribution
percentage for eligible Employees who are not in the Highly-Paid Group by
more than 2.0 percentage points.
Notwithstanding the foregoing, if the deferral percentage for eligible
Employees in the Highly-Paid Group
27
<PAGE>
under Part B of Section 3.5 satisfies the alternative set forth in clause (b) in
the first paragraph of such Part B but does not satisfy clause (a) set forth
therein, and the contribution percentage for eligible Employees in the
Highly-Paid Group satisfies clause (b) above but does not satisfy clause (a), a
special limitation shall apply. Under this limitation, the sum of the deferral
percentages under Part B of Section 3.5 for the eligible Employees who are in
the Highly-Paid Group plus the contribution percentages for such eligible
Employees under this Section 3.6 may not exceed the greater of:
(i) the maximum deferral percentage permissible for such employees
under clause (a) in such Part B plus the maximum contribution percentage
permissible for such Employees under clause (b) above, and
(ii) the maximum deferral percentage permissible for such Employees
under clause (b) in such Part B plus the maximum contribution percentage
permissible for such Employees under clause (a) above.
Any restriction in contributions required to comply with the foregoing special
limitation, or to make such special limitation inapplicable, shall be applied
under this Section 3.6 (rather than under Part B of Section 3.5).
The contribution percentage for a specified group of Employees for a
Year shall be the average of the ratios, calculated separately, for each
Employee in such group of:
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<PAGE>
(i) the aggregate amount of Company Matching Contributions made on his
behalf for such Year, to
(ii) the Employee's Compensation paid by the Participating Employer
and its Affiliates for such Year, for periods during which he is an
eligible Employee.
Notwithstanding the foregoing, if a Participating Employer aggregates
two or more plans for the purpose of satisfying section 410(b) of the Code,
other than section 410(b)(2)(A)(ii), such plans shall be treated as one plan for
purposes of the contribution percentage limitation described above.
The following special rules shall apply in calculating the
contribution ratio for any eligible Employee who is a "highly compensated
employee":
(i) If any such Employee is eligible to make employee contributions or
have matching employer contributions made for him under any other plan
maintained by the Participating Employer or an Affiliate for any Year, such
ratio shall be calculated for him for such Year as though the employee
contributions made by him and matching employer contributions made on his
behalf under any such other plan were made under this Plan. In addition,
such ratio shall be calculated for such Year as though any compensation
required to be taken into account in applying the test under section 401(m)
of the Code by such other plan that is not otherwise taken
29
<PAGE>
into account under this Section 3.6 were paid by the Participating Employer
to such Employee.
(ii) In determining the above ratio for any Employee in the
Highly-Paid Group, the Company Matching Contributions and the Compensation
of such Employee shall include the Company Matching Contributions and
Compensation of all of the Employee's "family members" covered under Code
section 414(q)(6), with such family group to be considered a single highly
compensated employee for purposes hereof. Such family members shall be
disregarded in determining the contribution percentage for eligible
Employees who are not in the Highly-Paid Group. For purposes of the
foregoing, (i) Company Matching Contributions shall include employee
contributions and matching employer contributions under any other plan of
the Participating Employer or its Affiliates and (ii) Compensation shall
include compensation paid by any Affiliate of a Participating Employer.
In determining the above ratios, 401(k) Contributions for all
Participants shall be taken into account, to the extent permissible under
section 401(m) of the Code and applicable Treasury Regulations, if this will
reduce the extent of any failure to satisfy the above contribution percentage
requirements, including the special limitation set forth above.
30
<PAGE>
If the contribution percentage for eligible Employees in the
Highly-Paid Group would otherwise be more than the amount permitted under the
above restrictions, Company Matching Contributions on behalf of such Employees
shall be reduced accordingly.
No Company Matching Contributions shall be made which the Plan
Administrator determines would result in the limitations of this Section 3.6
being exceeded. To enforce these requirements, at least once each Year, the Plan
Administrator shall review the levels of 401(k) Contributions being matched for
such Year to determine whether the special limitations regarding contribution
percentages will be satisfied.
To the extent that despite the foregoing a violation of this Section
3.6 occurs, to the extent necessary to correct such violation, Company Matching
Contributions that were made with regard to 401(k) Contributions, adjusted for
gain or loss in the manner described below, shall, to the extent vested, be
distributed to Participants, in accordance with section 1.401(m)-1(e)(2) of the
Treasury Regulations and taking into account applicable rules relating to family
aggregation, by March 15 of the Year next following the Year for which such
Contributions were made, to the extent practicable, and in no event later than
December 31 of the Year next following the Year for which such Contributions
were made, and shall be forfeited to the extent not vested.
31
<PAGE>
The amount distributed to a Participant under the next preceding
paragraph with regard to excess contributions for any Year shall be adjusted to
reflect the gain or loss during such Year considered allocable to such excess
Company Matching Contributions, but not the gain or loss since the end of such
Year. For this purpose, the gain or loss considered allocable to excess Company
Matching Contributions shall equal the total net gain or loss for the Year in
the Participant's Company Matching Contributions Accounts, multiplied by a
fraction the numerator of which is the amount of the Participant's excess
Company Matching Contributions for the Year and the denominator of which is the
sum of the aggregate balance in such Accounts at the beginning of such Year plus
the aggregate of all Company Matching Contributions made to the Participant's
Accounts for such Year.
The contribution percentages for eligible Employees in the Highly-Paid
Group and for eligible Employees who are not in the Highly-Paid Group shall be
determined in accordance with any requirements established by applicable
Treasury Regulations. The foregoing provisions of this Section 3.6 shall be
interpreted and administered in accordance with such Treasury Regulations.
3.7 Statutory Limitations. Notwithstanding any provision of the Plan
to the contrary, the maximum "Annual Addition", as hereinafter defined, to a
Participant's Account during any Year shall not exceed the lesser of:
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<PAGE>
(i) 25% of the Participant's "gross compensation" for the Year; or
(ii) $30,000, or such greater amount as is permissible under section
415(c)(1)(A) of the Code.
The Annual Addition for a Participant shall be the sum of:
(1) Employer Contributions allocated to the Accounts of such
Participant for the Year,
(2) for purposes only of the dollar limitation specified in clause
(ii) above, amounts allocated to an individual medical account, as defined
in section 415(1)(2) of the Code, which is part of a defined benefit plan
maintained by a Participating Employer, and
(3) for purposes only of the dollar limitation specified in clause
(ii) above, amounts attributable to post-retirement medical benefits that
are allocated to the separate account of a key employee, as defined in
section 419A(d)(3), under a welfare benefit fund, as defined in section
419(e), maintained by a Participating Employer or an Affiliate.
If any Participant hereunder is also a participant in another
retirement plan which (a) is a "defined contribution" plan within the meaning of
section 414(i) of the Code and (b) is maintained by a Participating Employer or
an Affiliate, the foregoing limitations shall be applied on an aggregate basis.
The term "Affiliate" shall be modified for purposes of this Section 3.7 in
accordance with section 415(h)
33
<PAGE>
of the Code. Any reduction in contributions under this Plan and any such other
plan that is required to satisfy such limitations shall first be made in such
other plan, to the extent possible.
If any Participant hereunder is also a participant of another employee
retirement plan which is a "defined benefit" plan within the meaning of section
414(j) of the Code maintained by a Participating Employer or an Affiliate, any
reduction in benefits required to conform to the limits imposed by section
415(e) of the Code shall be made in such defined benefit plan.
Notwithstanding anything elsewhere in the Plan to the contrary, any
contributions distributed to a Participant in accordance with Part A of Section
3.5 in order to comply with the limitations imposed by such Section shall not be
taken into account as an Annual Addition for the purposes of this Section 3.7.
The Plan Administrator shall adopt such uniform rules as it shall deem
necessary, in accordance with applicable Treasury Regulations, with regard to
coordination of the provisions concerning distribution of 401(k) Contributions
under Part B of Section 3.5 and Company Matching Contributions under Section 3.6
with the provisions of this Section 3.7.
For purposes of this Section 3.7, the term "gross compensation" for
any Year shall mean wages as defined in section 3401(a) of the Code for the
purpose of income tax withholding at the source, but determined without regard
to
34
<PAGE>
any rules that limit the remuneration included in wages based on the nature or
location of the employment or services performed, subject to a maximum limit of
such amount as may be permissible under Code section 401(a)(17).
The contributions to be made on behalf of a Participant under the Plan
may be reduced to the extent necessary, as determined by the Plan Administrator,
to comply with the provisions of section 415 of the Code as provided below:
(a) If as of the end of any payroll period the Annual Addition for the
Year for any Participant would otherwise exceed the maximum permitted under
this Section 3.7, the 401(k) Contributions which would otherwise be made on
behalf of the Participant for the pay period in which the applicable
maximum would be exceeded shall be decreased to the extent necessary to
conform to such limitation. If any of such 401(k) Contributions would have
been matched, the Company Matching Contributions made on behalf of the
Participant shall be reduced accordingly.
(b) Any amount of 401(k) Contributions which cannot be contributed to
the Plan as a result of any such decrease shall be paid to the Participant
directly, in cash.
Subject to applicable Treasury Regulations, distributions of 401(k)
Contributions may be made to the
35
<PAGE>
extent determined by the Plan Administrator to be necessary to conform to the
limitations imposed under this Section 3.7.
3.8 Return of Employer Contributions. Notwithstanding the foregoing
or anything elsewhere in the Plan to the contrary, to the extent permitted by
applicable government regulations, upon the Participating Employer's request,
(i) a contribution made under the Plan by the Participating Employer which was
made by a mistake of fact shall be returned to the Participating Employer within
one year after the payment of the contribution and (ii) a contribution made
under the Plan by the Participating Employer as to which a deduction under
section 404 of the Code is disallowed shall be returned to the Participating
Employer within one year after such disallowance, to the extent disallowed. Any
contribution made under the Plan by the Participating Employer is hereby
specifically conditioned upon the current deductibility of the contribution
under section 404 of the Code and that, in accordance with Section 3.4, no
contribution shall be made under the Plan by the Participating Employer that is
not currently deductible under such section 404. Any contribution to be returned
to the Participating Employer in accordance with clause (i) or (ii) above shall
be reduced before return to the Employer to reflect investment losses, but shall
not be increased to reflect investment gains.
Notwithstanding anything elsewhere in the Plan to the contrary,
contributions by Participating Employers under the Plan are conditioned upon the
initial qualification of the
36
<PAGE>
Plan under section 401(a) of the Code. If it is finally determined by
the Internal Revenue Service or any court of competent jurisdiction that the
Plan does not so qualify, the Trustee shall, upon written request of the Board,
return the amount of such contributions to the Participating Employers within
one year after the date of denial of qualifications of the Plan.
37
<PAGE>
SECTION 4
Investment of Contributions
4.1 Investment Funds. Assets in the Trust Fund shall be invested in
the following Investment Funds:
(a) GE U.S. Equity Fund: Invested primarily in U.S. common stock
through investment in shares of the GE U.S. Equity Fund.
(b) GE Global Equity Fund: Invested primarily in foreign stocks, and
may also be invested in U.S. common stocks, through investment in
shares of the GE Global Equity Fund.
(c) GE Strategic Investment Fund: Invested primarily in U.S. and
foreign stocks, convertible securities and bonds through
investment in shares of the GE Strategic Investment Fund.
(d) GE Fixed-Income Fund: Invested primarily in U.S. and foreign
corporate bonds, government bonds and mortgage-backed and
asset-backed securities through investment in shares of the GE
Fixed-Income Fund.
(e) GE Money Market Fund: Invested primarily in high-grade,
short-term U.S. government and corporate money market securities
through investment in shares of the GE Money Market Fund.
38
<PAGE>
(f) GE Stable Income Fund: Invested primarily in pooled investment
contracts with short-term maturities through investment in a
collective investment fund maintained by State Street Bank and
Trust Company for the investment of assets of employee benefit
plans qualified under section 401 of the Code (and the terms of
the instrument establishing such collective investment fund shall
be part of the Plan and the Trust Agreement).
(g) Common Stock Fund: Invested entirely in the Company's Common
Stock. To the extent that contributions to the Company Stock Fund
are not made in shares of the Company's Common Stock, shares of
the Company's Common Stock shall be purchased by the Trustee from
time to time out of funds held by the Trustee under the Plan, to
the extent and in such manner as shall be permitted by ERISA, (i)
on the open market at prevailing market prices, (ii) in privately
negotiated transactions, at current market value, or (iii)
directly from the Company, if the Company makes either treasury
shares or authorized but unissued shares available for sale to
the Trustee at no more than the current market value. For
purposes of this subsection, the current market value of the
Company's
39
<PAGE>
Common Stock shall mean, with respect to any day, the last
reported sales price of such stock on the New York Stock Exchange
or, if the Company's Common Stock is not listed on such exchange,
on the principal national securities exchange on which the
Company's Common Stock is listed. Any purchase in accordance with
(iii) above shall be made only at the close of business on a day
in which the current market value of such stock can be
determined. The Trustee may, at its discretion, maintain a
portion of the Company Common Stock Fund in cash or short term
investments to provide liquidity for distributions, transfers or
other plan activity.
Notwithstanding anything herein to the contrary, the Trustee in its
discretion may from time to time retain in or transfer to a collective
short-term fixed income investment fund maintained by the Trustee such amounts
as it shall consider appropriate to provide funds for the payment of current
benefits or current expenses of the Plan.
4.2 Responsibility for Investments. The selection of an investment
option is the sole responsibility of each Participant. The fact that an
Investment Fund is available to Participants for investment under the Plan shall
not be construed as a recommendation for the allocation of amounts to that
Investment Fund. The designation of any investment
40
<PAGE>
option shall not impose any liability on a Participating Employer, its
directors, officers or employees, the Trustee, the Plan Administrator, or any
Participant in the Plan. Subject to any applicable provisions of law, each
Participant assumes all risks connected with any decrease in the market value of
any securities in the Investment Funds, and such Investment Funds shall be the
sole source of payments to be made under the Plan.
4.3 Investment of Contributions. Contributions made on behalf of a
Participant, other than Company Matching Contributions made in Company Common
Stock, shall be invested, at the written election of the Participant, in
multiples of 10% (5%, effective April 1, 1996), in one or more of the Investment
Funds. Contributions to the Participant's Account prior to the effective date of
any such election shall be invested in the GE Money Market Fund. Any election
that is filed before the various Investment Funds become administratively
available as to contributions made to the Plan with respect to periods beginning
after December 1, 1993, shall be deemed to be an effective election as to
contributions paid into the Plan after such Investment Funds become thus
available (but not as to contributions paid into the Plan before such Investment
Funds become thus available, which contributions shall continue to be held in
the GE Money Market Fund until transferred in accordance with Section 4.5).
4.4 Change in Investment of Future Contributions.
A Participant may change his investment election
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<PAGE>
under Section 4.3 with respect to future contributions at any time, by
notification to the Trustee in the manner approved by the Plan Administrator,
with such change to be effective as promptly as practicable after the Trustee's
receipt of such notice, in accordance with the Trustee's customary procedures;
provided, however, that a Participant shall not be permitted to make more than
four such elections in any Year. Any such revised election must provide for
allocation of such contributions among the Investment Funds in multiples of 10%
(5%, effective April 1, 1996).
4.5 Transfers Between Investment Funds. A Participant may elect to
transfer all or any portion of his Accounts in any Investment Fund or Funds to
any other Investment Fund or Funds by notification to the Trustee in the manner
approved by the Plan Administrator, with such transfer to be effective as of the
earliest practicable Valuation Date following receipt of such notice by the
Trustee; provided, however, that (i) a Participant shall not be permitted to
make more than four such elections in any Year and (ii) a Participant may not
transfer from the Company Stock Fund any amount attributable to Company Matching
Contributions made on his behalf in shares of Company Common Stock. Any such
transfer election shall allocate the Participant's existing Account balances
among the Investment Funds in multiples of 10% (5%, effective April 1, 1996).
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4.6 Establishment of Trust Fund. For the purpose of funding the Plan,
the Company has entered into a Trust Agreement with the Trustee.
The Trustee may be removed at any time by the Board, in accordance
with the provisions of the Trust Agreement, and a new Trustee appointed.
4.7 Voting of Shares held in the Common Stock Fund. The Trustee shall
vote all shares of the Company's Common Stock held under the Plan in the Common
Stock Fund on each matter presented to the shareholders, in such manner as it
shall determine in its discretion.
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SECTION 5
Vesting and Forfeitures
5.1 Vesting. A Participant shall have fully vested rights at all times
to the value of his 401(k) Contributions Accounts, his Rollover Accounts, his
After-Tax Contributions Accounts and his Prior Employer Contributions Accounts.
A Participant's rights to the value of his Company Matching
Contributions Accounts shall vest in accordance with the following schedule:
Years of Service Vested Percent
---------------- --------------
Less than 1 0%
At least 1 100%
Notwithstanding the foregoing, a Participant's rights to his Company
Matching Contributions Accounts shall be fully vested upon (i) his reaching age
65 while employed by the Company, (ii) his termination of employment by reason
of death, (iii) his termination of employment on account of Total and Permanent
Disability, (iv) termination of the Plan or complete discontinuance of
contributions to the Plan, or (v) partial termination of the Plan, if such
partial termination is applicable to the Participant.
5.2 Forfeitures. If a Participant terminates employment other than by
reason of retirement, Total and Permanent Disability or death and he does not
have a fully vested interest under Section 5.1 above in his Company Matching
Contributions Accounts, the nonvested portion of such Accounts shall be
forfeited. Such forfeiture shall occur as
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of the fifth anniversary of his termination of Service or, if earlier, as of the
date his vested interest in the Plan is paid to him.
The value of any amounts thus forfeited, or forfeited under Section
9.13, by Participants shall be used as promptly as practicable to reduce future
Employer Contributions to be made by the Participating Employers.
Notwithstanding the foregoing, if the Plan is terminated, or
contributions thereunder permanently discontinued, any amount not previously
applied to reduce Employer Contributions shall be allocated among all
Participants in proportion to their Compensation for the Year in which such
termination or permanent discontinuance occurs.
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SECTION 6
Accounts
6.1 Separate Accounts. The Plan Administrator shall maintain for each
Participant the following separate Accounts in each Investment Fund to which
contributions, if any, are made by him or on his behalf:
(a) a Company Matching Contributions Account;
(b) a 401(k) Contributions Account;
(c) a Rollover Account;
(d) an After-Tax Contributions Account; and
(e) a Prior Employer Contributions Account.
The Plan Administrator shall also maintain any other bookkeeping
accounts and/or records it shall consider necessary for administration of the
Plan.
6.2 Valuation of Investment Funds. A Participant's Accounts invested
in each Mutual Fund shall be represented in shares, his Accounts in the GE
Stable Income Fund shall be represented in collective trust fund units and his
Accounts in the Common Stock Fund shall be represented in dollars. The value of
any Account invested in the Mutual Funds on any Valuation Date shall equal the
number of shares of the applicable Mutual Fund held for the Participant in such
Account multiplied by the value on such Valuation Date of such a share. In the
case of Accounts invested in each Mutual Fund, such share value shall be
determined in accordance with the applicable Mutual Fund's customary procedures.
The value of any Account invested in the GE Stable Income Fund shall
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equal the number of collective trust fund units held for the Participant in such
Account multiplied by the value on such Valuation Date of such a unit. In the
case of Accounts held in the GE Stable Income Fund, such unit value shall be
determined in accordance with the customary procedures of State Street Bank and
Trust Company. The value of the Common Stock Fund shall be determined by the
Trustee as of each Valuation Date on the basis of market values and shall
reflect income earned or accrued, expenses and any other increase or decrease in
the value of the Investment Fund due to investment experience since the
immediate preceding Valuation Date. Participants' Accounts in the Common Stock
Fund shall be adjusted as of each Valuation Date to reflect any change in the
value of such Investment Fund since the preceding Valuation Date.
A Participant's Accounts shall also be adjusted as of each Valuation
Date to reflect contributions, withdrawals, distributions, loans and loan
repayments, and transfers between Investment Funds since the next preceding
Valuation Date.
For purposes of the foregoing:
(1) contributions shall be credited as described in Sections 3.3 and
14.1 of the Plan;
(2) a withdrawal or distribution shall be deducted as of the Valuation
Date as of which it is effective under Section 7 or 9 (as the case may be);
and
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(3) transfers between Investment Funds shall be reflected as of their
effective date under Section 4.5.
(4) an appropriate adjustment shall be made to reflect any loans made
as of the current Valuation Date, or loan repayments received since the
next preceding Valuation Date.
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SECTION 7
Withdrawals During Employment
7.1 Hardship Withdrawals. Subject to the restrictions set forth below,
a hardship withdrawal may be made by a Participant by following the procedures
set forth by the Plan Administrator. Any such withdrawal shall be permitted only
on account of an immediate and heavy financial need of the Participant and only
in an amount necessary to satisfy such financial need. Upon a Participant's
request, notwithstanding any provision in this Section 7.1 to the contrary, the
amount necessary to satisfy an immediate and heavy financial need shall be
increased by the amount of federal, state and local income taxes reasonably
anticipated to result from the distribution, based on an assumed tax rate equal
to a percentage, not in excess of 20%, determined by the Participant, plus 10%
for the additional tax imposed under section 72(t) of the Code, if applicable.
The existence of an immediate and heavy financial need, and the amount
necessary to meet such need, will be determined by the Plan Administrator in
accordance with the standards set forth below.
For purposes hereof, an immediate and heavy financial need shall be
limited to a need for funds for any of the following purposes:
(1) Unreimbursed medical expenses described in section 213(d) of the
Code incurred by the Participant,
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the Participant's spouse, or any dependents of the Participant, as defined
in section 152 of the Code;
(2) Purchase, excluding mortgage payments, of a principal residence
for the Participant;
(3) Payment of tuition and related educational fees for the next
twelve months of post-secondary education for the Participant or his
spouse, children, or dependents;
(4) Prevention of the eviction of the Participant from his principal
residence or foreclosure on the mortgage on his principal residence; and
(5) Payment of funeral expenses of a member of the Participant's
family, and similar emergency expenses.
A Participant requesting a hardship withdrawal must represent that he
has an emergency need for funds for one of the reasons specified above. The
Participant shall provide the Plan Administrator with any information and
evidence that the Plan Administrator considers necessary in order to determine
whether such a hardship exists and the amount of the withdrawal from the Plan
that is necessary to meet the hardship.
A hardship withdrawal shall be considered to be necessary to meet such
an immediate and heavy financial need only under the following circumstances:
(1) the distribution is not in excess of the amount of the immediate
and heavy financial need of the Participant that cannot be satisfied by
distributions
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and/or non-taxable loans of the types described in clause (2) below;
(2) the Participant has obtained or requested all non-taxable loans
currently available under the Plan and all other plans maintained by any
Participating Employer or Affiliate.
In the event of any hardship distribution to a Participant hereunder
that includes amounts from the Participant's 401(k) Contributions Accounts, such
Participant may not make 401(k) or comparable contributions to the Plan or to
any qualified or non-qualified deferred compensation plan maintained by any
Participating Employer or its Affiliates during the twelve calendar months
immediately following the effective date of such hardship withdrawal. Such
Participant may also not make 401(k) Contributions or comparable contributions
to the Plan or to any other tax-qualified retirement plan maintained by a
Participating Employer or its Affiliates, for the calendar year immediately
following the calendar year of the hardship withdrawal, in excess of the
applicable limit under section 402(g) of the Code for such next calendar year
less the amount of such Participant's 401(k) Contributions or comparable
contributions made by him or on his behalf to the Plan or to any other
tax-qualified retirement plan maintained by a Participating Employer or its
Affiliates for the calendar year of the hardship distribution. A similar
suspension shall apply if the Participant receives a hardship withdrawal under
any other tax-qualified retirement
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plan maintained by a Participating Employer or any Affiliate in respect of which
such suspension penalty applies under such other plan.
The foregoing provisions shall be applied on a uniform and
nondiscriminatory basis and shall be subject to such changes as the Plan
Administrator may deem to be necessary at any time to comply with Treasury
Regulations or other rules issued under section 401(k) of the Code.
Any distribution under this Section 7.1 shall be taken from the
Participant's Accounts in the following order:
(i) from the value of his After-Tax Contributions Accounts;
(ii) from the value of his Prior Employer Contributions Accounts;
(iii) from the value of his Rollover Accounts;
(iv) in the case of a Participant who has a fully vested interest
in his Company Matching Contributions Accounts, from the
value of such Accounts;
(v) from the value of his 401(k) Contributions Accounts;
provided, however, that the amount withdrawn from such
Accounts may not exceed the dollar amount of his 401(k)
Contributions not previously withdrawn.
Any withdrawal under this Section 7.1 shall be made as promptly as
possible following the date the Plan Administrator determines that a hardship
exists.
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7.2 Other Withdrawals. A Participant who has reached age 59-1/2 may
elect to withdraw all or any portion of the vested value of his Accounts. Any
withdrawal made under this Section 7.2 shall be made in the following order:
(i) from the value of his After-Tax Contributions Accounts;
(ii) from the value of his Prior Employer Contributions Accounts;
(iii) from the value of his Rollover Accounts;
(iv) from the value of the vested portion of his Company Matching
Contributions Accounts;
(v) from the value of his 401(k) Contributions Accounts.
7.3 General Rules. Notwithstanding anything to the contrary in this
Section 7, any withdrawals by a Participant shall be subject to the following
conditions:
(i) Any withdrawal made under this Section 7 shall be made by
executing such documents as the Plan Administrator may
require.
(ii) No more than a total of four withdrawals under this Section 7
may be made in any Year.
(iii) The minimum amount of any withdrawal shall be $500 or, if
less, the total amount available to the Participant.
(iv) A Participant may not replace any amounts withdrawn.
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(v) Any amounts withdrawn by a Participant pursuant to this
Section 7 shall be paid to him in a lump sum, as soon as
practicable after the Valuation Date as of which the
withdrawal election is effective.
(vi) Any suspension periods hereunder shall run concurrently.
(vii) Any withdrawals made under this Section 7 from a particular
type of Account of a Participant shall be made pro rata from
the Participant's Accounts of such type in each of the
Investment Funds in which the Participant has an interest;
provided, however, that withdrawals shall not be made from
amounts in the Participant's Company Matching Contributions
Account attributable to Company Matching Contributions made on
his behalf in shares of the Company's Common Stock, to the
extent that amounts are available for such withdrawal from the
remainder of the Participant's Company Matching Contributions
Accounts.
(viii) Any amounts withdrawn under this Section 7 shall be paid
to the Participant in cash.
(ix) A Participant may not withdraw from his Accounts any amount
that is invested in a loan as described in Section 8, except
in the case
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of a Participant who is making a withdrawal of his entire
interest in the Plan.
(x) In the event a Participant shall make a withdrawal under
Section 7.2 from Accounts that are only partially vested, his
remaining interest in such Accounts for purposes of any
subsequent withdrawal, distribution or loan shall be adjusted,
in accordance with applicable regulations under section 411 of
the Code, to reflect such earlier withdrawal.
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<PAGE>
SECTION 8
Loans
8.1 Amount of Loans. Subject to the provisions of this Section 8, any
Participant who is employed by a Participating Employer may obtain a loan from
the Plan, by following the procedures established by the Plan Administrator and
executing such documents in connection therewith as the Plan Administrator may
require. To the extent required by applicable Department of Labor Regulations,
loans will also be available to Participants who are not employed by a
Participating Employer. A Participant may have only one loan outstanding at any
time.
The amount of any loan made under this Section 8 shall not be less
than $1,000.
No loan to a Participant hereunder may exceed the lesser of:
(i) $50,000, reduced by the greater of (a) the outstanding balance on
any loan considered to have been made from the Plan to the Participant on
the date the loan is approved by the Plan Administrator or (b) the highest
outstanding balance on loans from the Plan to the Participant during the
one-year period ending on the day before the date the loan is approved by
the Plan Administrator, not taking into account any payments made during
such one-year period, or
(ii) one-half of the value of the Participant's vested interest under
the Plan as of the Valuation Date
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<PAGE>
immediately preceding the date on which such loan is approved by the Plan
Administrator reduced by the outstanding balance of loans considered to
have been made from the Plan to the Participant on the date the loan is
made.
For purposes of the restrictions set forth in the next preceding
paragraph, any loan from any other tax-qualified retirement plan maintained by a
Participating Employer or an Affiliate shall be treated as if it were a loan
made from the Plan, and the Participant's vested interest under any such other
plan shall be considered a vested interest under this Plan. However, the
provisions of this paragraph shall not be applied so as to allow the amount of a
loan under this Section 8.1 to exceed the amount that would otherwise be
permitted in the absence of this paragraph.
8.2 Security for Loan. Any loan to a Participant under the Plan shall
be secured by the pledge of the portion of the Participant's interest in the
Plan invested in such loan.
8.3 Interest Rate. Each loan shall bear interest at a rate equal to
one percentage point above the prime rate as published in The Wall Street
Journal on the first business day of the month in which the loan is approved by
the Plan Administrator.
8.4 Repayment of Loans. Any loan hereunder shall be for a term of up
to five years. However, any loan to a Participant the proceeds of which are to
be used to acquire a
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principal residence of the Participant within a reasonable time of the granting
of the loan may be for a term of up to 15 years. The foregoing provision shall
apply only if the Plan Administrator receives evidence satisfactory to it,
within such period as the Plan Administrator shall prescribe, that the proceeds
of the loan are being used for the purpose specified herein.
Repayments of loans shall be made by payroll deduction of equal
amounts, comprised of both principal and interest, from each paycheck, with the
first such deduction to be made as soon as practicable after the loan funds are
disbursed. However, a Participant may prepay the entire outstanding balance of
his loan at any time, but may not make a partial prepayment. If any payroll
deductions cannot be made in full because a Participant is on an unpaid leave of
absence or is no longer employed by a Participating Employer, or Affiliate that
has consented to make payroll deductions for this purpose, or the Participant's
paycheck is insufficient for any other reason, the Participant shall pay
directly to the Plan the full amount that would have been deducted from the
Participant's paycheck. Such payment shall be made on the last business day of
the calendar month in which the amount would have been deducted.
Notwithstanding the foregoing, if loan proceeds are disbursed to a
Participant who then is no longer employed, pursuant to applicable Department of
Labor Regulations as described above, the principal and interest on the loan
will
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be paid in equal consecutive installments. The first such payment shall be due
and payable on the last business day of the month in which the loan funds are
disbursed and subsequent payments shall be due and payable on the last business
day of each month thereafter.
In the event that prior to full repayment of a loan under this Section
8, a distribution becomes payable to or on account of a Participant by reason of
his termination of employment for any reason, including death, or the
Participant becomes entitled to a distribution of benefits on account of
attaining age 70-1/2, the loan, or an appropriate portion thereof, shall be
distributed, to the extent that the Participant's remaining interest in the Plan
is insufficient to provide the required distribution.
Notwithstanding anything above to the contrary, in the event a
Participant terminates employment for any reason, including death, any
outstanding loan to the Participant under this Section 8 shall become
immediately due and payable, except to the extent that such acceleration shall
be impermissible under applicable Department of Labor Regulations.
8.5 Default on Loan. In the event that a participant fails to make a
loan payment under this Section 8 within 90 days after the date such payment is
due, a default on the loan shall occur. In the event of such a default, (i) all
remaining payments on the loan shall be immediately due any payable, (ii)
effective as of the first day of the
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calendar month next following the month in which any such loan default occurs,
the interest rate for such loan shall be, if higher than the rate otherwise
applicable, the rate being charged on loans from the Plan that are approved by
the Plan Administrator in the month in which such default occurs, (iii) no
contributions shall be made on such Participant's behalf prior to the first
payroll period that follows by twelve calendar months the date of repayment in
full of such loan, and (iv) the Participant shall be permanently ineligible for
any future loans from the Plan.
In the case of any default on a loan to a Participant, the Trustee
shall apply the portion of the Participant's interest in the Plan held as
security for the loan in satisfaction of the loan on the earliest possible date.
In addition, the Plan Administrator shall take any and all legal action it shall
consider necessary or appropriate to enforce collection of the unpaid loan, with
the costs of any legal proceeding or collection procedure to be charged to the
Accounts of the Participant.
Notwithstanding anything elsewhere in the Plan to the contrary, in the
event a loan is outstanding hereunder on the date of a Participant's death, his
estate shall be his Beneficiary as to the portion of his interest in the Plan
invested in such loan, with the Beneficiary or Beneficiaries as to the remainder
of his interest in the Plan to be determined in accordance with otherwise
applicable provisions of the Plan.
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8.6 Manner of Making Loans. A request by a Participant for a loan
shall be made in accordance with the procedures established by the Plan
Administrator. If a loan is requested for a term in excess of five years, the
Participant shall establish to the Plan Administrator's satisfaction that the
loans proceeds will be used for the purpose of acquiring a principal residence
for the Participant. A Participant taking a loan shall certify that he will not
elect to receive a distribution from the Plan as an annuity form of benefit if
he becomes eligible for such distribution while a loan under the Plan is
outstanding. If a Participant's request for a loan is determined by the Plan
Administrator to be in accord with the terms of the Plan, the Plan Administrator
shall direct the Trustee to make the loan in cash to the Participant.
Any loan shall be made as of the Valuation Date coincident with or
next following the date the loan is processed by the Plan Administrator in
accordance with its usual procedures, with disbursement of the loan funds to be
made as promptly as practicable after such Valuation Date.
Any loan under this Section 8 shall be taken from the various
Investment Funds in which the Participant has an interest on a pro rata basis;
provided, however, that loan amounts shall not be taken from a Participant's
interest in the Company Stock Fund attributable to Company Matching
Contributions made on his behalf in Company Common Stock, to the extent that
other amounts held on his behalf under the
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Plan are sufficient to provide the loan amount. In its discretion, the Plan
Administrator may direct that a Participant's Accounts be charged reasonable
fees for the processing and administration of loans; provided, however, that
such fees apply to Participants on a uniform and nondiscriminatory basis.
The amount to be taken from a Participant's interest in a particular
Investment Fund shall be taken from his Accounts in such Investment Fund in the
following order:
(i) from the value of his 401(k) Contributions Accounts,
(ii) from the value of the vested portion of his Company Matching
Contributions Accounts,
(iii) from the value of his Rollover Accounts,
(iv) from the value of
his Prior Employer Contributions Accounts,
(v) from the value of his After-Tax Contributions Accounts.
8.7 Accounting for Loans. A loan to a Participant shall be considered
an investment of a segregated sub-account of each of the Accounts of the
Participant from which the loan is made. All loan repayments to such
sub-accounts shall be credited to the Participant's Accounts in the reverse of
the order in which such loans were taken from the Accounts in accordance with
Section 8.6. All loan repayments shall be reinvested exclusively in one or more
of the Investment Funds
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in the same manner as current contributions for the Participant.
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SECTION 9
Payment of Benefits
9.1 General. In the event of the termination of employment of a
Participant for reasons other than death, subject to the provisions of Section
9.6, the vested value of his Accounts shall be paid to him in a lump sum. Such
payment shall be made as of the earliest practicable Valuation Date following
the Trustee's receipt of notice that a distribution is due, in accordance with
its customary procedures (with actual payment thereof to be made as promptly as
practicable thereafter). In the case of a Participant who terminates employment
at or after Normal Retirement Date, the Plan Administrator shall give such
notice to the Trustee as promptly as practicable after the Participant's
termination of employment. In the case of a Participant who terminates
employment prior to Normal Retirement Date, the Plan Administrator shall give
the Trustee notice, on a timely basis, that a distribution is due as of the
Participant's Normal Retirement Date; provided, however, that if any such
Participant shall elect to receive an earlier distribution, as described in the
next following paragraph, the Plan Administrator shall notify the Trustee that a
distribution is due as promptly as practicable after the Plan Administrator
receives such election from the Participant. However, any Participant who
terminates employment, other than by death, prior to the last day of the year in
which he reaches age 70- 1/2 may elect, at least 30 days before his benefit
would
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otherwise commence, to defer receipt of the vested value of his Accounts.
Receipt of such benefit may be deferred until such date as the Participant shall
request payment (by notice to the Plan Administrator at least 30 but not more
than 90 days prior to the date as of which benefits are to be paid, but not
later than the last day of the year in which he reaches at 70-1/2), in which
case the distribution shall be effective as of the earliest practicable
Valuation Date following the Trustee's receipt of notice that a payment election
has been filed (which notice shall be given by the Plan Administrator on a
timely basis), in accordance with the Trustee's customary procedures, with
actual payment to be made as promptly as practicable thereafter (and in no event
later than the April 1 next following the Year in which he attains age 70-1/2).
Notwithstanding the foregoing, any Participant who terminates
employment before his Normal Retirement Date may elect, by written notice to the
Plan Administrator on the Appropriate Form, to have the vested value of his
Accounts paid to him in a lump sum as of the earliest practicable Valuation Date
following the Trustee's receipt of notice that a distribution is due, in
accordance with its customary procedures (with actual payment thereof to be made
as promptly as practicable thereafter); provided, however, that such Valuation
Date shall not precede his termination of employment. Any Participant who does
not make such an immediate election to have the vested value of his Accounts
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paid to him in an immediate lump sum may elect to receive such a lump-sum
distribution as of a subsequent Valuation Date preceding his Normal Retirement
Date, with the amount of such payment to be based on the value of his Accounts
as of the earliest practicable Valuation Date following the Trustee's receipt of
notice that a distribution is due, in accordance with the Trustee's customary
procedures. Notwithstanding the foregoing, no Participant election under this
paragraph shall be effective unless (a) the distribution requested is made as of
a Valuation Date within 90 days after receipt of such election by the Plan
Administrator and (b) the notice required by section 1.411(a)-11(c) of the
Income Tax Regulations has been given on a timely basis; provided, however, that
if a distribution is one to which sections 401(a)(11) and 417 of the Code do not
apply, such distribution may commence less than 30 days after the notice
required under section 1.411(a)- 11(c) of the Income Tax Regulations is given,
provided that (1) the Plan Administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether or not to elect a distribution (and,
if applicable, a particular distribution option), and (2) the Participant, after
receiving the notice, affirmatively elects a distribution.
Notwithstanding anything to the contrary in this Section 9, in the
case of any Participant who continues employment with a Participating Employer
after the close of
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the calendar year in which he attains age 70-1/2, his Accounts shall be
distributed to him, in accordance with the Trustee's customary procedures, as of
the earliest practicable Valuation Date (on or after the last day of such year)
following the Trustee's receipt of notice that the distribution is due (which
notice shall be given by the Plan Administrator on a timely basis), with actual
payment thereof to be made as promptly as practicable thereafter, and in no
event later than April 1 of the calendar year next following the year in which
the Participant attains age 70-1/2. Any Participant who continues employment
after age 70-1/2 shall continue to be eligible to actively participate in the
Plan. If any such Participant receives a distribution under the foregoing
provisions of this paragraph, the value of his Accounts shall be distributed to
him (or his Beneficiary in the case of his death) in a lump sum not later than
the last day of each subsequent Plan Year (with the amount of each such payment
to be based on the value of his Accounts on a Valuation Date that shall be as
close as practicable to the date of payment, in accordance with the Trustee's
customary procedures).
If a contribution is made for a Participant following his termination
of employment and after his Accounts are distributed to him under the Plan, he
shall receive a supplemental payment equal to such contribution, with such
payment to be made as soon as practicable after the date the contribution is
made. If, on account of the death of the
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Participant, his Accounts were distributed to his Beneficiary, such supplemental
payment shall be made to the Beneficiary.
9.2 Optional Forms of Payment. Subject to the provisions of Section
9.3 and 9.6, in lieu of a lump-sum payment, a Participant may elect to have all
or a portion of his benefits provided through the purchase of a commercial
annuity contract (providing benefits in such form as the Participant shall
select, in accordance with this Section 9, from the benefit forms made available
by the insurer). Such election shall be made by filing a written notice with the
Plan Administrator within ninety days before the date as of which benefits are
to be paid under Section 9.1.
Notwithstanding the foregoing, the following restrictions shall apply
to any form of benefit under this Section 9.2 or Section 9.3:
(A) such benefit must be payable (i) over a period not exceeding the
life of the Participant or lives of the Participant and his beneficiary
under the annuity contract, (ii) over a period not in excess of the
Participant's life expectancy or the joint and survivor's life expectancy
of the Participant and his beneficiary under the annuity contract,
determined as of the date his benefits commence, notwithstanding any change
in such Participant's beneficiary under the annuity contract thereafter or
(iii) in a combination of (1) and (2) above;
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(B) no form of benefit may be selected under which benefits would be
payable over a period that exceeds the greater of (i) the life of the
Participant or the lives of the Participant and his spouse, or the
Participant's life expectancy or the joint and survivor's life expectancy
of the Participant and his spouse, whether or not, in any such case, his
spouse is designated as his joint annuitant, or (ii) the longest period
whereby the actuarial value of the payments to be made to the Participant
exceeds 50% of the aggregate amount in the Participant's Accounts,
determined in any such case as of the date his benefits commence; and
(C) all distributions required under this Section 9 shall be
determined and made in accordance with the proposed regulations under
section 401(a)(9) of the Code (including the minimum distribution
incidental benefit requirement of section 1.401(a)(9)-2 of the proposed
regulations) or the requirements of any successor regulations.
If any payment is made under this Section 9.2 or Section 9.4 to any
person, in reasonable reliance on (i) a written statement by the Participant
that he was unmarried, (ii) a spousal consent that on its face conformed to the
requirements set forth below or (iii) evidence establishing to the Plan
Administrator's satisfaction that a Participant's spouse could not be located,
or that the spouse's consent to an election under the Plan was unnecessary
because of other
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circumstances, the Plan's liability for benefits shall be satisfied to the
extent of such payment and the Plan shall have no liability to any spouse to
such extent.
9.3 Statutory Joint and Survivor Annuity. Subject to the provisions of
Section 9.6 but notwithstanding anything elsewhere in the Plan to the contrary,
any Participant who is married on the date as of which his benefits are to
commence under Section 9.1 and elects a benefit under Section 9.2 involving a
life annuity shall automatically be deemed to have elected a joint and survivor
annuity benefit under such Section 9.2 as of such date, with 50% of the
Participant's annuity benefit to be paid for life to his spouse after his death
(hereinafter sometimes referred to as the "Statutory Joint and Survivor
Annuity"). However, a Participant may file a written notice with the Plan
Administrator within 90 days before the date on which his benefits are to
commence, effectively waiving such Statutory Joint and Survivor Annuity and
electing payment in another form of benefit under Section 9.2. Any subsequent
change, by a Participant who previously elected payment under such Section 9.2
and filed a waiver, to a different form of payment or in the person designated
as Beneficiary or otherwise to receive any amounts due under a form of benefit
on the death of the Participant pursuant to Section 9.2 shall not be effective
unless a new waiver of the Statutory Joint and Survivor Annuity, containing the
notarized consent of the Participant's spouse, as described below, is filed with
the Plan Administrator.
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Any waiver of the Statutory Joint and Survivor Annuity filed by a
Participant shall be effective only if the consent of the Participant's spouse
to (i) such waiver and (ii) the election of an alternative form of benefit shall
be indicated thereto in writing. However, no such consent shall be necessary if
the alternative form of payment elected is a joint and survivor annuity, with
the Participant's spouse to receive, as the joint annuitant, a benefit equal to
more than 50% of the Participant's annuity benefit. In addition, no such consent
is required if (i) such spouse cannot be located, (ii) the Participant and such
spouse, are legally separated or the Participant has been abandoned by such
spouse, within the meaning of local law, and has a court order to such effect or
(iii) such other circumstances apply as may be prescribed by Treasury
Regulations. Any such consent shall be irrevocable and must explicitly
acknowledge the effect of the waiver and must be notarized.
Any election made by a Participant waiving the Statutory Joint and
Survivor Annuity provided hereunder may itself be revoked in writing not later
than the date on which his benefits are to commence, effective as of the date of
such revocation. If a waiver is thus revoked, another waiver may be made in
accordance with the foregoing provisions of this Section 9.3.
In the case of a Participant who elects a form of benefit under
Section 9.2 that involves a life annuity, the Plan Administrator shall prepare a
notice which shall describe
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in general terms (i) the form of Statutory Joint and Survivor Annuity provided
under this Section 9.3, (ii) the Participant's right to waive such Annuity and
to revoke any such waiver, (iii) the rights of the Participant's spouse
regarding such Annuity (iv) the general financial effect of waiving the Annuity
and of revoking any such waiver and (v) the other optional forms of benefit
available. Such notice shall also describe the Participant's right to request
further financial information concerning the effect of waiving such Annuity, as
described below. Such notice shall be furnished to each such Participant no
earlier than 90 days and no later than 30 days prior to the date on which his
benefits are to commence, or within such other time as shall be permitted by
applicable Treasury Regulations. Such notice shall be furnished by mail, or
personal delivery, or by such other means as the Plan Administrator shall select
that conforms to the requirements of ERISA, including permanent posting at a
location or locations customarily used for Employer notices to employees. If a
Participant shall so request in writing at least 30 days prior to the date as of
which his benefits are to commence or within 30 days after receiving the notice
described above, the Plan Administrator shall furnish to the Participant by mail
or personal delivery, within 30 days after the Participant's request, the
additional information required by applicable Treasury Regulations. However, the
Plan Administrator need not comply with more than one such request.
Notwithstanding anything elsewhere in the Plan to the
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contrary, if the Plan Administrator is thus required to furnish such additional
information, a Participant's benefit shall not begin until the 91st day after
such additional information is furnished.
The Plan Administrator shall interpret the provisions of this Section
9.3 in such manner, and shall take such administrative actions hereunder, as
shall be necessary to comply with applicable provisions of ERISA.
For purposes of this Section 9.3, a Participant's "spouse" shall mean
the person to whom the Participant is married on the date as of which his
benefits are to commence, without regard to whether the marriage terminates at
some later date. In connection with the commencement of his benefits, each
Participant who elects a benefit involving a life annuity shall file a written
statement with the Plan Administrator indicating whether he is married, and
shall notify the Plan Administrator of any subsequent change in his marital
status occurring on or before the date as of which his benefits commence.
The Plan Administrator may delay the commencement of the benefits of a
Participant or any other person until such Participant or other person shall
have furnished the Plan Administrator with such information as it may reasonably
require to provide benefits payable in accordance with the terms of the Plan,
including such information as it may require to administer the provisions of the
Plan relating to the Statutory Joint and Survivor Annuity.
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If a married Participant shall elect a form of payment under Section
9.2 that involves a life annuity and thereafter elects a lump-sum payment or any
other form of payment under Section 9.2 not involving a life annuity, any such
election shall require spousal consent as described above. If any such election
shall be effective, the provisions of this Section 9.3 shall not thereafter be
applicable to such Participant unless he again elects a form of benefit
involving a life annuity.
9.4 Death Prior to Commencement of Benefits. If a Participant's death
occurs prior to payment of his benefit, through a lump sum distribution or
purchase of a commercial annuity contract, the vested value of the Participant's
interest in the Plan shall be paid to his Beneficiary in a lump sum as of the
earliest practicable Valuation Date following the Trustee's receipt of notice
that such distribution is due (which notice shall be given to the Trustee by the
Plan Administrator as promptly as practicable after the Participant's death), in
accordance with its customary procedures, with actual payment to be made as soon
as practicable thereafter.
The foregoing shall be subject to Section 8 in the event that a
Participant dies with a loan outstanding.
9.5 Beneficiary. Each Participant may designate a Beneficiary to whom,
in the event of his death, any benefit due under Section 9.4 shall be payable.
Each Participant may also elect, if desired, contingent and alternate
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Beneficiaries. Any such Beneficiary designation may be changed by a Participant
at any time. A designation or change of Beneficiary shall be made by a notice in
writing filed with the Plan Administrator prior to the Participant's death. If a
participant dies without a surviving designated Beneficiary, his Beneficiary
shall be the person or persons then surviving in the first surviving of the
following classes of beneficiaries: (a) his spouse, (b) his children, per
stirpes, (c) his parents, (d) his brothers and sisters and (e) the Participant's
estate.
Notwithstanding the foregoing, if a Participant dies with a surviving
spouse, such spouse shall be the Participant's Beneficiary as to any benefits
payable under Section 9.4, subject to the provisions of Section 8 in the event
that a Participant dies with a loan outstanding. Any designation of another
person or persons as the Participant's Beneficiary hereunder in accordance with
the foregoing provisions shall not be effective unless (i) the spouse consented
to such designation in the manner provided below or (ii) no such consent was
necessary (a) because such spouse could not be located, (b) because the
Participant and such spouse were legally separated, (c) because the Participant
had been abandoned by such spouse within the meaning of local law and a court
order had been issued to such effect or (d) because of such other circumstances
as may be prescribed in Treasury Regulations. However, a spouse's rights
hereunder shall, in accordance with the provisions of Section 9.8, be
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subject to the requirements of any "qualified domestic relations order", as
defined therein.
Any spousal consent to a designation of Beneficiary hereunder must be
given in writing at the time of such designation, must acknowledge the effect of
such Beneficiary designation and must be notarized. Any such spousal consent
shall be irrevocable.
The Plan Administrator may require and rely upon such proof of death
and such evidence of the right of any Beneficiary or other person to receive the
value of the Accounts of a deceased Participant as the Plan Administrator may
deem proper, and its determination of death and of the right of such Beneficiary
or other person to receive payment shall be conclusive, subject to applicable
provisions of law.
9.6 Small Benefits. Notwithstanding anything in the Plan to the
contrary, in the event that the total vested value of a Participant's Accounts
(i) does not exceed $3,500 as of the Valuation Date coincident with or next
following the date he terminates employment for any reason, including death, and
(ii) did not exceed $3,500 on any prior Valuation Date that was the effective
date of any prior distribution, including any withdrawal, such total vested
value shall be paid to the Participant or his Beneficiary in a lump sum as soon
as practicable after such Valuation Date (in accordance with procedures
comparable to those described in Section 9.1); provided, however, that if on the
date as of which payment is
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to be made hereunder the amount to be paid exceeds $3,500, this Section 9.6
shall not apply.
9.7 Form of Payment. Any distribution to or on behalf of a Participant
shall be made in cash.
9.8 Limitation of Assignment. Except as specifically permitted by
applicable Treasury Regulations, no benefit payable at any time under the Plan
shall be subject in any manner to alienation, sale, transfer, assignment,
pledge, attachment, garnishment or encumbrance, and any attempt to alienate,
sell, transfer, assign, pledge, attach, garnish or encumber the same shall be
void, nor shall any such benefit be in any way liable for or subject to the
debts, contracts, liabilities, engagements or torts of any person entitled to
such benefit.
Notwithstanding the foregoing or anything elsewhere in the Plan to the
contrary, all benefits shall be paid under the Plan which are required to be
paid under the terms of any domestic relations order constituting a "Qualified
Domestic Relations Order" ("QDRO") under ERISA. Such payments shall be made in
such manner and to such person or persons as such QDRO shall specify. The Plan
Administrator shall establish reasonable procedures for determining the
qualified status of any domestic relations order and for administering
distributions under any QDRO.
9.9 Limitation of Rights. No person shall have any vested right under
the Plan except as otherwise expressly provided in the Plan. Neither the Plan
nor any action of the
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Board or of the Plan Administrator, heretofore or hereafter taken, shall be
construed (i) to give any person a right to be retained in the employ of a
Participating Employer, (ii) to furnish any basis for a claim to any benefit
before or after retirement or termination of employment except as provided in
the Plan, or (iii) to interfere with the right of a Participating Employer to
discharge, suspend or otherwise treat any person without regard to the effect
which such action might have upon him under the Plan.
9.10 Distributions on Behalf of Incapacitated Persons. If the Plan
Administrator receives evidence satisfactory to it that (i) a person entitled to
receive any payment under the Plan is physically, mentally or otherwise
incompetent to receive such payment and to give a valid release therefor, and
(ii) another person or an institution is then maintaining or has custody of such
person and (iii) no guardian, committee or other representative of the estate of
such person has been duly appointed by a court of competent jurisdiction, the
Plan Administrator may direct that the payment or any portion thereof be made to
such other person or institution, and the release of such other person or
institution shall be a valid and complete discharge of the payment or the
portion thereof so made.
9.11 Determination as to Payment of Benefits by the Plan
Administrator. Subject to the provisions of applicable law, the determination of
the Plan Administrator as to the identity of the proper payee of any benefit
payment from the
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Trust Fund and the amount properly payable shall be conclusive, and payments in
accordance with such determination shall constitute a complete discharge of the
payment thereof so made.
9.12 Income Tax Withholding. Any retirement benefit payment made under
the Plan shall be subject to any applicable income tax withholding requirements.
For this purpose, the Plan Administrator shall provide the Trustee with an
information that the Trustee needs to satisfy such withholding obligations and
with any other information that may be required by regulations promulgated under
the Code.
9.13 Inability to Locate Payee. If the Plan Administrator is unable,
after making reasonable efforts, to locate any person to whom an amount is
payable under the Plan, such person's rights under the Plan shall be forfeited.
For this purpose, the Plan Administrator will be deemed to have been unable,
after making reasonable efforts, to locate a payee if (i) a written notice has
been sent to such person's last known address, by first class or certified mail,
notifying him of his eligibility to receive a benefit under the Plan, and the
payee has not responded to such written notice within 90 days and (ii) a
notification has been sent to the Pension Benefit Guaranty Corporation or the
Social Security Administration, under their program to identify payees under
retirement plans, and the payee has not responded within six months thereafter.
The benefit of any person whom the Plan Administrator is unable after the
foregoing or other
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reasonable efforts to locate shall in any event be forfeited no later than the
date by which distributions are required to have commenced under section
401(a)(9) of the Code.
If any such person files a claim for the forfeited benefit with the
Plan Administrator at any time thereafter, the amount that was thus forfeited
shall be recredited to such person's Accounts. Such recrediting shall in no
event be taken into account in applying any contribution limitations under the
Plan. Any amounts that are to be thus recredited shall be provided by a special
Participating Employer contribution. The recredited amounts shall be invested in
the Investment Fund or Funds selected by the Plan Administrator unless such
person shall otherwise direct by a notice filed with the Plan Administrator, in
such form and within such time as the Plan Administrator shall require. Such
recredited amount shall be payable in accordance with the provisions of the
Plan, commencing as promptly as practicable thereafter.
9.14 Limitations on Certain Distributions. Notwithstanding anything
contained elsewhere in the Plan, no amounts attributable (i) to Participant
401(k) Contributions or (ii) to amounts taken into account in applying the
deferral rate requirements under section 401(k) of the Code, shall be
distributed from a Participant's Accounts prior to the earliest date permitted
under section 401(k)(2)(B) of the Code.
9.15 Termination of Employment as a Result of the Sale of Assets or
Stock. If, as the result of the sale of
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assets or stock, a Participant shall no longer be employed by either a
Participating Employer or an Affiliate but shall not have incurred a "separation
from service" for purposes of section 401(k) of the Code, such Participant shall
not be considered to have terminated employment for purposes of the Plan;
provided, however, that the following special rules shall apply to such
Participant if such sale is of a type described in section 401(k)(10) of the
Code:
(i) he may receive a lump sum distribution of the vested value of his
Accounts if such distribution occurs by the end of the second calendar year
after the calendar year in which the sale occurs, but he shall not be
eligible for any withdrawals under Section 7 during such period;
(ii) he shall be treated as having terminated employment for purposes
of repayment of any outstanding loan; and
(iii) after the expiration of the period described in clause (i)
above, assuming he has not taken a distribution in accordance with such
clause, he shall be eligible for withdrawals under Section 7 but he shall
not be eligible for other distributions under the Plan until he has
incurred a separation from service.
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SECTION 10
Reemployment
If a person shall resume his employment as an Employee with a
Participating Employer after having previously terminated employment for any
reason:
(i) any benefit payment due to him under the Plan shall be suspended,
unless he has attained age 70-1/2 at the time he resumes employment;
(ii) he shall immediately be eligible to resume active participation
in the Plan if he was a Participant at the time of his prior termination.
In such case, he may resume having 401(k) Contributions made for him as of
the first payroll period beginning after his resumption of Employee status,
or the first payroll period beginning after any subsequent Entry Date, by
filing the Appropriate Form with the Plan Administrator at least 30 days in
advance (or within such other period as the Plan Administrator may
require).
(iii) his Service credit at the time of his prior termination shall be
reinstated;
(iv) if he was not a Participant at the time of his prior termination,
he shall become a Participant in accordance with Section 2.1 of the Plan,
taking into account any Service reinstated pursuant to clause (iii) above;
and
(v) if he is reemployed (a) on or before the first anniversary of the
date of his prior termination
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and (b) within 12 months of his last day of active work with a
Participating Employer, the period between his prior termination and his
reemployment shall be treated as a period of Service for all purposes of
the Plan, other than determining contributions.
Notwithstanding the foregoing, there shall be no reinstatement of any
amounts forfeited by him on account of his prior termination of Service.
However, if (i) on account of his prior termination of Service he forfeited his
interest in his Company Matching Contributions Accounts in accordance with
Section 5.2, (ii) he resumes Service hereunder on or before the fifth
anniversary of the date of his prior termination and (iii) he repays in cash,
within five years after the date he resumes Service, the full distribution he
received upon his prior termination of Service, then an amount equal to the
amount he forfeited shall be recredited to his Accounts. Such recrediting shall
be done as of the earliest practicable Valuation Date after such repaid amount
is remitted to the Trustee, in accordance with the Trustee's normal procedures.
Such recrediting shall in no event be subject to, or included in applying, the
limitations imposed under Section 3. Any amounts which are to be recredited as
herein provided shall be taken first from any forfeitures of Company Matching
Contributions in accordance with Section 5.2 and, if any amounts remain to be
recredited, his Participating Employer shall make a special contribution equal
to such amount. Any amounts repaid by a Participant hereunder shall
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be recredited to the Accounts from which they were previously distributed. The
amounts recredited to a Participant's Accounts hereunder shall be invested in
the Investment Fund or Funds selected by the Participant (without regard to
whether any such amounts relate to contributions that were originally made in
Company Common Stock).
For purposes of determining the date of a Participant's prior
termination of Service under this Section, a Participant who is absent from work
on account of maternity or paternity shall not be treated as having terminated
Service before the second anniversary of the date such absence commenced. For
purposes hereof, an absence on account of maternity or paternity shall mean an
absence from work (i) by reason of the Participant's pregnancy or the birth of
the Participant's child, (ii) by reason of the placement of a child with the
Participant in connection with the Participant's adoption of such child or (iii)
for purposes of caring for such child for a period beginning immediately after
such birth or placement. No credit shall be given under this Section 10 for such
maternity or paternity absence unless the Participant furnishes to the Plan
Administrator such information as the Plan Administrator shall require to
establish that such Participant's absence was on account of a birth or placement
described in this paragraph. Such information shall be furnished within 90 days
after the commencement of such maternity or paternity absence or within such
other period as the Plan Administrator may specify.
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SECTION 11
Administration of the Plan
11.1 Powers and Duties of the Plan Administrator.
The Plan Administrator shall be the plan administrator and shall have
fiduciary responsibility for the general operation of the Plan. However, the
Plan Administrator shall have no responsibility for or control over the funding,
investment or management of Plan assets.
Subject to the foregoing, the Plan Administrator shall have the power
and the duty to take all action and to make all decisions that shall be
necessary or proper in order to interpret and carry out the provisions of the
Plan, and without limiting the generality of the foregoing, subject as
aforesaid, the Plan Administrator shall have the following powers and duties:
(a) to make and enforce such rules and regulations as he shall deem
necessary or proper for the efficient administration of the Plan and the
transaction of the Plan Administrator's business;
(b) to construe the Plan and to determine all questions of fact that
may arise hereunder, including the discretionary fiduciary authority to
interpret the terms of the Plan and to decide all questions concerning the
eligibility of any person to become a Participant in the Plan, the right to
and amount of any benefit payable under the Plan to or on behalf of any
person and the date on which any person ceases to be a Participant, with
any
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such construction or determination to be conclusively binding, to the
extent permitted by applicable law, upon all persons interested or claiming
an interest in the Plan; and
(c) to establish and maintain a claims procedure pursuant to which any
Participant, Beneficiary or joint annuitant whose claim for benefits under
the Plan has been denied shall be given (i) notice in writing of such
denial, including the reasons therefor and (ii) a reasonable opportunity to
have a full review of such denial by the Plan Administrator.
The Plan Administrator in making any determinations or constructions
required hereunder and in exercising any discretionary power shall treat
Participants in like circumstances in like manner.
In addition to the foregoing, the Plan Administrator shall have all
the rights, powers, duties and obligations granted or imposed upon it elsewhere
in the Plan or allocated to him by the Board.
The Plan Administrator may designate any other person or persons to
carry out any responsibility of the Plan Administrator under the Plan. The Plan
Administrator may appoint or employ such advisers or assistants as he deems
necessary. The Plan Administrator shall serve without compensation for his
services as such but the Company or the Plan, as provided below in Section 11.2,
shall pay all expenses reasonably incurred by the Plan Administrator in
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discharge of his duties. The Company shall indemnify the Plan Administrator to
the full extent permitted by law and the ByLaws of the Company.
The Plan Administrator and other persons who are fiduciaries of the
Plan may serve in more than one fiduciary capacity with regard to the Plan.
If the Plan Administrator is also a Participant, he shall not vote or
act upon any matter relating solely or primarily to himself.
11.2 Plan Expenses. All expenses reasonably incurred in the
administration of the Plan shall be paid by the Trustee out of the appropriate
Investment Funds' assets, except to the extent that the Participating Employers
shall otherwise provide for such payment. Such payment shall be made either
directly or through reimbursement of the Participating Employers for any such
expenses paid by the Participating Employers. The Participating Employers may
not reimburse the Trustee for expenses of administering the Plan.
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SECTION 12
The Trust Fund
All assets of the Plan shall be held as a Trust Fund under the Trust
Agreement with the Trustee, in accordance with Section 4, for the exclusive
benefit of Participants and their Beneficiaries under the Plan and for paying
the expenses of the Plan. No part of the corpus or income of the Trust Fund
shall be used for or diverted to purposes other than for the exclusive benefit
of Participants and their Beneficiaries, including the payment of Plan expenses.
No person shall have any interest in or right to any part of the earnings of the
Trust Fund, or any rights in, to, or under the Trust Fund or any part of its
assets, except to the extent expressly provided in the Plan.
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SECTION 13
Amendment or Termination of the Plan
13.1 Amendment of the Plan. Subject to applicable law and to the
further provisions of this Section 13.1, the Company reserves the right from
time to time, without notice to or action on the part of its stockholders, to
amend the Plan by resolution or other written action of the Board, retroactively
or otherwise, in any way and to suspend or terminate the Plan by action of the
Board either (i) in its entirety or (ii) as to Employees at any location of the
Participating Employers. Such amendment may be made whether or not the cost of
the Plan to the Participating Employer be increased thereby. Any amendment to
the Plan that would not result in a material increase in the cost of providing
benefits under the Plan may also be made by written action of the Chief
Executive Officer of the Company.
Anything in this Section 13.1 to the contrary notwithstanding, any
amendment to the Plan may be made which in the opinion of the Board is necessary
or appropriate (i) to qualify or maintain the Plan as a plan and trust meeting
the requirements of the applicable provisions of the Code and regulations
thereunder and corresponding provisions of subsequent laws and regulations or
(ii) to conform to any requirements of ERISA.
13.2 Termination of the Plan. The Plan may be terminated at any time,
in whole or in part, by resolution or other written action of the Board. Written
notice of any such
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termination shall be given promptly to the Participating Employers, the Plan
Administrator and the Trustee. In the event of any such termination or complete
discontinuance of contributions under the Plan, (i) no further contributions
shall be made by either Participants or the Participating Employers and (ii) the
Company Matching Contributions Accounts of all Participants shall be fully
vested and nonforfeitable. The Plan shall otherwise be administered as though it
were in full force and effect. If the Trust Fund subsequently is terminated, the
provisions of Section 13.3 shall then apply.
13.3 Termination of the Trust Fund. If the Plan is terminated pursuant
to Section 13.2 and the Board determines that the Trust Fund should be
terminated, written notice of such determination shall be given to the
Participating Employers, the Plan Administrator and the Trustee, and the value
of all Accounts of Participants shall be distributed through lump-sum payments.
Such payments shall be paid as promptly as practicable, to the extent permitted
by law.
13.4 Partial Termination of the Plan. If at any time the Plan is
terminated as to any group of Employees under such circumstances as to
constitute a partial termination of the Plan within the meaning of section
411(d)(3) of the Code, (i) no further contributions shall be made on behalf of
the Participants affected by the partial termination and (ii) the Company
Matching Contributions Accounts of all such Participants shall be fully vested
and nonforfeitable. The Plan shall otherwise be administered as though such
partial
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termination had not occurred. However, the Board, in its discretion, may direct
that an amount equal to the portion of each Investment Fund under the Plan that
is allocable to the Participants as to whom such termination occurred be
segregated by the Trustee as a separate plan and trust and that the funds thus
allocated to such separate trust be applied for the benefit of such Participants
in the manner described in this Section 13.
13.5 Mergers, Consolidations and Transfers. The Plan shall not be
merged or consolidated with, or transfer its assets or liabilities to, any other
employee retirement plan unless each Participant or his Beneficiary or joint
annuitant, as the case may be, would receive a benefit, were such other plan to
terminate immediately after such merger, consolidation or transfer, at least
equal to the benefit he would have received if the Plan had terminated
immediately prior to such transaction.
13.6 Withdrawal by a Participating Employer. A Participating Employer
other than the Company may withdraw from the Plan at any time, by action of its
Board of Directors. The Board may take action to terminate the status of any
such Participating Employer as a Participating Employer. An affiliate of the
Company shall automatically cease to be a Participating Employer if its status
as an Affiliate is terminated by sale or otherwise. In the event an entity
ceases to be a Participating Employer, the amounts standing to the credit of
Participants employed by such
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Participating Employer shall be set aside as a separate trust fund, as though
the Plan had terminated as to such Participating Employer. Such separate fund
shall thereafter be applied and used in accordance with the provisions of the
Plan and any related documents in effect at the time of such withdrawal, except
that such Participating Employer shall become the "Company" thereunder and such
separate plan shall cover only employees of such Participating Employer.
Notwithstanding the foregoing provisions of this Section 13.6, if
Employees of a Participating Employer cease to be eligible to accrue benefits
under the Plan by reason of this Section 13.6, the Board may elect, in lieu of
segregation of such assets, to continue to hold under the Plan the Trust Fund
assets allocable to the withdrawing Participating Employer and to apply the same
in accordance with otherwise applicable provisions of the Plan. In such case,
any such Employees (a) shall be considered to have transferred to non-covered
status or (b) shall be treated as terminated Employees if no longer employed by
a Participating Employer or any Affiliate.
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SECTION 14
Rollover Contributions
14.1 Rollover Contributions to the Plan. The special provisions set
forth in this Section 14 shall apply to Rollover Contributions, as defined
herein, notwithstanding anything elsewhere in the Plan to the contrary. Any
Rollover Contribution made hereunder shall be entirely separate from, and shall
not affect, any other contributions made on behalf of a Participant under the
Plan.
An Employee may at any time file with the Plan Administrator a request
that he be permitted to make a Rollover Contribution. Such Employee need not
have satisfied the Service eligibility requirement for participation. The Plan
Administrator shall have the sole discretion, which shall be exercised in a
non-discriminatory manner, as to whether any such Rollover Contribution is
permitted. As a condition of its approval, the Plan Administrator may require
the Participant to furnish such evidence as the Plan Administrator deems
appropriate that the requested contribution will constitute a Rollover
Contribution. Any such Rollover Contribution shall be made in cash.
For purposes of the Plan, a "Rollover Contribution" means a
contribution to the Plan of an amount constituting an "eligible rollover
distribution," "rollover amount" or "rollover contribution" under (i) section
402(c)(4) of the Code, (ii) section 402(a)(5) of the Code, (iii) section
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403(a)(4) of the Code or (iv) section 408(d)(3) of the Code, or any successor
provisions of the Code.
Any amount to be contributed as a Rollover Contribution by a
Participant shall be remitted to the Plan Administrator. The Plan Administrator
shall remit such contribution to the Trustee as soon as practicable. Such amount
shall be credited to the appropriate Rollover Accounts of the Participant,
depending on his investment election. Such amount shall be credited as of the
earliest practicable Valuation Date following its receipt by the Trustee, in
accordance with the Trustee's normal procedures.
Any Rollover Contribution made by a Participant shall be invested in
accordance with the written directions of the Participant in one or more of the
Investment Funds available under Section 4.1, without regard to the manner of
investment of any other amounts contributed to the Plan on behalf of the
Participant.
14.2 Direct Rollovers from the Plan. Notwithstanding any provision in
any other Section of the Plan to the contrary that would otherwise limit a
distributee's election under this Section, a Participant or other distributee
under the Plan may elect to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.
Any such election shall be made at the time and in the manner
prescribed by the Plan Administrator and shall be
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subject to such uniform restrictions or limitations (permissible under section
401(a)(31) of the Code and other applicable Code provisions) as the Plan
Administrator may impose under rules adopted by him.
To the extent and in the manner required by section 402(f) of the
Code, each distributee who is to receive an eligible rollover distribution from
the Plan shall be notified of the special federal income tax provisions
applicable to such distribution.
For purposes of this Section, the following definitions shall apply:
(a) An "eligible rollover distribution" is any lump sum payment or other
distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not
include: (i) any life annuity or any distribution that is one of a
series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a
specified period of 10 years or more; (ii) any distribution to the
extent such distribution is required under section 401(a)(9) of the
Code; and (iii) the portion of any distribution that is not includable
in gross income (determined without
95
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regard to the exclusion for net unrealized appreciation with respect
to employer securities).
(b) An "eligible retirement plan" is an individual retirement account
described in section 408(a) of the Code, an individual retirement
annuity described in section 408(b) of the Code, an annuity plan
described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in the case of
an eligible rollover distribution to a surviving spouse, an eligible
retirement plan is an individual retirement account described in
section 408(a) of the Code or individual retirement annuity described
in section 408(b) of the Code.
(c) A "distributee" includes a Participant (whether or not he has
terminated employment). In addition, the Participant's surviving
spouse, and the Participant's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in section 414(p) of the Code, are distributees with regard to their
respective interests in the Plan.
(d) A "direct rollover" is a payment by the Plan to the eligible
retirement plan specified by the distributee.
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SECTION 15
Top-Heavy Provisions
15.1 General. If the Plan is or becomes a Top-Heavy Plan in any Year,
the provisions of this Section 15 shall supersede any conflicting provisions of
the Plan. The determination as to whether the Plan is a Top Heavy Plan in any
Year shall be made on the last day of the preceding Year, (except that, in the
case of the first year during which the Plan is in effect, the determination
shall be made on the last day of such first year) based on the value of Plan
benefits on such date. The provisions of this Section 15 shall be applied
separately to each Participating Employer and its Affiliates.
15.2 Definitions. For purposes of this Section 15, the following
definitions shall apply:
(a) "Key Employee" shall mean any Employee who is a key employee
within the meaning of section 416(i) of the Code.
(b) "Top-Heavy Plan" shall mean the Plan for any calendar year in
which the Top-Heavy Ratio for the Plan's Aggregation Group exceeds 60%.
(c) "Top-Heavy Ratio" shall mean the ratio of (i) the account balances
(in the case of a defined contribution plan) and present value of accrued
benefits (in the case of a defined benefit plan) for Key Employees under
all plans in the Aggregation Group to (ii) the account balances and present
value of accrued benefits
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for all Employees in all plans in the Aggregation Group, calculated in
accordance with section 416 of the Code and regulations thereunder.
(d) "Aggregation Group" means the Plan and any other plan of the
Company or any Affiliate which either (i) covers a Key Employee or (ii) is
required to be aggregated with the Plan or any other plan in order for any
such plan to satisfy the requirements of section 401(a)(4) or 410(b) of the
Code, together with any other plan of the Company or any Affiliate but only
if such inclusion would cause the Plan to not be a Top-Heavy Plan and the
resulting Aggregation Group would satisfy the requirements of sections
401(a)(4) and 410(b) of the Code.
15.3 Vesting. If in any calendar year the Plan is a Top-Heavy Plan,
the Accounts of each Participant in the Plan shall be fully vested on his
completion of three years of employment. However, this provision does not apply
to any Participant who does not have any period of employment after the Plan has
initially become a Top-Heavy Plan. Notwithstanding the foregoing, if after
having previously been a Top-Heavy Plan, the Plan is no longer a Top-Heavy Plan
in any calendar year, the vesting schedule set forth above shall no longer
apply. In such case, the vesting shall be determined under otherwise applicable
Plan provisions, except that the vesting percentage applicable to a
Participant's accrued benefit as of the beginning of such calendar year
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<PAGE>
shall not be less than the percentage applicable under the above schedule as of
the beginning of such calendar year.
15.4 Minimum Allocation. Except as provided below, for any Year in
which the Plan is a Top-Heavy Plan, an additional contribution, equal to the
lesser of (i) three percent of compensation, defined for purposes of this
Section 15 in accordance with section 415 of the Code, or (ii) the largest
Employer Contribution, as a percentage of the maximum amount of the Key
Employee's Compensation that may be taken into account under section 401(a)(17)
of the Code, allocated on behalf of any Key Employee for that Year, shall be
made by the Participating Employer and shall be allocated on behalf of any
Participant who is not a Key Employee. Such additional allocation shall be made
even though the Participant would not otherwise be entitled to receive an
allocation or would have received a lesser allocation because of the
Participant's failure to 401(k) Contributions made on his behalf to the Plan.
The provisions of the preceding paragraph shall not apply to any
Participant who was not employed by a Participating Employer on the last day of
the Year.
The minimum allocation under this Section 15.4 shall not apply to any
Participant who is covered by any other plan or plans of a Participating
Employer to the extent such plan or plans provide that the minimum allocation or
retirement benefit applicable to Top-Heavy Plans shall be met in such plan or
plans.
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15.5 Change in Section 415 Limitations. If the Plan becomes a
Top-Heavy Plan, the reduction in benefits set forth in the Plan to comply with
section 415(e) of the Code shall be made in accordance with section 416(h) of
the Code.
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SECTION 16
Construction of Plan
The validity of the Plan or of any of the provisions thereof shall be
determined under and shall be construed according to the laws of the State of
Connecticut and ERISA.
Titles to Sections are for general information only and the Plan is
not to be construed by reference thereto.
The masculine pronoun includes the feminine and the singular form
includes the plural wherever such usage would apply.
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APPENDIX A
Special Provisions Applicable to Participants in Allcom Plan
The Allcom, Inc. 401(k) Plan (the "Allcom Plan") has been merged into
the Plan as of the close of the 1993 calendar year (the "Merger Date").
Notwithstanding anything contained in the Plan to the contrary, the following
special provisions shall apply to any person who was a participant in the Allcom
Plan on the Merger Date (each such person being hereinafter referred to as an
"Allcom Participant").
1. Each Allcom Participant shall become a Participant in the Plan on
the Merger Date (if such individual has not previously become a Participant).
2. The account balances of all Allcom Participants under the Allcom
Plan immediately prior to the Merger Date shall be transferred to the Plan, as
follows:
(i) all Profit Sharing Contribution account balances and Matching
Contribution account balances under the Allcom Plan shall be
transferred to Prior Employer Contributions Accounts that
shall be established under the Plan,
(ii) all Voluntary Contribution account balances under the Allcom
Plan shall be transferred to After-Tax Contributions Accounts
that shall be established under the Plan, and
(iii) all Section 401(k) Contribution account balances and Rollover
Contribution account balances under the Allcom Plan shall be
transferred to the comparable Accounts under the Plan.
A-1
<PAGE>
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Allcom Plan shall be transferred to
the Investment Funds under the Plan, as follows:
================================================================================
Allcom Plan Investment Funds Plan Investment Funds
- --------------------------------------------------------------------------------
Government Money Market Fund GE Money Market Fund
- --------------------------------------------------------------------------------
Utility B Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Equity B Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Growth Opportunity B Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
U.S. Government B Fund GE Fixed-Income Fund
================================================================================
As promptly as practicable thereafter, the assets transferred from the Allcom
Plan shall be reallocated among the Plan's Investment Funds (pursuant to Section
4.5 of the Plan) in accordance with each Allcom Participant's election.
4. Each Allcom Participant's years of Service for vesting purposes
under the Plan as of the Merger Date shall equal his number of years of service
for vesting purposes under the Allcom Plan on such date.
5. Each Allcom Participant who is an Employee on the Merger Date shall
be fully vested in all amounts transferred from the Allcom Plan on his behalf as
of the Merger Date. Amounts transferred from the Allcom Plan with respect to
each other Allcom Participant shall be vested to at least as great an extent as
would be the case under the Allcom Plan.
6. In addition to any other withdrawal rights provided under the Plan,
each Allcom Participant shall be permitted to withdraw amounts in his After-Tax
Contributions Accounts to the extent and in the manner provided on the Merger
Date under the Allcom Plan.
7. If, on the Merger Date, any Allcom Participant was subject to a
suspension of contributions under the Allcom Plan, such Participant shall be
subject to a suspension of contributions under the Plan for a period equal to
the remaining suspension period applicable on the Merger Date under the Allcom
Plan.
8. In the case of any Allcom Participant whose benefits are in pay
status on the Merger Date, any election as to the form of benefits made under
the Allcom Plan shall be considered to have been made under this Plan.
A-2
<PAGE>
APPENDIX B
Special Provisions Applicable to Participants in Cleary Plan
The Cleary Co. 401(k) Plan (the "Cleary Plan") has been merged into
the Plan as of the close of the 1993 calendar year (the "Merger Date").
Notwithstanding anything contained in the Plan to the contrary, the following
special provisions shall apply to any person who was a participant in the Cleary
Plan on the Merger Date (each such person being hereinafter referred to as an
"AmeriData Participant").
1. Each AmeriData Participant shall become a Participant in the Plan
on the Merger Date (if such individual has not previously become a Participant).
2. The account balances of all AmeriData Participants under the Cleary
Plan immediately prior to the Merger Date shall be transferred to the Plan, as
follows:
(i) all Participant's Elective Accounts balances under the Cleary
Plan relating to Employer matching contributions and all
Participant's Account balances under the Cleary Plan shall be
transferred to Prior Employer Contributions Accounts that shall
be established under the Plan,
(ii) all Predecessor Employee account balances under the Cleary Plan
shall be transferred to After-Tax Contribution Accounts that
shall be established under the Plan and,
(iii) all Participant's Elective Accounts balances under the Cleary
Plan relating to Elective Contributions made under the Cleary
Plan and Participant's Rollover Account balances under the Cleary
Plan shall be transferred to the comparable Accounts under the
Plan. All amounts held in Participant's Elective Accounts under
the Cleary Plan relating to Qualified Non-Elective Contributions
made under the Cleary Plan shall be transferred to 401(k)
Contributions Accounts under the Plan.
B-1
<PAGE>
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Cleary Plan shall be transferred to
the Investment Funds under the Plan, as follows:
================================================================================
Cleary Plan Investment Funds Plan Investment Funds
- --------------------------------------------------------------------------------
Bond Fund GE Fixed-Income Fund
- --------------------------------------------------------------------------------
Managed Fund (Balanced) GE Strategic Investment Fund
- --------------------------------------------------------------------------------
Stock Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
General Account Fund GE Stable Income Fund
================================================================================
As promptly as practicable thereafter, the assets transferred from the Cleary
Plan shall be reallocated among the Plan's Investment Funds (pursuant to Section
4.5 of the Plan) in accordance with each AmeriData Participant's election.
4. Each AmeriData Participant's years of Service for vesting purposes
under the Plan as of the Merger Date shall equal his number of years of service
for vesting purposes under the Cleary Plan as of the end of the plan year
immediately preceding the Merger Date, plus one.
5. Each AmeriData Participant who is an Employee on the Merger Date
shall be fully vested in all amounts transferred from the Cleary Plan on his
behalf as of the Merger Date. Amounts transferred from the Cleary Plan with
respect to each other AmeriData Participant shall be vested to at least as great
an extent as would be the case under the Cleary Plan.
6. In addition to any other withdrawal rights provided under the Plan,
each AmeriData Participant shall be permitted to withdraw amounts in his
After-Tax Contributions Accounts to the extent and in the manner provided on the
Merger Date under the Cleary Plan.
7. If, on the Merger Date, any AmeriData Participant was subject to a
suspension of contributions under the Cleary Plan, such Participant shall be
subject to a suspension of contributions under the Plan for a period equal to
the remaining suspension period applicable on the Merger Date under the Cleary
Plan.
8. Any loans made by the Cleary Plan to an AmeriData Participant which
are outstanding under the Cleary Plan on the Merger Date shall be assumed by and
be treated
B-2
<PAGE>
as participant loans under Section 8 of the Plan, but shall continue to be
governed by the terms of the loan documents executed by the AmeriData
Participant.
9. In the case of any AmeriData Participant whose benefits are in pay
status on the Merger Date, any election as to the form of benefits made under
the Cleary Plan shall be considered to have been made under this Plan.
B-3
<PAGE>
APPENDIX C
Special Provisions Applicable to Participants in
Computer Communications Plan
The Computer Communications Co. 401(k) Plan (the "Computer
Communications Plan") has been merged into the Plan as of the close of the 1993
calendar year (the "Merger Date"). Notwithstanding anything contained in the
Plan to the contrary, the following special provisions shall apply to any person
who was a participant in the Computer Communications Plan on the Merger Date
(each such person being hereinafter referred to as a "Computer Communications
Participant").
1. Each Computer Communications Participant shall become a Participant
in the Plan on the Merger Date (if such individual has not previously become a
Participant).
2. The account balances of all Computer Communications Participants
under the Computer Communications Plan immediately prior to the Merger Date
shall be transferred to the Plan, as follows:
(i) all Non-qualified Employer Contribution account balances and
Qualified Matching Contribution account balances under the
Computer Communications Plan shall be transferred to Prior
Employer Contributions Accounts that shall be established under
the Plan,
(ii) all account balances under the Computer Communications Plan
relating to after-tax contributions made to such plan shall be
transferred to After-Tax Contributions Accounts that shall be
established under the Plan, and
(iii) all Elective Deferral account balances and Rollover account
balances under the Computer Communications Plan shall be
transferred to the comparable Accounts under the Plan. All
Qualified Non-elective Contribution account balances under the
Computer Communications Plan shall be transferred to 401(k)
Contributions Accounts under the Plan.
C-1
<PAGE>
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Computer Communications Plan shall be
transferred to the Investment Funds under the Plan, as follows:
================================================================================
Computer Communications Plan
Investment Funds Plan Investment Funds
- --------------------------------------------------------------------------------
Guardian Cash Fund GE Money Market Fund
- --------------------------------------------------------------------------------
Guardian Bond Fixed Fund GE Fixed-Income Fund
- --------------------------------------------------------------------------------
Value Line SAM Trust Fund GE Strategic
Investment Fund
- --------------------------------------------------------------------------------
Guardian Stock Value Line- GE U.S. Equity Fund
Centurian Fund
- --------------------------------------------------------------------------------
Baille Clifford International GE Global Equity Fund
Fund
================================================================================
As promptly as practicable thereafter, the assets transferred from the Computer
Communications Plan shall be reallocated among the Plan's Investment Funds
(pursuant to Section 4.5 of the Plan) in accordance with each Computer
Communications Participant's election.
4. Each Computer Communications Participant's years of Service for
vesting purposes under the Plan as of the Merger Date shall equal his number of
years of service for vesting purposes under the Computer Communications Plan on
such date.
5. Each Computer Communications Participant who is an Employee on the
Merger Date shall be fully vested in all amounts transferred from the Computer
Communications Plan on his behalf as of the Merger Date. Amounts transferred
from the Computer Communications Plan with respect to each other Computer
Communications Participant shall be vested to at least as great an extent as
would be the case under the Computer Communications Plan.
6. In addition to any other withdrawal rights provided under the Plan,
each Computer Communications Participant shall be permitted to withdraw amounts
in his After-Tax Contributions Accounts to the extent and in the manner provided
on the Merger Date under the Computer Communications Plan.
7. If, on the Merger Date, any Computer Communications Participant was
subject to a suspension of contributions under the Computer Communications Plan,
such
C-2
<PAGE>
Participant shall be subject to a suspension of contributions under the Plan for
a period equal to the remaining suspension period applicable on the Merger Date
under the Computer Communications Plan.
8. Any loans made by the Computer Communications Plan to a Computer
Communications Participant which are outstanding under the Computer
Communications Plan on the Merger Date shall be assumed by and be treated as
participant loans under Section 8 of the Plan, but shall continue to be governed
by the terms of the loan documents executed by the Computer Communications
Participant.
9. In the case of any Computer Communications Participant whose
benefits are in pay status on the Merger Date, any election as to the form of
benefits made under the Computer Communications Plan shall be considered to have
been made under this Plan.
C-3
<PAGE>
APPENDIX D
Special Provisions
Applicable to Participants in Comstor Plan
The Comstor Corporation 401(k) Retirement Plan (the "Comstor Plan")
has been merged into the Plan as of the close of the 1993 calendar year (the
"Merger Date"). Notwithstanding anything contained in the Plan to the contrary,
the following special provisions shall apply to any person who was a participant
in the Comstor Plan on the Merger Date (each such person being hereinafter
referred to as a "Comstor Participant").
1. Each Comstor Participant shall become a Participant in the Plan on
the Merger Date (if such individual has not previously become a Participant).
2. The account balances of all Comstor Participants under the Comstor
Plan immediately prior to the Merger Date shall be transferred to the Plan, as
follows:
(i) all Matching Contribution account balances and nonelective
contribution account balances under the Comstor Plan shall be
transferred to Prior Employer Contributions Accounts that shall
be established under the Plan, and
(ii) all Deferral Contribution account balances and Rollover
Contribution account balances under the Comstor Plan shall be
transferred to the comparable Accounts under the Plan. All
qualified nonelective contribution account balances under the
Comstor Plan shall be transferred to 401(k) Contributions
Accounts under the Plan.
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Comstor Plan shall be transferred to
the Investment Funds under the Plan, as follows:
================================================================================
Comstor Plan Investment Funds Plan Investment Funds
- --------------------------------------------------------------------------------
Individually Managed Equity GE U.S. Equity Fund
Portfolio
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
D-1
<PAGE>
As promptly as practicable thereafter, the assets transferred from the Comstor
Plan shall be reallocated among the Plan's Investment Funds (pursuant to Section
4.5 of the Plan) in accordance with each Comstor Participant's election.
4. Each Comstor Participant's years of Service for vesting purposes
under the Plan as of the Merger Date shall equal his number of years of service
for vesting purposes under the Comstor Plan on such date.
5. Each Comstor Participant who is an Employee on the Merger Date
shall be fully vested in all amounts transferred from the Comstor Plan on his
behalf as of the Merger Date. Amounts transferred from the Comstor Plan with
respect to each other Comstor Participant shall be vested to at least as great
an extent as would be the case under the Comstor Plan.
6. If, on the Merger Date, any Comstor Participant was subject to a
suspension of contributions under the Comstor Plan, such Participant shall be
subject to a suspension of contributions under the Plan for a period equal to
the remaining suspension period applicable on the Merger Date under the Comstor
Plan.
7. Any loans made by the Comstor Plan to a Comstor Participant which
are outstanding under the Comstor Plan on the Merger Date shall be assumed by
and be treated as participant loans under Section 8 of the Plan, but shall
continue to be governed by the terms of the loan documents executed by the
Comstor Participant.
8. In the case of any Comstor Participant whose benefits are in pay
status on the Merger Date, any election as to the form of benefits made under
the Comstor Plan shall be considered to have been made under this Plan.
D-2
<PAGE>
APPENDIX E
Special Provisions Applicable to Participants in PDI Plan
The Potomac Digital, Inc. and TSA, Inc. Profit Sharing Plan (the "PDI
Plan") has been merged into the Plan as of the close of the 1993 calendar year
(the "Merger Date"). Notwithstanding anything contained in the Plan to the
contrary, the following special provisions shall apply to any person who was a
participant in the PDI Plan on the Merger Date (each such person being
hereinafter referred to as a "PDI Participant").
1. Each PDI Participant shall become a Participant in the Plan on the
Merger Date (if such individual has not previously become a Participant).
2. The account balances of all PDI Participants under the PDI Plan
immediately prior to the Merger Date shall be transferred to the Plan, as
follows:
(i) all amounts held in Participant's Accounts under the PDI Plan
shall be transferred to Prior Employer Contributions Accounts
that shall be established under the Plan, and
(ii) all Participant's Elective Account balances under the PDI Plan
and all Participant's Rollover Account balances under the PDI
Plan shall be transferred to the comparable Accounts under the
Plan. All Participant's Qualified Non-Elective Accounts balances
under the PDI Plan shall be transferred to 401(k) Contributions
Accounts under the Plan.
E-1
<PAGE>
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the PDI Plan shall be transferred to the
Investment Funds under the Plan, as follows:
================================================================================
PDI Plan Investment Funds Plan Investment Funds
- --------------------------------------------------------------------------------
Money Market Fund GE Money Market Fund
- --------------------------------------------------------------------------------
Fixed Interest Fund GE Money Market Fund
- --------------------------------------------------------------------------------
Omni Managed (Balanced) Fund GE Strategic Investment
Fund
- --------------------------------------------------------------------------------
Equity Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Bond Fund GE Fixed - Income Fund
- --------------------------------------------------------------------------------
================================================================================
As promptly as practicable thereafter, the assets transferred from the PDI Plan
shall be reallocated among the Plan's Investment Funds (pursuant to Section 4.5
of the Plan) in accordance with each PDI Participant's election.
4. Each PDI Participant's years of Service for vesting purposes under
the Plan as of the Merger Date shall equal his number of years of service for
vesting purposes under the PDI Plan as of the end of the plan year immediately
preceding the Merger Date, plus one.
5. Each PDI Participant who is an Employee on the Merger Date shall be
fully vested in all amounts transferred from the PDI Plan on his behalf as of
the Merger Date. Amounts transferred from the PDI Plan with respect to each
other PDI Participant shall be vested to at least as great an extent as would be
the case under the PDI Plan.
6. If, on the Merger Date, any PDI Participant was subject to a
suspension of contributions under the PDI Plan, such Participant shall be
subject to a suspension of contributions under the Plan for a period equal to
the remaining suspension period applicable on the Merger Date under the PDI
Plan.
7. Any loans made by the PDI Plan to a PDI Participant which are
outstanding under the PDI Plan on the Merger Date shall be assumed by and be
treated as participant loans under Section 8 of the Plan, but shall continue to
be governed by the terms of the loan documents executed by the PDI Participant.
8. In the case of any PDI Participant whose benefits are in pay status
on the Merger Date, any election
E-2
<PAGE>
as to the form of benefits made under the PDI Plan shall be considered to have
been made under this Plan.
E-3
<PAGE>
APPENDIX F
Special Provisions Applicable
to Participants in Scott Data Plan
The Scott Data Corporation 401(k) Profit Sharing Plan (the "Scott Data
Plan") has been merged into the Plan as of the close of the 1993 calendar year
(the "Merger Date"). Notwithstanding anything contained in the Plan to the
contrary, the following special provisions shall apply to any person who was a
participant in the Scott Data Plan on the Merger Date (each such person being
hereinafter referred to as a "Scott Data Participant").
1. Each Scott Data Participant shall become a Participant in the Plan
on the Merger Date (if such individual has not previously become a Participant).
2. The account balances of all Scott Data Participants under the Scott
Data Plan immediately prior to the Merger Date shall be transferred to the Plan,
as follows:
(i) all Participant's Elective Account balances relating to matching
contributions made under the Scott Data Plan and all
Participant's Account balances under the Scott Data Plan shall be
transferred to Prior Employer Contributions Accounts that shall
be established under the Plan,
(ii) all Voluntary Contribution Account balances under the Scott Data
Plan shall be transferred to After-Tax Contributions Accounts
that shall be established under the Plan and,
(iii) all Participant's Elective Account balances under the Scott Data
Plan relating to Deferred Compensation contributions made under
the Scott Data Plan and all Participant's Rollover Account
balances under the Scott Data Plan shall be transferred to the
comparable Accounts under the Plan.
F-1
<PAGE>
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Scott Data Plan shall be transferred
to the Investment Funds under the Plan, as follows:
================================================================================
Scott Data Plan Investment Funds Plan Investment Funds
- --------------------------------------------------------------------------------
Connecticut Mutual Guaranteed GE Money Market Fund
Account
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
As promptly as practicable thereafter, the assets transferred from the Scott
Data Plan shall be reallocated among the Plan's Investment Funds (pursuant to
Section 4.5 of the Plan) in accordance with each Scott Data Participant's
election.
4. Each Scott Data Participant's years of Service for vesting purposes
under the Plan as of the Merger Date shall equal his number of years of service
for vesting purposes under the Scott Data Plan as of the end of the plan year
immediately preceding the Merger Date, plus one.
5. Each Scott Data Participant who is an Employee on the Merger Date
shall be fully vested in all amounts transferred from the Scott Data Plan on his
behalf as of the Merger Date. Amounts transferred from the Scott Data Plan with
respect to each other Scott Data Participant shall be vested to at least as
great an extent as would be the case under the Scott Data Plan.
6. In addition to any other withdrawal rights provided under the Plan,
each Scott Data Participant shall be permitted to withdraw amounts in his
After-Tax Contributions Accounts to the extent and in the manner provided on the
Merger Date under the Scott Data Plan.
7. If, on the Merger Date, any Scott Data Participant was subject to a
suspension of contributions under the Scott Data Plan, such Participant shall be
subject to a suspension of contributions under the Plan for a period equal to
the remaining suspension period applicable on the Merger Date under the Scott
Data Plan.
8. In the case of any Scott Data Participant whose benefits are in pay
status on the Merger Date, any election as to the form of benefits made under
the Scott Data Plan shall be considered to have been made under this Plan.
F-2
<PAGE>
APPENDIX G
Special Provisions Applicable to Participants in Mericom Plan
The Magco, Inc. 401(k) Plan (the "Mericom Plan") has been merged into
the Plan as of the close of the 1993 calendar year (the "Merger Date").
Notwithstanding anything contained in the Plan to the contrary, the following
special provisions shall apply to any person who was a participant in the
Mericom Plan on the Merger Date (each such person being hereinafter referred to
as a "Mericom Participant").
1. Each Mericom Participant shall become a Participant in the Plan on
the Merger Date (if such individual has not previously become a Participant).
2. The account balances of all Mericom Participants under the Mericom
Plan immediately prior to the Merger Date shall be transferred to the Plan, as
follows:
(i) all Discretionary Employer Contribution account balances under
the Mericom Plan shall be transferred to Prior Employer
Contributions Accounts that shall be established under the Plan,
and
(ii) all Elective Deferral Account balances and Rollover Account
balances under the Mericom Plan shall be transferred to the
comparable Accounts under the Plan. All Qualified Nonelective
Account balances under the Mericom Plan shall be transferred to
401(k) Contributions Accounts under the Plan.
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Mericom Plan shall be transferred to
such Investment Funds under the Plan as shall be designated by either of the
Co-Chairmen, the President, Vice President or David Petulla, in accordance with
uniform rules.
As promptly as practicable thereafter, the assets transferred from the
Mericom Plan shall be reallocated among the Plan's Investment Funds (pursuant to
Section 4.5 of the Plan) in accordance with each Mericom Participant's election.
G-1
<PAGE>
4. Each Mericom Participant's years of Service for vesting purposes
under the Plan as of the Merger Date shall equal his number of years of service
for vesting purposes under the Mericom Plan on such date.
5. Each Mericom Participant who is an Employee on the Merger Date
shall be fully vested in all amounts transferred from the Mericom Plan on his
behalf as of the Merger Date. Amounts transferred from the Mericom Plan with
respect to each other Mericom Participant shall be vested to at least as great
an extent as would be the case under the Mericom Plan.
Each Mericom Employee who has at least three years of service for
vesting purposes under the Mericom Plan as of the Merger Date shall become fully
vested in all his Accounts under the Plan upon his attainment of age 59-1/2
(while an Employee).
6. If, on the Merger Date, any Mericom Participant was subject to a
suspension of contributions under the Mericom Plan, such Participant shall be
subject to a suspension of contributions under the Plan for a period equal to
the remaining suspension period applicable on the Merger Date under the Mericom
Plan.
7. Any loans made by the Mericom Plan to a Mericom Participant which
are outstanding under the Mericom Plan on the Merger Date shall be assumed by
and be treated as participant loans under Section 8 of the Plan, but shall
continue to be governed by the terms of the loan documents executed by the
Mericom Participant.
8. In the case of any Mericom Participant whose benefits are in pay
status on the Merger Date, any election as to the form of benefits made under
the Mericom Plan shall be considered to have been made under this Plan.
G-2
<PAGE>
APPENDIX H
Special Provisions Applicable to Participants in Forsythe Plan
The Forsythe Computers Employees' Savings Plan (the "Forsythe Plan")
has been merged into the Plan as of July 1, 1994 (the "Merger Date").
Notwithstanding anything contained in the Plan to the contrary, the following
special provisions shall apply to any person who was a participant in the
Forsythe Plan on the Merger Date (each such person being hereinafter referred to
as a "Forsythe Participant").
9. Each Forsythe Participant shall become a Participant in the Plan on
the Merger Date (if such individual has not previously become a Participant).
10. The account balances of all Forsythe Participants under the
Forsythe Plan immediately prior to the Merger Date shall be transferred to the
Plan, as follows:
(i) all Company Optional Contribution account balances and Company
Matching Contribution account balances under the Forsythe Plan
shall be transferred to Prior Employer Contributions Accounts
that shall be established under the Plan, and
(ii) all Elective Deferral account balances and Rollover Contribution
account balances under the Forsythe Plan shall be transferred to
the comparable Accounts under the Plan.
11. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Forsythe Plan shall be transferred to
a short-term investment fund and, as promptly as practicable thereafter, assets
held in such short-term fund shall be transferred to the Investment Funds under
the Plan, as follows:
H-1
<PAGE>
================================================================================
Forsythe Plan Investment Funds Plan Investment Funds
Prior to the Merger Date
- --------------------------------------------------------------------------------
Bond Fund GE Fixed-Income Fund
- --------------------------------------------------------------------------------
Balanced Fund GE Strategic Investment Fund
- --------------------------------------------------------------------------------
Equity Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Indexed Equity Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Small Company Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
International Account Fund GE Global Equity Fund
- --------------------------------------------------------------------------------
Guaranteed Fund #1 GE Stable Income Fund
- --------------------------------------------------------------------------------
Guaranteed Fund #2 GE Stable Income Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
As promptly as practicable thereafter, the assets transferred from the Forsythe
Plan for any Forsythe Participant shall be subject to reallocation among the
Plan's Investment Funds (pursuant to Section 4.5 of the Plan) at the
Participant's election.
12. Each Forsythe Participant's years of Service for vesting purposes
under the Plan as of the Merger Date shall equal his number of years of service
for vesting purposes under the Forsythe Plan on such date, plus one.
13. Each Forsythe Participant who is an Employee on the Merger Date
shall be fully vested in all amounts transferred from the Forsythe Plan on his
behalf as of the Merger Date. Amounts transferred from the Forsythe Plan with
respect to each other Forsythe Participant shall be vested to at least as great
an extent as would be the case under the Forsythe Plan. In addition, each
Forsythe Participant who has at least three years of service for vesting
purposes under the Forsythe Plan as of the Merger Date shall be fully vested in
the remainder of his account balances under the Plan upon his attainment of age
55 while an Employee.
14. If, on the Merger Date, any Forsythe Participant was subject to a
suspension of contributions under the Forsythe Plan, such Participant shall be
subject to a suspension of contributions under the Plan for a period equal to
the remaining suspension period applicable on the Merger Date under the Forsythe
Plan.
H-2
<PAGE>
15. Any loans made by the Forsythe Plan to a Forsythe Participant
which are outstanding under the Forsythe Plan on the Merger Date shall be
assumed by and be treated as participant loans under Section 8 of the Plan, but
shall continue to be governed by the terms of the loan documents executed by the
Forsythe Participant.
16. In the case of any Forsythe Participant whose benefits are in pay
status on the Merger Date, any election as to the form of benefits made under
the Forsythe Plan shall be considered to have been made under this Plan.
H-3
<PAGE>
APPENDIX I
Special Provisions Applicable to Participants in Bohdan Plan
The Bohdan Associates, Inc. 401(k) Plan (the "Bohdan Plan") has been
merged into the Plan as of the close of the 1994 calendar year (the "Merger
Date"). Notwithstanding anything contained in the Plan to the contrary, the
following special provisions shall apply to any person who was a participant in
the Bohdan Plan on the Merger Date (each such person being hereinafter referred
to as a "Bohdan Participant").
1. Each Bohdan Participant shall become a Participant in the Plan on
the Merger Date (if such individual has not previously become a Participant).
2. The account balances of all Bohdan Participants under the Bohdan
Plan immediately prior to the Merger Date shall be transferred to the Plan, as
follows:
(i) all Profit Sharing Contribution account balances and Matching
Contribution account balances under the Bohdan Plan shall be
transferred to Prior Employer Contributions Accounts that shall
be established under the Plan,
(ii) all Voluntary Contribution account balances under the Bohdan Plan
shall be transferred to After-Tax Contributions Accounts that
shall be established under the Plan, and
(iii) all Section 401(k) Contribution account balances and Rollover
Contribution account balances under the Bohdan Plan shall be
transferred to the comparable Accounts under the Plan.
I-1
<PAGE>
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Bohdan Plan shall be transferred to
the Investment Funds under the Plan, as follows:
================================================================================
Bohdan Plan Investment Funds Plan Investment Funds
- --------------------------------------------------------------------------------
Equity Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
FlexiFund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Utility Fund GE Strategic Investment
Fund
- --------------------------------------------------------------------------------
Global Genesis Fund GE Global Equity Fund
- --------------------------------------------------------------------------------
U.S. Government Fund GE Fixed-Income Fund
- --------------------------------------------------------------------------------
Government Securities Money GE Money Market Fund
Market Fund
================================================================================
As promptly as practicable thereafter, the assets transferred from the Bohdan
Plan shall be reallocated among the Plan's Investment Funds (pursuant to Section
4.5 of the Plan) in accordance with each Bohdan Participant's election.
4. Each Bohdan Participant's years of Service for vesting purposes
under the Plan as of the Merger Date shall equal his number of years of service
for vesting purposes under the Bohdan Plan on such date.
5. Each Bohdan Participant who is an Employee on the Merger Date shall
be fully vested in all amounts transferred from the Bohdan Plan on his behalf as
of the Merger Date. Amounts transferred from the Bohdan Plan with respect to
each other Bohdan Participant shall be vested to at least as great an extent as
would be the case under the Bohdan Plan. In addition, each Bohdan Participant
who has at least three years of Service for vesting purposes under the Bohdan
Plan as of the Merger Date shall be fully vested in the remainder of his account
balances under the Plan.
6. In addition to any other withdrawal rights provided under the Plan,
each Bohdan Participant shall be permitted to withdraw amounts in his After-Tax
Contributions Accounts to the extent and in the manner provided on the Merger
Date under the Bohdan Plan.
7. If, on the Merger Date, any Bohdan Participant was subject to a
suspension of contributions under the Bohdan Plan, such Participant shall be
subject to a suspension of contributions under the Plan for a period equal to
the remaining suspension period applicable on the Merger Date under the Bohdan
Plan.
I-2
<PAGE>
8. Any loans made by the Bohdan Plan to a Bohdan Participant which are
outstanding under the Bohdan Plan on the Merger Date shall be assumed by and be
treated as participant loans under Section 8 of the Plan, but shall continue to
be governed by the terms of the loan documents executed by the Bohdan
Participant.
9. In the case of any Bohdan Participant whose benefits are in pay
status on the Merger Date, any election as to the form of benefits made under
the Bohdan Plan shall be considered to have been made under this Plan.
I-3
<PAGE>
APPENDIX J
Special Provisions Applicable to Participants in ACR Plan
The American Computer Rental, Inc. 401(k) Profit Sharing Plan and
Trust (the "ACR Plan") has been merged into the Plan as of the close of the 1994
calendar year (the "Merger Date"). Notwithstanding anything contained in the
Plan to the contrary, the following special provisions shall apply to any person
who was a participant in the ACR Plan on the Merger Date (each such person being
hereinafter referred to as an "ACR Participant").
1. Each ACR Participant shall become a Participant in the Plan on the
Merger Date (if such individual has not previously become a Participant).
2. The account balances of all ACR Participants under the ACR Plan
immediately prior to the Merger Date shall be transferred to the Plan, as
follows:
(i) all Employer Account balances and Matching Account balances under
the ACR Plan shall be transferred to Prior Employer Contributions
Accounts that shall be established under the Plan, and
(ii) all Elective Contribution Account balances and Qualified
Non-elective Contribution Account balances under the ACR Plan
shall be transferred to 401(k) Contributions Accounts under the
Plan. All Segregated Account balances under the ACR Plan shall be
transferred to Rollover Accounts under the Plan.
J-1
<PAGE>
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the ACR Plan shall be transferred to the
GE Money Market Fund under the Plan. As promptly as practicable thereafter, the
assets transferred from the ACR Plan shall be reallocated among the Plan's
Investment Funds in accordance with the Investment Fund election (in effect on
the date of such reallocation) of each ACR Participant pursuant to Section 4.2
or 4.3 of the Plan.
4. Each ACR Participant's years of Service for vesting purposes under
the Plan as of the Merger Date shall equal his number of years of service for
vesting purposes under the ACR Plan on such date.
5. Each ACR Participant who is an Employee on the Merger Date shall be
fully vested in all amounts transferred from the ACR Plan on his behalf as of
the Merger Date. Amounts transferred from the ACR Plan with respect to each
other ACR Participant shall be vested to at least as great an extent as would be
the case under the ACR Plan.
6. If, on the Merger Date, any ACR Participant was subject to a
suspension of contributions under the ACR Plan, such Participant shall be
subject to a suspension of contributions under the Plan for a period equal to
the remaining suspension period applicable on the Merger Date under the ACR
Plan.
7. Any loans made by the ACR Plan to an ACR Participant which are
outstanding under the ACR Plan on the Merger Date shall be assumed by and be
treated as participant loans under Section 8 of the Plan, but shall continue to
be governed by the terms of the loan documents executed by the ACR Participant.
8. In the case of any ACR Participant whose benefits are in pay status
on the Merger Date, any election as to the form of benefits made under the ACR
Plan shall be considered to have been made under this Plan.
J-2
<PAGE>
APPENDIX K
Special Provisions Applicable to Participants in Mitchell Plan
The David Mitchell & Associates, Inc. Retirement Savings Plan (the
"Mitchell Plan") has been merged into the Plan as of the close of the 1994
calendar year (the "Merger Date"). Notwithstanding anything contained in the
Plan to the contrary, the following special provisions shall apply to any person
who was a participant in the Mitchell Plan on the Merger Date (each such person
being hereinafter referred to as a "Mitchell Participant").
1. Each Mitchell Participant shall become a Participant in the Plan on
the Merger Date (if such individual has not previously become a Participant).
2. The account balances of all Mitchell Participants under the
Mitchell Plan immediately prior to the Merger Date shall be transferred to the
Plan, as follows:
(i) all employer nonelective contribution account balances and
matching contribution account balances under the Mitchell Plan
shall be transferred to Prior Employer Contributions Accounts
that shall be established under the Plan, and
(ii) all salary reduction contribution account balances and qualified
nonelective contribution account balances under the Mitchell Plan
shall be transferred to 401(k) Contributions Accounts under the
Plan and all rollover contribution account balances shall be
transferred to Rollover Accounts under the Plan.
K-1
<PAGE>
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Mitchell Plan shall be transferred to
the Investment Funds under the Plan, as follows:
================================================================================
Mitchell Plan Plan Investment Funds
Investment Funds
- --------------------------------------------------------------------------------
Linder Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
American Bank Employee Equity GE U.S. Equity Fund
Fund
- --------------------------------------------------------------------------------
Calvert Social Investment Fund GE Strategic Investment
Fund
- --------------------------------------------------------------------------------
Dreyfus Cash Management Money GE Money Market Fund
Market Fund
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
As promptly as practicable thereafter, the assets transferred from the Mitchell
Plan shall be reallocated among the Plan's Investment Funds (pursuant to Section
4.5 of the Plan) in accordance with each Mitchell Participant's election.
4. Each Mitchell Participant's years of Service for vesting purposes
under the Plan as of the Merger Date shall equal his number of years of service
for vesting purposes under the Mitchell Plan on such date.
5. Each Mitchell Participant who is an Employee on the Merger Date
shall be fully vested in all amounts transferred from the Mitchell Plan on his
behalf as of the Merger Date. Amounts transferred from the Mitchell Plan with
respect to each other Mitchell Participant shall be vested to at least as great
an extent as would be the case under the Mitchell Plan. In addition, each
Mitchell Participant who has at least three years of service for vesting
purposes under the Mitchell Plan as of the Merger Date shall be fully vested in
the remainder of his account balances under the Plan.
6. If, on the Merger Date, any Mitchell Participant was subject to a
suspension of contributions under the Mitchell Plan, such Participant shall be
subject to a suspension of contributions under the Plan for a period equal to
the remaining suspension period applicable on the Merger Date under the Mitchell
Plan.
K-2
<PAGE>
7. Any loans made by the Mitchell Plan to a Mitchell Participant which
are outstanding under the Mitchell Plan on the Merger Date shall be assumed by
and be treated as participant loans under Section 8 of the Plan, but shall
continue to be governed by the terms of the loan documents executed by the
Mitchell Participant.
8. In the case of any Mitchell Participant whose benefits are in pay
status on the Merger Date, any election as to the form of benefits made under
the Mitchell Plan shall be considered to have been made under this Plan.
K-3
<PAGE>
APPENDIX L
Special Provisions Applicable to Participants in Abacus Plan
The Entre Computer 401(k) Employee Savings and Retirement Plan (the
"Abacus Plan") has been merged into the Plan as of the close of June 30, 1995
(the "Merger Date"). Notwithstanding anything contained in the Plan to the
contrary, the following special provisions shall apply to any person who was a
participant in the Abacus Plan on the Merger Date (each such person being
hereinafter referred to as an "Abacus Participant").
1. Each Abacus Participant shall become a Participant in the Plan on
the Merger Date.
2. The account balances of all Abacus Participants under the Abacus
Plan immediately prior to the Merger Date shall be transferred to the Plan, as
follows:
(i) all matching contribution account balances and discretionary
contribution account balances under the Abacus Plan shall be
transferred to Prior Employer Contributions Accounts that shall
be established under the Plan, and
(ii) all elective deferral account balances, qualified matching
contribution account balances and qualified nonelective
contribution account balances under the Abacus Plan shall be
transferred to 401(k) Contributions Accounts under the Plan and
all rollover contribution account balances and transfer
contribution account balances shall be transferred to Rollover
Accounts under the Plan.
L-1
<PAGE>
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Abacus Plan shall be transferred to
the Investment Funds under the Plan, as follows:
================================================================================
Abacus Plan Plan Investment Funds
Investment Funds
- --------------------------------------------------------------------------------
Global Growth Fund GE Global Equity Fund
- --------------------------------------------------------------------------------
Growth & Income Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Growth Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Asset Allocation Fund GE Strategic Investment Fund
- --------------------------------------------------------------------------------
U.S. Government Securities GE Fixed-Income Fund
================================================================================
As promptly as practicable thereafter, the assets transferred from the Abacus
Plan shall be reallocated among the Plan's Investment Funds (pursuant to Section
4.5 of the Plan) in accordance with each Abacus Participant's election.
4. Each Abacus Participant's years of Service for vesting purposes
under the Plan as of the Merger Date shall equal his number of years of service
for vesting purposes under the Abacus Plan on such date.
5. Each Abacus Participant who is an Employee on the Merger Date shall
be fully vested in all amounts transferred from the Abacus Plan on his behalf as
of the Merger Date. Amounts transferred from the Abacus Plan with respect to
each other Abacus Participant shall be vested to at least as great an extent as
would be the case under the Abacus Plan. In addition, each Abacus Participant
who has at least three but less than four years of service for vesting purposes
under the Abacus Plan as of the Merger Date shall be at least 80% vested in the
remainder of his account balances under the Plan.
6. If, on the Merger Date, any Abacus Participant was subject to a
suspension of contributions under the Abacus Plan, such Participant shall be
subject to a suspension of contributions under the Plan for a period equal to
the remaining suspension period applicable on the Merger Date under the Abacus
Plan.
7. In the case of any Abacus Participant whose benefits are in pay
status on the Merger Date, any election as to the form of benefits made under
the Abacus Plan shall be considered to have been made under this Plan.
8. In addition to any other withdrawal rights provided under the
Plan, each Abacus Participant shall be
L-2
<PAGE>
permitted to withdraw amounts attributable to his rollover contribution account
and transfer contribution account balances under the Abacus Plan as of the
Merger Date, to the extent and in the manner provided on the Merger Date under
the Abacus Plan.
L-3
<PAGE>
APPENDIX M
Special Provisions Applicable to
Participants in the Micro Recovery Plan
The Micro Recovery Services, Inc. 401(k) Incentive Savings Plan (the
"Micro Recovery Plan") has been merged into the Plan as of the close of
September 30, 1995 (the "Merger Date"). Notwithstanding anything contained in
the Plan to the contrary, the following special provisions shall apply to any
person who was a participant in the Micro Recovery Plan on the Merger Date (each
such person being hereinafter referred to as an "Micro Recovery Participant").
1. Each Micro Recovery Participant shall become a Participant in the
Plan on the Merger Date.
2. The account balances of all Micro Recovery Participants under the
Micro Recovery Plan immediately prior to the Merger Date shall be transferred to
the Plan, as follows:
(i) all matching contribution account balances and discretionary
additional employer contribution account balances under the Micro
Recovery Plan shall be transferred to Prior Employer
Contributions Accounts that shall be established under the Plan,
and
(ii) all elective deferral account balances under the Micro Recovery
Plan shall be transferred to 401(k) Contributions Accounts under
the Plan and all rollover contribution account balances and
transfer contribution account balances shall be transferred to
Rollover Accounts under the Plan.
M-1
<PAGE>
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Micro Recovery Plan shall be
transferred to the Investment Funds under the Plan, as follows:
================================================================================
Micro Recovery Plan Plan Investment Funds
Investment Funds
- --------------------------------------------------------------------------------
Equity Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Intermediate Term Fixed GE Fixed Income Fund
Income Fund
- --------------------------------------------------------------------------------
GIC Fund GE Stable Income Fund
================================================================================
As promptly as practicable thereafter, the assets transferred from the Micro
Recovery Plan shall be reallocated among the Plan's Investment Funds (pursuant
to Section 4.5 of the Plan) in accordance with each Micro Recovery Participant's
election.
4. Each Micro Recovery Participant's years of Service for vesting
purposes under the Plan as of the Merger Date shall equal his number of years of
service for vesting purposes under the Micro Recovery Plan on such date.
5. Each Micro Recovery Participant who is an Employee on the Merger
Date shall be fully vested in all amounts transferred from the Micro Recovery
Plan on his behalf as of the Merger Date. Amounts transferred from the Micro
Recovery Plan with respect to each other Micro Recovery Participant shall be
vested to at least as great an extent as would be the case under the Micro
Recovery Plan. In addition, each Micro Recovery Participant who has at least
three years of service for vesting purposes under the Micro Recovery Plan as of
the Merger Date shall be fully vested under the Plan.
6. If, on the Merger Date, any Micro Recovery Participant was subject
to a suspension of contributions under the Micro Recovery Plan, such Participant
shall be subject to a suspension of contributions under the Plan for a period
equal to the remaining suspension period applicable on the Merger Date under the
Micro Recovery Plan.
7. In the case of any Micro Recovery Participant whose benefits are in
pay status on the Merger Date, any election as to the form of benefits made
under the Micro Recovery Plan shall be considered to have been made under this
Plan.
8. Any loans made by the Plan to a Micro Participant which are
outstanding under the Micro Recovery
M-2
<PAGE>
Plan on the Merger Date shall be assumed by and be treated as participant loans
under Section 8 of the Plan, but shall continue to be governed by the terms of
the loan documents executed by the Micro Recovery Participant.
M-3
<PAGE>
APPENDIX N
Special Provisions Applicable
to Participants in Microcomputer Plan
The Microcomputer Power, Inc. 401(k) Profit Sharing Plan (the
"Microcomputer Plan") has been merged into the Plan as of the close of December
31, 1995 (the "Merger Date"). Notwithstanding anything contained in the Plan to
the contrary, the following special provisions shall apply to any person who was
a participant in the Microcomputer Plan on the Merger Date (each such person
being hereinafter referred to as a "Microcomputer Participant").
1. Each Microcomputer Participant shall become a Participant in the
Plan on the Merger Date (if such individual has not previously become a
Participant).
2. The account balances of all Microcomputer Participants under the
Microcomputer Plan immediately prior to the Merger Date shall be transferred to
the Plan, as follows:
(i) all Participant's Elective Account balances relating to matching
contributions made under the Microcomputer Plan and all
Participant's Account balances under the Microcomputer Plan shall
be transferred to Prior Employer Contributions Accounts that
shall be established under the Plan,
(ii) all Voluntary Contribution Account balances under the
Microcomputer Plan shall be transferred to After-Tax
Contributions Accounts that shall be established under the Plan,
(iii) all Participant's Elective Account balances under the
Microcomputer Plan relating to Deferred Compensation
contributions made under the Microcomputer Plan and all Elective
Account balances relating to Qualified Non- Elective
Contributions under the Microcomputer Plan shall be transferred
to 401(k) Contributions Accounts under the Plan and,
(iv) all Participant's Rollover Account balances under the
Microcomputer Plan shall be transferred to Rollover Accounts
under the Plan.
N-1
<PAGE>
3. As promptly as practicable after the Merger Date, assets held in
the investment funds maintained under the Microcomputer Plan shall be
transferred to the Investment Funds under the Plan, as follows:
================================================================================
Microcomputer Plan Investment Plan Investment Funds
Funds
- --------------------------------------------------------------------------------
Scudder International Portfolio GE Global Equity
Fund
- --------------------------------------------------------------------------------
Alger American Small Cap Fund GE U.S. Equity Fund
- --------------------------------------------------------------------------------
TCI Growth GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Fidelity VIP Growth GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Aetna Growth & Income GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Fidelity VIP Equity GE U.S. Equity Fund
- --------------------------------------------------------------------------------
Aetna Managed Fund GE Strategic Fund
- --------------------------------------------------------------------------------
Aetna Bond Fund GE Fixed Income Fund
- --------------------------------------------------------------------------------
Aetna GAA Long Term GE Fixed Income Fund
- --------------------------------------------------------------------------------
Aetna GAA Short Term GE Fixed Income Fund
- --------------------------------------------------------------------------------
Aetna Money Market Fund GE Money Market Fund
- --------------------------------------------------------------------------------
Aetna Fixed Account GE Stable Income Fund
================================================================================
As promptly as practicable thereafter, the assets transferred from the
Microcomputer Plan shall be reallocated among the Plan's Investment Funds
(pursuant to Section 4.5 of the Plan) in accordance with each Microcomputer
Participant's election.
4. Each Microcomputer Participant's years of Service for vesting
purposes under the Plan as of the Merger Date shall equal his number of years of
service for vesting purposes under the Microcomputer Plan as of the end of the
plan year immediately preceding the Merger Date.
5. Each Microcomputer Participant who is an Employee on the Merger
Date shall be fully vested in all amounts transferred from the Microcomputer
Plan on his behalf as of the Merger Date. Amounts transferred from the
Microcomputer Plan with respect to each other Microcomputer Participant shall be
vested to at least as great an extent as would be the case under the
Microcomputer Plan.
6. In addition to any other withdrawal rights provided under the Plan,
each Microcomputer Participant shall be permitted to withdraw amounts in his
After-Tax
N-2
<PAGE>
Contributions Accounts to the extent and in the manner provided on the Merger
Date under the Microcomputer Plan.
7. If, on the Merger Date, any Microcomputer Participant was subject
to a suspension of contributions under the Microcomputer Plan, such Participant
shall be subject to a suspension of contributions under the Plan for a period
equal to the remaining suspension period applicable on the Merger Date under the
Microcomputer Plan.
8. In the case of any Microcomputer Participant whose benefits are in
pay status on the Merger Date, any election as to the form of benefits made
under the Microcomputer Plan shall be considered to have been made under this
Plan.
9. Any loans made by the Microcomputer Plan to a Microcomputer
Participant which are outstanding under the Microcomputer Plan on the Merger
Date shall be assumed by and be treated as participant loans under Section 8 of
the Plan, but shall continue to be governed by the terms of the loan documents
executed by the Microcomputer Participant.
N-3
<PAGE>
Exhibit K
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Agreement made and entered into as of the 16th
day of March, 1995, by and between AmeriData Technologies, Inc. (f/k/a Sage
Technologies, Inc.), a Delaware corporation, having a place of business at 700
Canal Street, Stamford, Connecticut 06902 ("Employer"), and GERALD A. POCH,
having a business office at 700 Canal Street, Stamford, Connecticut 06902
("Employee").
W I T N E S S E T H:
WHEREAS, Employer is engaged in the computer products and services
business and the emergency alerting business and desires to employ Employee as
Co-Chairman of the Board, President and Chief Executive Officer of Employer, and
Employee desires to be employed by Employer, all pursuant to the terms and
conditions hereinafter set forth:
WHEREAS, Employer entered into an Employment Agreement with Executive
effective August 1, 1993, as amended December 29, 1993 and restated and amended
on the date hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT; DUTIES.
Employer hereby agrees to employ Employee, and Employee hereby agrees to
accept employment during the term hereof on a substantially full-time basis, as
Co-Chairman of the Board, and shall perform such services as are customarily
performed by persons holding such offices and shall be subject at all times to
the direction of the Board of Directors of Employer. Nothing herein contained
shall be construed as, including, but not limited to, (a) preventing Employee
from devoting a portion of his business time to the business of SBC
Technologies, Inc. in fulfillment of his duties as an officer and director of
such entity, (b) preventing Employee from investing his personal assets in any
business which does not compete directly or indirectly with Employer, or (c)
preventing Employee from purchasing securities in any corporation whose
securities are regularly publicly traded, if such purchases shall not result in
his owning beneficially at any time 5% or more of the equity securities of any
corporation engaged in a business which is competitive, directly or indirectly,
to that of Employer.
<PAGE>
2. TERM.
Employee's employment hereunder shall be for a term commencing August 1,
1993 and ending on December 31, 1998. The Agreement shall be automatically
extended from year to year thereafter unless either party gives not less than
three (3) months prior written notice to the other that such party elects to
have the Agreement terminated effective at the end of the initial or then
current renewal term.
3. COMPENSATION.
(a) As compensation for the performance of his duties on behalf of
Employer, Employee shall be compensated as follows:
(i) For the period from August 1, 1993 until December 31, 1993,
Employer shall pay Employee a salary at the rate of Two Hundred Fifty
Thousand Dollars ($250,000) per annum, payable in installments in
accordance with the usual practice of the Employer.
(ii) For the period commencing January 1, 1994, until the end of the
initial or then current renewal term, Employer shall pay Employee a salary
at the rate of Three Hundred Thousand Dollars ($300,000) per annum,
subject to annual cost of living increases based upon the Consumer Price
Index for all Urban Consumers-New York Metropolitan Area, payable in
installments in accordance with the usual practice of Employer.
(b) Employee shall be entitled to an annual bonus, which bonus will be
paid from a pool established by the Board of Directors or Compensation Committee
for the awarding of bonuses to senior management of Employer, which pool shall
in no event exceed Ten Percent (10%) of Employer's pre-tax income and of which
Employee shall be entitled to receive up to 2.5% of such pre-tax income;
provided, however, that in no event shall Employee's salary and annual bonus for
any year exceed an aggregate of $1 million.
(c) Employer shall reimburse Employee for the expenses incurred by
Employee in connection with his duties hereunder upon presentation by Employee
of the details of and vouchers for such expenses in accordance with customary
Employer practice. Employer shall pay Employee a non-accountable automobile
expense allowance not to exceed Five Hundred Dollars ($500) per month and shall
reimburse Employee for the costs of automobile insurance.
(d) Employee shall be entitled to participate in all retirement, life
insurance, medical insurance,
2
<PAGE>
disability insurance, vacation, savings and other employee benefit plans
generally available to the senior officers of the Company, so long as such
benefits comply with applicable law (including without limitation the Internal
Revenue Code of 1986, as amended, and ERISA) and except to the extent that such
benefits are no longer available at commercially reasonable rates.
4. NON-COMPETITION.
(a) During the term of this Agreement and for a period of twenty-four (24)
months from the date of termination of his employment hereunder for whatever
reason, Employee agrees that he will not solicit any customers who are presently
or may hereafter become customers of Employer unless such solicitation is
entirely unrelated to Employer's business, or compete in any way with Employer
alone or together with others in any state or foreign country in which (i) a
facility of the Employer is located, (ii) Employer is engaged in business at the
time of termination of employment, or (iii) where Employee knows Employer
intends to carry on business in such area by expansion of its activities within
the two (2) years following termination.
(b) Subsequent to the termination of this Agreement, Employee will not
interfere with or disrupt or attempt to disrupt Employer's business relationship
with its customers or suppliers or solicit the employees or Employer.
(c) During the term of this Agreement and for a period of twenty-four (24)
months from the date of termination of his employment hereunder for whatever
reason, Employee will not disclose or use or enable anyone else to use any
information or data which may be obtained by him or available to him during the
term of employment whether or not such information or data will be considered
proprietary or secret.
(d) In the event that Employee breaches any provisions of this paragraph
or there is a threatened breach, then, in addition to any other rights which
Employer may have, Employer shall be entitled to injunctive relief to enforce
the restrictions contained herein. In the event that an actual proceeding is
brought in equity to enforce the provisions of this paragraph, Employee shall
not urge as a defense that there is an adequate remedy at law nor shall Employer
be prevented from seeking any other remedies which may be available.
(e) The existence of any claim or cause of action by Employee against
Employer, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to
3
<PAGE>
the enforcement by Employer of the foregoing restrictive covenants but shall be
litigated separately.
5. TERMINATION.
(a) Anything to the contrary notwithstanding, this Agreement shall
terminate 30 days after the Employee's (i) death or (ii) disability for a period
of not less than twenty-six consecutive weeks; provided, however, that the
provisions of Section 6 hereof shall remain in full force and effect through the
end of the term hereof.
(b) Employee's employment hereunder may also be terminated by the Employer
before the expiration of the term hereof only for cause as herein defined.
"Cause" shall mean only one or both of the following occurrences:
(i) The Employee's conviction of a felony by a court of competent
jurisdiction (which conviction, through lapse of time or otherwise, is not
subject to appeal); or
(ii) The Employee's commission of an act of fraud or embezzlement
upon the Employer.
6. SEVERANCE.
In the event of termination of employment of Employee by Employer before
the expiration of the term hereof, except when such termination is in accordance
with the provisions of paragraph 5(a) or 5(b) hereof, Employer will provide
Employee with severance pay in an amount equal to Employee's base annual salary
through the end of the term hereof, which shall be payable in a lump sum,
discounted based on the prime rate of Chemical Bank then in effect, which lump
sum shall be payable within 30 days of the date of termination. Employer will
provide Employee with a bonus calculated in accordance with Paragraph 3(b)
hereof through the end of the term hereof when, as and if such pre-tax income is
recorded (subject to reduction for any payments to Employee for personal
services rendered during such period). Employer shall also continue to provide
to Employee the retirement benefits, life insurance, medical insurance and
disability insurance pursuant to Section 3(d) through the end of the term
hereof.
In the event of termination of employment of Employee before the
expiration of the term hereof pursuant to the provisions of paragraph 5(a)
hereof, Employer will provide Employee (or Employee's estate) with severance pay
in an amount equal to one year's base annual salary, which shall be payable in a
lump sum, discounted based on the prime rate of Chemical Bank then in effect,
which lump sum
4
<PAGE>
shall be payable within 30 days of the date of termination. Employer will
provide Employee with a pro-rata bonus calculated in accordance with Paragraph
3(b) hereof through the date of termination. Employer shall also continue to
provide to Employee the retirement benefits, life insurance, medical insurance
and disability insurance pursuant to Section 3(d) through the end of the term
hereof. Employer shall continue to provide Employee's spouse and minor children
with medical benefits pursuant to Section 3(d) through the end of the term
hereof.
7. NOTICES.
All notices hereunder shall be in writing and shall be delivered in person
or given by registered or certified mail, postage prepaid, and sent to the
parties at the respective addresses above set forth. Either party may designate
any other address to which notice shall be given, by giving notice to the other
of such change of address in the manner herein provided.
8. SEVERABILITY OF PROVISIONS.
If any provision of this agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any other covenant or provision unless so expressed herein.
9. GOVERNING LAW.
This Agreement shall be construed and governed by the laws of the State of
Connecticut.
10. NON-WAIVER.
The failure of either party to insist upon the strict performance of any
term or condition in this Agreement shall not be considered a waiver or
relinquishment of future compliance therewith.
10.1 ATTORNEY'S FEES.
In the event of a dispute arising hereunder, the Company shall pay all
reasonable attorneys fees incurred by Employee and the Company in connection
with such dispute.
5
<PAGE>
11. ENTIRE AGREEMENT; MODIFICATION.
This Agreement contains the entire agreement between the parties relating
to the subject matter hereof. No modification of this Agreement shall be valid
unless it is made in writing and signed by the parties hereto.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
AMERIDATA TECHNOLOGIES, INC.,
Employer
By:
------------------------------------
Leonard J. Fassler, Co-Chairman
of the Board,
---------------------------------------
GERALD A. POCH, Employee
7
AmeriData Technologies, Inc.
700 Canal Street
Stamford, CT 06902
May 20, 1996
Gerald A. Poch
c/o AmeriData Technologies, Inc.
700 Canal Street
Stamford, CT 06902
Dear Mr. Poch:
Reference is made to the Amended and Restated
Employment Agreement, dated as of March 16, 1995 (as amended
or modified from time to time, the "Employment Agreement"),
between AmeriData Technologies, Inc. ("Employer") and Gerald
A. Poch ("Employee"). Reference is also made to the
Agreement and Plan of Merger, dated May 20, 1996, among
General Electric Capital Corporation, GAC Acquisition I
Corp. ("Sub") and Employer (as amended or modified from time
to time, the "Merger Agreement"). Capitalized terms used
herein and not herein defined shall have the respective
meanings set forth in the Merger Agreement.
For good and valuable consideration, receipt of which
is hereby acknowledged, Employer and Employee hereby agree
as follows:
1. Simultaneously with the acceptance by Sub for
payment of, or payment by Sub for, Shares pursuant to the
Offer (the "Purchase Date"):
(a) Section 4(a) of the Employment Agreement
shall be amended and restated in its entirety to read
as follows:
4. NON-COMPETITION
(a) During the term of this Agreement and for a
period of forty-eight (48) months from the date of
termination of his employment hereunder for whatever reason,
Employee agrees that he will not solicit any customers who
are presently or may hereafter become customers of Employer
unless such solicitation is entirely unrelated to the
business then engaged in or contemplated by the Employer
during the term of Employee's employment, and he will not
compete in any way with Employer in the business then
engaged in or contemplated by the Employer during the term
of Employee's employment either alone or together with
others in any state or foreign country in which a facility
of the Employer is located.
(b) Section 4(c) of the Employment Agreement
shall be amended by changing the references to "twenty-
four (24) months" contained therein to "forty-eight
(48) months";
<PAGE>
(c) Section 6 of the Employment Agreement shall
be amended and restated in its entirety to read as
follows:
"6. SEVERANCE.
Employer shall be entitled to terminate this
Agreement and the employment of Employee hereunder at
any time for any reason upon notice to Employee (in
which event Employer shall have no further obligations
to Employee under this Agreement); provided, that in
the event of the termination of employment of Employee
by Employer (a) during the twelve-month period
commencing on the Purchase Date (except where such
termination is in accordance with the provisions of
paragraph 5(a) or 5(b) hereof), Employer shall provide
Employee with severance pay in an amount equal to
$1,000,000 and (b) subsequent to the period described
in (a) (except where such termination is in accordance
with the provisions of paragraph 5(a) or (5(b) hereof),
Employer shall provide Employee with severance pay in a
lump sum amount equal to the compensation not yet paid
under Section 3(a)(ii) for the remainder of the term;
and further provided, that a material diminution in
Employee's duties or an attempt to change Employee's
place of work to a location more than 15 miles from its
present location shall be deemed to be a termination of
employment of Employee by Employer."
(d) Employer and Employee shall negotiate in good
faith with a view towards mutually agreeing to make
such changes to the bonus provisions of Section 3(b) of
the Employment Agreement as may be necessary in order
to appropriately adjust the provisions of Section 3(b)
so as not to result in an enlargement or diminution in
Employee's rights to bonus compensation following the
Offer and the Merger (taking into account the changes
in the Employer resulting therefrom); provided, that
such bonus amount shall be increased by $100,000 per
year in respect of the two-year period commencing on
the Purchase Date.
2. The provisions of Section 1 shall become effective
only upon, and subject to, the occurrence of the Purchase
Date. If the Offer shall be terminated, withdrawn or
abandoned and the Merger Agreement shall be terminated, this
letter agreement shall become null and void and of no
further force and effect.
2
<PAGE>
3. This letter agreement may be executed in two or
more counterparts, each of which shall be an original but
all of which shall be deemed one and the same agreement.
4. This letter agreement shall be constituted and
governed by the laws of the State of Connecticut.
Very truly yours,
AMERIDATA TECHNOLOGIES, INC.
By:
Accepted and Agreed:
GERALD A. POCH
3
<PAGE>
Exhibit M
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Agreement made and entered into as of the 16th
day of March, 1995, by and between AmeriData Technologies, Inc. (f/k/a Sage
Technologies, Inc.), a Delaware corporation, having a place of business at 700
Canal Street, Stamford, Connecticut 06902 ("ATI"), AmeriData, Inc. ("Employer"),
a Minnesota corporation, and JAMES K. MCCLEARY, having a business office at
10200 51st Avenue North, Minneapolis, Minnesota 55442 ("Employee").
W I T N E S S E T H:
WHEREAS, ATI and Employer are engaged in the computer products and
services business and the emergency alerting business and desires to employ
Employee as Co-Chairman of the Board of ATI and President and Chief Executive
Officer of Employer, and Employee desires to be employed by Employer, all
pursuant to the terms and conditions hereinafter set forth:
WHEREAS, Employer entered into an Employment Agreement with Executive
effective August 1, 1993, as amended December 29, 1993 and restated and amended
on the date hereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT; DUTIES.
Employer hereby agrees to employ Employee, and Employee hereby agrees to
accept employment during the term hereof on a substantially full-time basis, as
Co-Chairman of the Board of ATI and President and Chief Executive Officer of
Employer, and shall perform such services as are customarily performed by
persons holding such offices and shall be subject at all times to the direction
of the Boards of Directors of ATI and Employer. Nothing herein contained shall
be construed as, including, but not limited to, (a) preventing Employee from
investing his personal assets in any business which does not compete directly or
indirectly with Employer, or (b) preventing Employee from purchasing securities
in any corporation whose securities are regularly publicly traded, if such
purchases shall not result in his owning beneficially at any time 5% or more of
the equity securities of any corporation engaged in a business which is
competitive, directly or indirectly, to that of Employer.
<PAGE>
2. TERM.
Employee's employment hereunder shall be for a term commencing January 1,
1994 and ending on December 31, 1998. The Agreement shall be automatically
extended from year to year thereafter unless either party gives not less than
three (3) months prior written notice to the other that such party elects to
have the Agreement terminated effective at the end of the initial or then
current renewal term.
3. COMPENSATION.
(a) As compensation for the performance of his duties on behalf of
Employer for the period commencing January 1, 1994, until the end of the initial
or then current renewal term, Employer shall pay Employee a salary at the rate
of Three Hundred Thousand Dollars ($300,000) per annum, subject to annual cost
of living increases based upon the Consumer Price Index for all Urban
Consumers-New York Metropolitan Area, payable in installments in accordance with
the usual practice of Employer.
(b) Employee shall be entitled to an annual bonus, which bonus will be
paid from a pool established by the Board of Directors or Compensation Committee
for the awarding of bonuses to senior management of Employer, which pool shall
in no event exceed Ten Percent (10%) of Employer's pre-tax income and of which
Employee shall be entitled to receive up to 2.5% of such pre-tax income;
provided, however, that in no event shall Employee's salary and annual bonus for
any year exceed an aggregate of $1 million.
(c) Employer shall reimburse Employee for the expenses incurred by
Employee in connection with his duties hereunder upon presentation by Employee
of the details of and vouchers for such expenses in accordance with customary
Employer practice. Employer shall pay Employee a non-accountable automobile
expense allowance not to exceed Five Hundred Dollars ($500) per month and shall
reimburse Employee for the costs of automobile insurance.
(d) Employee shall be entitled to participate in all retirement, life
insurance, medical insurance, disability insurance, vacation, savings and other
employee benefit plans generally available to the senior officers of the
Company, so long as such benefits comply with applicable law (including without
limitation the Internal Revenue Code of 1986, as amended, and ERISA) and except
to the extent that such benefits are no longer available at commercially
reasonable rates.
2
<PAGE>
4. NON-COMPETITION.
(a) During the term of this Agreement and for a period of twenty-four (24)
months from the date of termination of his employment hereunder for whatever
reason, Employee agrees that he will not solicit any customers who are presently
or may hereafter become customers of Employer unless such solicitation is
entirely unrelated to Employer's business, or compete in any way with Employer
alone or together with others in any state or foreign country in which (i) a
facility of the Employer is located, (ii) Employer is engaged in business at the
time of termination of employment, or (iii) where Employee knows Employer
intends to carry on business in such area by expansion of its activities within
the two (2) years following termination.
(b) Subsequent to the termination of this Agreement, Employee will not
interfere with or disrupt or attempt to disrupt Employer's business relationship
with its customers or suppliers or solicit the employees or Employer.
(c) During the term of this Agreement and for a period of twenty-four (24)
months from the date of termination of his employment hereunder for whatever
reason, Employee will not disclose or use or enable anyone else to use any
information or data which may be obtained by him or available to him during the
term of employment whether or not such information or data will be considered
proprietary or secret.
(d) In the event that Employee breaches any provisions of this paragraph
or there is a threatened breach, then, in addition to any other rights which
Employer may have, Employer shall be entitled to injunctive relief to enforce
the restrictions contained herein. In the event that an actual proceeding is
brought in equity to enforce the provisions of this paragraph, Employee shall
not urge as a defense that there is an adequate remedy at law nor shall Employer
be prevented from seeking any other remedies which may be available.
(e) The existence of any claim or cause of action by Employee against
Employer, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of the foregoing restrictive
covenants but shall be litigated separately.
5. TERMINATION.
(a) Anything to the contrary notwithstanding, this Agreement shall
terminate 30 days after the Employee's (i) death or (ii) disability for a period
of not less than
3
<PAGE>
twenty-six consecutive weeks; provided, however, that the provisions of Section
6 hereof shall remain in full force and effect through the end of the term
hereof.
(b) Employee's employment hereunder may also be terminated by the Employer
before the expiration of the term hereof only for cause as herein defined.
"Cause" shall mean only one or both of the following occurrences:
(i) The Employee's conviction of a felony by a court of competent
jurisdiction (which conviction, through lapse of time or otherwise, is not
subject to appeal); or
(ii) The Employee's commission of an act of fraud or embezzlement
upon the Employer.
6. SEVERANCE.
In the event of termination of employment of Employee by Employer before
the expiration of the term hereof, except when such termination is in accordance
with the provisions of paragraph 5(a) or 5(b) hereof, Employer will provide
Employee with severance pay in an amount equal to Employee's base annual salary
through the end of the term hereof, which shall be payable in a lump sum,
discounted based on the prime rate of Chemical Bank then in effect, which lump
sum shall be payable within 30 days of the date of termination. Employer will
provide Employee with a bonus calculated in accordance with Paragraph 3(b)
hereof through the end of the term hereof when, as and if such pre-tax income is
recorded (subject to reduction for any payments to Employee for personal
services rendered during such period). Employer shall also continue to provide
to Employee the retirement benefits, life insurance, medical insurance and
disability insurance pursuant to Section 3(d) through the end of the term
hereof.
In the event of termination of employment of Employee before the
expiration of the term hereof pursuant to the provisions of paragraph 5(a)
hereof, Employer will provide Employee (or Employee's estate) with severance pay
in an amount equal to one year's base annual salary, which shall be payable in a
lump sum, discounted based on the prime rate of Chemical Bank then in effect,
which lump sum shall be payable within 30 days of the date of termination.
Employer will provide Employee with a pro-rata bonus calculated in accordance
with Paragraph 3(b) hereof through the date of termination. Employer shall also
continue to provide to Employee the retirement benefits, life insurance, medical
insurance and disability insurance pursuant to Section 3(d) through the end of
the term hereof. Employer shall continue to provide Employee's spouse and minor
4
<PAGE>
children with medical benefits pursuant to Section 3(d) through the end of the
term hereof.
7. NOTICES.
All notices hereunder shall be in writing and shall be delivered in person
or given by registered or certified mail, postage prepaid, and sent to the
parties at the respective addresses above set forth. Either party may designate
any other address to which notice shall be given, by giving notice to the other
of such change of address in the manner herein provided.
8. SEVERABILITY OF PROVISIONS.
If any provision of this agreement shall be declared by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced in
whole or in part, the remaining conditions and provisions or portions thereof
shall nevertheless remain in full force and effect and enforceable to the extent
they are valid, legal and enforceable, and no provision shall be deemed
dependent upon any other covenant or provision unless so expressed herein.
9. GOVERNING LAW.
This Agreement shall be construed and governed by the laws of the State of
Connecticut.
10. NON-WAIVER.
The failure of either party to insist upon the strict performance of any
term or condition in this Agreement shall not be considered a waiver or
relinquishment of future compliance therewith.
10.1 ATTORNEY'S FEES.
In the event of a dispute arising hereunder, the Company shall pay all
reasonable attorneys fees incurred by Employee and the Company in connection
with such dispute.
11. ENTIRE AGREEMENT; MODIFICATION.
This Agreement contains the entire agreement between the parties relating
to the subject matter hereof. No modification of this Agreement shall be valid
unless it is made in writing and signed by the parties hereto.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
AMERIDATA TECHNOLOGIES, INC.,
Employer
By:
-------------------------------------
Gerald A. Poch, Co-Chairman
of the Board, President and CEO
AMERIDATA, INC.
By:
-------------------------------------
Gerald A. Poch, Vice President
By:
-------------------------------------
James K. McCleary, Employee
6
<PAGE>
AmeriData Technologies, Inc.
700 Canal Street
Stamford, CT 06902
May 20, 1996
James K. McCleary
c/o AmeriData, Inc.
10200 51st Ave. North
Minneapolis, Minnesota 55442
Dear Mr. McCleary:
Reference is made to the Amended and Restated
Employment Agreement, dated as of March 16, 1995 (as amended
or modified from time to time, the "Employment Agreement"),
between AmeriData Technologies, Inc. ("Employer") and
James K. McCleary ("Employee"). Reference is also made to
the Agreement and Plan of Merger, dated May 20, 1996, among
General Electric Capital Corporation, GAC Acquisition I
Corp. ("Sub") and Employer (as amended or modified from time
to time, the "Merger Agreement"). Capitalized terms used
herein and not herein defined shall have the respective
meanings set forth in the Merger Agreement.
For good and valuable consideration, receipt of which
is hereby acknowledged, Employer and Employee hereby agree
as follows:
1. Simultaneously with the acceptance by Sub for
payment of, or payment by Sub for, Shares pursuant to the
Offer (the "Purchase Date"):
(a) Section 4(a) of the Employment Agreement
shall be amended and restated in its entirety to read
as follows:
4. NON-COMPETITION
(a) During the term of this Agreement and for a
period of forty-eight (48) months from the date of
termination of his employment hereunder for whatever reason,
Employee agrees that he will not solicit any customers who
are presently or may hereafter become customers of Employer
unless such solicitation is entirely unrelated to the
business then engaged in or contemplated by the Employer
during the term of Employee's employment, and he will not
compete in any way with Employer in the business engaged in
or contemplated by the Employer during the term of
Employee's employment either alone or together with others
<PAGE>
in any state or foreign country in which a facility of the
Employer is located.
(b) Section 4(c) of the Employment Agreement
shall be amended by changing the references to "twenty-
four (24) months" contained therein to "forty-eight
(48) months";
(c) Section 6 of the Employment Agreement shall
be amended and restated in its entirety to read as
follows:
"6. SEVERANCE.
Employer shall be entitled to terminate this
Agreement and the employment of Employee hereunder at
any time for any reason upon notice to Employee (in
which event Employer shall have no further obligations
to Employee under this Agreement); provided, that in
the event of the termination of employment of Employee
by Employer (a) during the twelve-month period
commencing on the Purchase Date (except where such
termination is in accordance with the provisions of
paragraph 5(a) or 5(b) hereof), Employer shall provide
Employee with severance pay in an amount equal to
$1,000,000 and (b) subsequent to the period described
in (a) (except where such termination is in accordance
with the provisions of paragraph 5(a) or 5(b) hereof),
Employer shall provide Employee with severance pay in a
lump sum amount equal to the compensation not yet paid
under Section 3(a)(ii) for the remainder of the term;
and further provided, that an attempt to change
Employee's place of work to a location more than 15
miles from its present location shall be deemed to be a
termination of employment of Employee by Employer."
(d) Employer and Employee shall negotiate in good
faith with a view towards mutually agreeing to make
such changes to the bonus provisions of Section 3(b) of
the Employment Agreement as may be necessary in order
to appropriately adjust the provisions of Section 3(b)
so as not to result in an enlargement or diminution in
Employee's rights to bonus compensation following the
Offer and the Merger (taking into account the changes
in the Employer resulting therefrom).
2. The provisions of Section 1 shall become effective
only upon, and subject to, the occurrence of the Purchase
Date. If the Offer shall be terminated, withdrawn or
abandoned and the Merger Agreement shall be terminated, this
2
<PAGE>
letter agreement shall become null and void and of no
further force and effect.
3. This letter agreement may be executed in two or
more counterparts, each of which shall be an original but
all of which shall be deemed one and the same agreement.
4. This letter agreement shall be constituted and
governed by the laws of the State of Connecticut.
Very truly yours,
AMERIDATA TECHNOLOGIES, INC.
By:_____________________________
Accepted and Agreed:
___________________________
JAMES K. MCCLEARY
3
<PAGE>
Exhibit O
ADVISORY AGREEMENT
This Advisory Agreement made and entered into as of the 20th day of
May, 1996, by and between AmeriData Technologies, Inc., a Delaware corporation,
having a place of business at 700 Canal Street, Stamford, Connecticut 06902
("Employer"), and LEONARD J. FASSLER, having a business office at 700 Canal
Street, Stamford, Connecticut 06902 ("Employee").
W I T N E S S E T H:
WHEREAS, Employer is engaged in the computer products and services
business and desires to employ Employee as an advisor to Employer, and
Employee desires to be employed by Employer, all pursuant to the terms and
conditions hereinafter set forth:
WHEREAS, Employer heretofore entered into an
Employment Agreement with Employee;
WHEREAS, in connection with the merger of the Employer and GAC
Acquisition I Corp. (the "Merger"), the parties hereto desire to amend the
Employment Agreement and to provide as follows;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, it is agreed as follows:
1. EMPLOYMENT; DUTIES.
Employer hereby agrees, to employ Employee, and Employee
hereby agrees to accept employment during the term hereof for up to 50 days in
each of the first two years following the Purchase Date and for up to 25 days
during the last six months of this Agreement, as an advisor, and shall perform
such advisory services in the mergers and acquisitions area. Employer shall not
require Employee to perform such services on a regular basis at a location which
is more than 15 miles from Stamford, Connecticut, other than such travel as may
be reasonably required to perform such advisory services. Nothing herein
contained shall be construed as, including, but not limited to, (a) preventing
Employee from investing his personal assets in any business which does not
compete directly with Employer, or (b) preventing Employee from purchasing
securities in any corporation whose securities are regularly publicly traded, if
such purchases shall not result in his owning beneficially at any time 5% or
more of the equity securities of any corporation engaged in a business which is
directly competitive to that of Employer.
<PAGE>
2. TERM.
Employee's employment hereunder shall be for a term commencing
on the date immediately following the Purchase Date until and ending on the
date which is two and one-half years after such Purchase Date.
3. COMPENSATION.
(a) As compensation for the performance of his
duties on behalf of Employer, Employee shall be compensated
as follows:
(i) Employer will pay Employee a lump-sum payment in the
amount of Five Hundred Thousand Dollars ($500,000) at the closing date
of the Merger.
(ii) For the period commencing on the date immediately
following the Purchase Date until the date which is two years after
such Purchase Date, Employer shall pay Employee Two Hundred
Seventy-Five Thousand Dollars ($275,000) per year and for the period of
six months immediately thereafter, Employer shall pay Employee
$100,000, in each case irrespective of whether Employer uses Employee's
services as an advisor.
(b) Employer shall reimburse Employee for the expenses
incurred by Employee in connection with his duties hereunder upon presentation
by Employee of the details of and vouchers for such expenses in accordance with
customary Employer practice. Employer shall pay Employee a non-accountable
automobile expense allowance not to exceed Five Hundred Dollars ($500) per month
and shall reimburse Employee for the costs of automobile insurance.
(c) Employee shall be entitled to participate in all
retirement, life insurance, medical insurance, disability insurance, vacation,
savings and other employee benefit plans generally available to the senior
officers of Employer, to the extent that Employer's participation in such
benefit plans complies with applicable law (including without limitation the
Internal Revenue Code of 1986, as amended, and ERISA) and, to the extent such
benefits cannot reasonably be provided pursuant to such employee benefit plans,
such Employee shall receive a cash payment economically equivalent to such
benefit.
4. NON-COMPETITION.
(a) During the term of this Agreement and for a period of
forty-eight (48) months from the date of termination of his employment hereunder
for whatever reason,
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Employee agrees that he will not solicit any customers who are presently or may
hereafter become customers of Employer unless such solicitation is entirely
unrelated to the business then engaged in or contemplated by the Employer during
the term of Employee's employment and he will not compete in any way with
Employer either alone or together with others in any state or foreign country in
which a facility of the Employer is located.
(b) Subsequent to the termination of this Agreement, Employee
will not interfere with or disrupt or attempt to disrupt Employer's business
relationship with its customers or suppliers or solicit the employees or
Employer.
(c) During the term of this Agreement and for a period of
forty-eight (48) months from the date of termination of his employment hereunder
for whatever reason, Employee will not disclose or use or enable anyone else to
use any information or data which may be obtained by him or available to him
during the term of employment whether or not such information or data will be
considered proprietary or secret.
(d) In the event that Employee breaches any provisions of this
paragraph or there is a threatened breach, then, in addition to any other rights
which Employer may have, Employer shall be entitled to injunctive relief to
enforce the restrictions contained herein. In the event that an actual
proceeding is brought in equity to enforce the provisions of this paragraph,
Employee shall not urge as a defense that there is an adequate remedy at law nor
shall Employer be prevented from seeking any other remedies which may be
available.
(e) The existence of any claim or cause of action by Employee
against Employer, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of the foregoing restrictive
covenants but shall be litigated separately.
5. TERMINATION.
(a) Anything to the contrary notwithstanding, this Agreement
shall terminate 30 days after the Employee's (i) death or (ii) disability for a
period of not less than twenty-six consecutive weeks; provided, however, that
the provisions of Section 6 hereof shall remain in full force and effect through
the end of the term hereof.
(b) Employee's employment hereunder may also be
terminated by the Employer before the expiration of the
term hereof only for cause as herein defined. "Cause" shall
mean only one or both of the following occurrences:
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<PAGE>
(i) The Employee's conviction of a felony
by a court of competent jurisdiction (which conviction, through lapse of time or
otherwise, is not subject to appeal); or
(ii) The Employee's commission of an act
of fraud or embezzlement upon the Employer.
6. SEVERANCE.
In the event of termination of employment of Employee by
Employer before the expiration of the term hereof, except when such termination
is in accordance with the provisions of paragraph 5(b) hereof, Employer will
provide Employee (or Employee's estate) with severance pay in an amount equal to
Employee's compensation pursuant to paragraph 3(a)(ii) hereof through the end
of the term hereof, which shall be payable in a lump sum, discounted based on
the prime rate of Chemical Bank then in effect, which lump sum shall be payable
within 30 days of the date of termination. Employer shall also continue to
provide to Employee the retirement benefits, life insurance, medical insurance
and disability insurance pursuant to Section 3(c) through the end of the term
hereof. In the event of termination of employment of Employee by Employer before
the expiration of the term hereof in accordance with paragraph 5(a) hereof,
Employer shall continue to provide Employee's spouse with medical benefits
pursuant to Section 3(c) through the end of the term hereof.
7. NOTICES.
All notices hereunder shall be in writing and shall be
delivered in person or given by registered or certified mail, postage prepaid,
and sent to the parties at the respective addresses above set forth. Either
party may designate any other address to which notice shall be given, by giving
notice to the other of such change of address in the manner herein provided.
8. SEVERABILITY OF PROVISIONS.
If any provision of this agreement shall be declared by a
court of competent jurisdiction to be invalid, illegal or incapable of being
enforced in whole or in part, the remaining conditions and provisions or
portions thereof shall nevertheless remain in full force and effect and
enforceable to the extent they are valid, legal and enforceable, and no
provision shall be deemed dependent upon any other covenant or provision unless
so expressed herein.
9. GOVERNING LAW.
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This Agreement shall be construed and governed by the laws of
the State of New York.
10. NON-WAIVER.
The failure of either party to insist upon the strict
performance of any term or condition in this Agreement shall not be considered a
waiver or relinquishment of future compliance therewith.
10.1 ATTORNEY'S FEES.
In the event of a dispute arising hereunder, the Employer
shall pay all reasonable attorneys fees incurred by Employee and the Employer in
connection with such dispute.
11. ENTIRE AGREEMENT; MODIFICATION.
This Agreement contains the entire agreement between the
parties relating to the subject matter hereof. No modification of this Agreement
shall be valid unless it is made in writing and signed by the parties hereto.
12. EFFECTIVE DATE; DEFINED TERMS.
The amendments made herein shall be effective simultaneously
with the acceptance by Sub for payment of, or payment by Sub for, shares
pursuant to the offer (the "Purchase Date") and on such date the Amended and
Restated Agreement dated as of March 20, 1995 shall terminate and be of no
further force and effect. Capitalized terms used herein and not defined shall
have the meanings given such terms in the Agreement and Plan of Merger dated May
20, 1996, among General Electric Capital Corporation, GAC Acquisition I Corp.
and Employer.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
AMERIDATA TECHNOLOGIES, INC.,
Employer
By:
-----------------------------------
Gerald A. Poch, Co-Chairman
of the Board, President and CEO
---------------------------------------
LEONARD J. FASSLER, Employee
6
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EXHIBIT P
FORM OF EMPLOYMENT AGREEMENT
This Employment Agreement made this 9th day of September, 1994, between
AMERIDATA CONSULTING, INC., a Delaware corporation (the "Employer"), and DAVID
F. MITCHELL (the "Executive").
WHEREAS, the Employer, Sage Technologies, Inc. ("Sage"), David Mitchell &
Associates, Inc. ("Seller"), and David F. Mitchell ("Shareholder") have executed
an Asset Purchase Agreement dated September 9, 1994 (the "Purchase Agreement");
and
WHEREAS, in connection with the transactions contemplated by the Purchase
Agreement, the parties desire the Executive to serve in certain capacities with
the Employer and the Executive has accepted such employment and agrees to be
bound by the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
the parties agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall have
the meaning ascribed to them in the Purchase Agreement. As used herein, the
following terms have the following meanings:
"Agreement" shall mean this Agreement and any amendments hereto.
"Agreement Term" shall have the meaning ascribed to it in Section 2(a)
hereof.
"Automobile Allowance" shall mean the $500 monthly allowance payable to
the Executive for automobile-related expenses.
"Base Salary" shall mean the Executive's annual salary as determined
pursuant to Section 5 hereof.
"Board" shall mean the Board of Directors of the Employer.
"Bonus Allocation" shall mean the Executive's bonus for each calendar
year, as provided in Section 6 hereof.
"Cause" shall have the meaning ascribed to it in Section 11 hereof.
"Employment Period" shall mean the period commencing on the date of this
Agreement and ending on December 31, 1999.
<PAGE>
"Existing Company Business" shall mean business of Seller with respect
to existing and prospective clients listed on Attachment B to the
Purchase Agreement and the business of Seller in the Minneapolis, St.
Paul, and Rochester, Minnesota and Austin and San Antonio, Texas
geographic areas, including new business in such geographic areas as a
result of identifiable growth of the Existing Company Business due
predominantly to identifiable efforts made by the Existing Company
Business. Any disagreement between the parties hereto as to the
application of such definition shall be resolved by agreement of the
parties hereto by James McCleary or, if he is not the president of
AmeriData, Inc., by the then president of AmeriData, Inc. The parties
hereto acknowledge that James McCleary may be a member of the Board.
2. Agreement Term.
(a) The Employer will employ the Executive and the Executive will work
for the Employer for the Employment Period, unless sooner terminated as provided
in this Agreement (the "Agreement Term").
(b) This Agreement may be terminated by the Employer for Cause prior to
the end of the Agreement Term on such date as shall be specified in a notice
given by the Employer to the Executive. Any such notice shall state in detail
the reasons for such termination.
(c) In the event of the death or disability of the Executive during the
Agreement Term, this Agreement shall terminate as of the date of such death or
disability and the Executive's estate or the Executive, as the case may be,
shall be entitled to (i) any and all accrued and unpaid portions of the Base
Salary and Automobile Allowance to the date of death or disability, (ii) at such
reasonable time, but no later than 90 days following the completion of the
calendar year during which the Executive's death or disability occurred, such
portion of the Bonus Allocation to which the Executive would have been entitled
for each whole month worked by the Executive during such calendar year if the
Bonus Allocation were payable in 12 equal whole month installments; provided,
that if the Executive shall have been employed for a period of at least 9 full
calendar months of the calendar year in which his death or disability shall have
occurred, the Bonus Allocation shall be paid as if he had been employed during
all of such calendar year, (iii) all of the benefits to which the Executive
would be entitled pursuant to Sections 8 and 10 hereof to the date of death or
disability, and (iv) such other payments and benefits as shall be provided to
the estates and beneficiaries of deceased executives under the then existing
policies of the Employer. As used herein, a "disability" shall have occurred if,
as a result of physical or mental incapacity, the Executive shall have been
incapable of
<PAGE>
performing his duties hereunder for a period in excess of 26 consecutive
calendar weeks or an aggregate of 30 weeks in any 12 month period as determined
by the Board of Directors of Employer in its sole discretion. Notwithstanding
the foregoing, the Board may appoint an interim President of Employer prior to
the determination of a disability.
3. Duties. (a) During the Agreement Term, the Executive shall serve as
President of the Employer and shall exercise such powers and perform such duties
and services for the Employer of an executive nature as the Board may, from time
to time, reasonably require, consistent with Executive's position, including,
without limitation overall responsibility for management and operation of each
of the entities listed on Attachment A hereto and any other business of Employer
permitted by Section 3(c); provided, however, that Executive shall not have such
responsibility for an entity listed on Attachment A until Executive has received
the business plans and financial statements for such entity. The Executive shall
report directly to, and be subject to the absolute authority of, the Board.
(b) The Executive shall exercise his powers and perform his duties and
services at all times subject to the limitations set forth in the By-laws of
Employer and the resolutions of the Board. Without limiting the generality of
the foregoing, the Executive shall dedicate all his professional time, attention
and efforts during the Agreement Term, first, to building a national business
computer consulting service company and then, an international business computer
consulting service company, in each case, similar in scope of service to that
provided by Seller on and prior to the Closing Date, including, but not limited
to, business systems analysis and re-engineering, client server re-engineering,
work flow analysis and conversion of main-frame and micro-frame based computer
systems to personal computer based systems (the "Consulting Business"). During
the Agreement Term, the Executive shall be based in the Minneapolis-St. Paul,
Minnesota metropolitan area, but shall travel as reasonably necessary in
connection with the Consulting Business and any other business of Employer
permitted by Section 3(c).
(c) The Employer may, in addition to the Consulting Business and the
businesses conducted by the entities listed on Attachment A, conduct imaging,
training and mobile communications consulting businesses during the Agreement
Term, but shall not conduct, as a significant portion of Employer's business
during the Agreement Term, any other business without the prior consent of
Executive.
(d) Executive has received and reviewed copies of Employer's Certificate
of Incorporation, By-laws and initial minutes of the Board, and acknowledges
that the shareholders may, from time to time, elect the members of the Board.
<PAGE>
4. Non-Competition; Non-Solicitation; Confidentiality. (a) During the
Agreement Term and for a period ending on the later of the date of five years
from the date of this Agreement and two years from the date of termination or
expiration of this Agreement, Executive will not engage in any capacity in a
business in the United States or in any other country in which Employer is doing
business during such period substantially similar to the business in which
Employer or any entity listed on Attachment A is or has been engaged during such
period, except as an officer, director, shareholder or employee of Buyer or any
affiliate thereof; provided, however, that the non-competition obligations of
the Executive shall terminate upon the final nonappealable adjudication of a
material breach by Employer of this Agreement or the final nonappealable
adjudication of a material breach by Buyer or Sage of the Purchase Agreement, it
being understood that termination of this Agreement by Employer for any of the
reasons set forth in Section 11(a) of this Agreement shall not constitute a
breach of this Agreement. Executive understands that pursuant to the Purchase
Agreement he has received and will receive and as an employee of Employer he
will receive confidential and proprietary information of Buyer and Sage and its
affiliates, including without limitation, customer lists and other trade
secrets.
(b) During the Agreement Term and for a period ending on the later of
the date of five years from the date of this Agreement and two years from the
date of termination or expiration of this Agreement, Executive will not, unless
acting with the express written consent of Buyer and Sage, directly or
indirectly, solicit or interfere with, or endeavor to entice away (x) any person
who was employed by Seller or Buyer, (y) any person who otherwise performed
services on a regular basis for Buyer, Seller or any entity listed on Attachment
A or (z) with respect to any business in which Sage, Buyer or any affiliate of
either thereof or any entity listed on Attachment A is or has been engaged after
the date of this Agreement or in any way directly or indirectly, involving
computer products or services, any person or entity who was a customer or client
of Buyer, Seller or any entity listed on Attachment A or any person or entity
who requested or received a proposal from Seller or Sage or any of its
affiliates, in the case of (i), (ii) or (iii), during the 12 months immediately
preceding the date of termination or expiration of this Agreement; provided,
however, that the non-solicitation obligations of the Executive shall terminate
upon the final nonappealable adjudication of a material breach by Employer of
this Agreement or the final nonappealable adjudication of a material breach by
Buyer or Sage of the Purchase Agreement, it being understood that termination of
this Agreement by Employer for any of the reasons set forth in Section 11(a) of
this Agreement shall not constitute a breach of this Agreement.
(c) During the Agreement Term and at all times thereafter Executive
agrees to hold in confidence all
<PAGE>
matters and things related to the business of Sage and its direct and indirect
subsidiaries (including without limitation, Employer) of a confidential or
secret nature as to which Executive may acquire information or possession during
the Agreement Term and will not, without the consent of Employer or Sage, except
in the performance of Executive's duties as a loyal employee of the Employer,
use any such matter or thing or disclose to others any matter or thing related
to the business of the Sage or any of its direct or indirect subsidiaries where
such disclosure might possibly be contrary to the best interests of Sage or any
of such subsidiaries, in each case, except to the extent that (i) such
information is otherwise publicly available or (ii) disclosure is required by
applicable law or court order.
(d) Termination of this Agreement by Executive for any of the reasons
set forth in Section 11(b) of this Agreement shall not constitute a breach of
this Agreement by Employer and the provisions of this Section shall survive any
such termination.
5. Salary. (a) As compensation for his services to the Employer, the
Employer shall pay to the Executive an annual Base Salary of $250,000 for each
full calendar year of the Employment Period, and a ratable portion of $250,000
for that portion of the calendar year 1994 that is part of the Employment
Period, subject to annual cost of living adjustments comparable to those paid by
Buyer and its affiliates to other executives in comparable positions.
(b) The Base Salary shall be payable in substantially equal installments
and in substantially the same manner that salaries are paid by Buyer and its
affiliates to other executives in comparable positions.
6. Bonus. (a) During the Employment Period, the Executive shall receive a
bonus as follows:
(i) Calendar Year 1994. Within 90 days following the end of calendar
year 1994, the Executive shall receive a bonus equal to 10% of the sum of (x)
EBIT of Employer (minus EBIT with respect to the Existing Company Business) and
(y) EBIT of each entity then listed on Attachment A hereto, in each case, for
the period from the Closing Date to and including December 31, 1994;
(ii) Calendar Year 1995. Within 90 days following the end of calendar
year 1995, the Executive shall receive a bonus equal to 10% of the sum of (x)
EBIT of Employer (minus EBIT with respect to the Existing Company Business) and
(y) EBIT of each entity then listed on Attachment A hereto, in each case, for
calendar year 1995; and
(iii) Calendar Year 1996 and Thereafter. Within 90 days following the
end of calendar year 1996 and the end of each subsequent calendar year that is
included in the Employment Period, the Executive shall receive a bonus for
<PAGE>
each such calendar year then ended equal to 10% of the sum of (x) EBIT of
Employer and (y) EBIT of each entity then listed on Attachment A hereto for such
year.
(b) Notwithstanding the foregoing, except as otherwise provided in
Section 2(c) and Section 12(b) of this Agreement, the Executive shall not be
entitled to payment of any of the Bonus Allocations described in this Section 6
unless he is employed hereunder on the last day of the calendar year to which
any such Bonus Allocation applies. Notwithstanding any other provision of this
Agreement, the Executive's total compensation under this Agreement (a) shall not
exceed $1,000,000 with respect to each full calendar year included in the
Employment Period and (b) shall not exceed a ratable portion thereof for the
part of calendar year 1994 that is included in the Employment Period.
(c) For purposes of this Section 6, "EBIT" for any entity with respect
to any period, shall mean the earnings before interest and taxes (but after
depreciation, amortization and bonuses payable to executives and employees of
Employer and entities listed on Attachment A hereto), in each case for such
period, and shall be calculated in accordance with GAAP consistently applied
throughout such period; provided, however, that EBIT shall exclude (i) any
amortization charges for good will or acquisition costs during such period as a
result of the transaction contemplated by the Purchase Agreement, (ii) corporate
overhead charges during such period not directly related to the business of
Employer, (iii) expenses, which are approved in advance (budgeted) by the Board
of Directors for internal development costs during such period and (iv) losses
resulting from internal development costs of the entities listed on Attachment A
hereto during such period. Notwithstanding the foregoing, the losses described
in (iv) above shall reduce earnings in subsequent periods to the extent that
there are earnings in such periods, until such losses have been fully applied.
7. Vacation. The Executive shall be entitled to vacation periods annually
during the Executive's employment under this Agreement consistent with the Sage
vacation policy for executives generally (which shall be no less favorable to
Executive than under Sage's policy for executives in comparable positions).
8. Reimbursement for Expenses. The Employer shall reimburse the Executive
for all reasonable and necessary expenses and other disbursements actually
incurred by the Executive for and on behalf of the Employer in the performance
of the Executive's duties, provided, with respect to ordinary expenses, that
such expenses are adequately documented and, with respect to extraordinary
expenses, that such expenses are adequately documented and are consistent with
the amounts provided therefor in the annual business plan and/or budget of
Employer.
<PAGE>
9. Automobile Allowance. The Executive shall be entitled to the Automobile
Allowance plus reimbursement of out-of-pocket expenses for business use of an
automobile during the Agreement Term, provided such expenses are consistent with
the amounts provided therefor in the annual business plan of Employer. The
Automobile Allowance is in lieu of and the Executive shall not be provided with
the use of an automobile owned or leased by the Employer.
10. Benefits. The Executive shall be entitled to participate in any
employee benefit plan, program or policy of Sage, whether funded or unfunded,
now existing or established hereafter, for the benefit of employees of Sage and
its affiliates generally and/or its executives and key personnel to the extent
that the Executive is eligible under the general provisions thereof.
11. Termination for Cause. Termination of this Agreement for "Cause" shall
mean:
(a) In the case of termination by the Employer, termination due to the
occurrence of any of the following events:
(i) the Executive is convicted of any crime (whether or not
involving the Employer) which constitutes a felony;
(ii) the Executive shall have breached his agreement not to
compete, not to solicit and not to disclose as provided in Section 4
hereof or in Section 5(l) of the Purchase Agreement (other than an
inadvertent breach, if Executive shall have discontinued the activity
causing the breach immediately following receipt of notice thereof from
Employer);
(iii) the Executive fails to follow the reasonable directives of
the Board for the performance of Executive's duties or responsibilities
hereunder including, without limitation, his duties and responsibilities
under Section 3 after due notice to the Executive and a reasonable
opportunity to be heard by the Board and to correct such failure;
(iv) following at least 10 business days prior written notice from
Employer or Sage, the Executive continues to fail to perform or to be
otherwise in breach of (x) his obligations as Shareholder under the
Purchase Agreement or (y) any other agreement, contract or arrangement
with Sage or any of its affiliates to which Executive is a party, in his
individual capacity; or
(v) with respect to any calendar year beginning after December 31,
1994 during the Agreement Term, Employer and the entities listed on
Attachment A hereto, taken together, fail to achieve an EBIT of at
<PAGE>
least 50% of the projected EBIT for the Employer and such entities in
the aggregate as set forth in the business plan and/or budget for such
calendar year, which plan and/or budget shall have been unanimously
approved by the Board and Employee.
(b) In the case of termination by the Executive, termination due to the
following events:
(i) following at least 10 business days prior written notice from
Executive, (x) Employer or Sage continue to fail to perform or to be
otherwise in breach of its obligations under the Purchase Agreement or
(y) Employer continues to fail to perform or to be otherwise in breach
of its obligations under this Agreement;
(ii) unless the Executive has consented in writing, (A) an
attempted assignment of this Agreement by the Employer in violation of
Section 14, or (B) the sale or other transfer of substantially all of
the assets of Employer in one or more related transactions or (C) Sage
(or any successor to substantially all of Sage's business by merger,
consolidation or otherwise) shall cease to beneficially own, directly or
indirectly, at least a majority of the outstanding shares of voting
stock of Employer;
(iii) any purported termination by the Employer pursuant to Section
11(a) above which is subsequently determined to have been improper by a
final nonappealable adjudication by a court of competent jurisdiction;
(iv) the occurrence of any substantial diminution of the
Executive's responsibilities and duties provided in this Agreement as
determined by a final nonappealable adjudication by a court of competent
jurisdiction; or
(v) the permanent relocation of Executive to a geographical
location outside the Minneapolis-St. Paul, Minnesota metropolitan area
without the consent of Executive.
12. Certain Remedies. (a) In addition to any other remedies of Employer, if
the Employer terminates this Agreement for Cause (as defined in Section 11(a)
above), all of the Executive's rights under this Agreement shall thereupon
terminate and he shall be entitled only to (i) all accrued and unpaid portions
of the Base Salary through the date of such termination and (ii) to all vested
benefits under any employee benefit plans maintained by the Employer, whether
funded or unfunded, accrued through the date of such termination.
Notwithstanding the foregoing, such termination shall be without prejudice to
any right the Executive may have to continue to participate, on a
post-employment basis, in any employee benefit plan, program
<PAGE>
or policy of the Employer now existing or established hereafter for the benefit
of its employees in general and/or its senior executives and key personnel, to
the extent he is eligible under the general provisions thereof or as required by
applicable law.
(b) In addition to any other remedies of Executive, if the Executive
terminates the Agreement for Cause as determined by a final nonappealable
adjudication by a court of competent jurisdiction, the Executive shall be
entitled to the continuation of (i) Base Salary payments and (ii) Bonus
Allocations, in the case of (i) and (ii), during the period ending on the date
five years from the date of this Agreement (subject to reduction for any
payments the Executive may receive in consideration of personal services
rendered during such period).
13. Notice. Any notice required or permitted to be given hereunder shall be
in writing and shall be deemed to have been duly given if delivered or mailed by
registered mail, postage prepaid: if to the Executive at 2550 University Avenue
West, Suite 180 S, St. Paul, Minnesota 55114 or at such other address as he
shall designate by notice to the Employer, with a copy to Faegre & Benson, 2200
Norwest Center, Minneapolis, Minnesota 55402, Attention: Bruce M. Engler, and if
to the Employer at AmeriData Consulting, Inc., 2550 University Avenue West,
Suite 180 S, St. Paul, Minnesota 55114, Attention: President, with a copy to
Sage Technologies, Inc., 700 Canal Street, Stamford, Connecticut 06902,
Attention: Co-Chairman, or at such other address as it shall designate by notice
to the Executive.
14. Successors and Assigns. This Agreement is personal in its nature with
respect to Executive and neither of the parties hereto shall, without the
consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder; provided, however, that Employer may assign this
Agreement to any entity controlled by or under common control with Employer.
15. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Minnesota without regard to
its conflict of law rules.
16. Only Contract Relating to Employment. This Agreement supersedes any
prior contracts relating to employment between the Executive and the Employer
and constitutes the full and complete agreement between the Executive and the
Employer in such respect. This Agreement cannot be changed, modified or amended
and no provision or requirement hereof may be waived without the consent in
writing of the Executive and the Employer. The Executive is not party to any
other contract relating to employment with any other person that is in effect on
the date hereof.
17. Complete Understanding. This Agreement constitutes the complete
understanding between the parties
<PAGE>
with respect to the employment of the Executive by the Employer and no
statement, representation, warranty or covenant has been made by either party
with respect thereto except as expressly set forth herein or in the Purchase
Agreement, the provisions of which are incorporated herein by reference.
18. Third Party Beneficiary. Sage shall be a third party beneficiary of
this Agreement.
19. Headings. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.
20. Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the Employer and the Executive have caused this
Agreement to be executed as of the date first above written.
---------------------------------
David F. Mitchell
AMERIDATA CONSULTING, INC.
By
------------------------------
<PAGE>
Attachment A to
Mitchell Employment Agreement
1. Feld Technologies, Inc.
2. Mobile Systems Integration, Inc.
3. From and after January 1, 1995, Alternative Computer Co.
4. All entities engaged in the Consulting Business and owned directly or
indirectly by Sage.
5. All other entities that Executive and Employer have agreed in writing to add
to this Attachment A.
Exhibit Q
To all Holders of 8% Convertible Fixed
Life Aggregated Securities of AmeriData Delaware, L.L.C.
(the "Preferred Securities")
As you are aware, AmeriData Technologies, Inc.
("AmeriData") has signed an Agreement and Plan of Merger (the
"Merger Agreement"), providing for the merger (the "Merger") of
AmeriData with a wholly-owned subsidiary of General Electric
Capital Corporation ("GE Capital"). The Merger Agreement
contemplates a tender offer by a GE Capital subsidiary at
$16.00 per share of AmeriData common stock, followed by a
merger of that subsidiary into AmeriData. As a result of the
Merger, AmeriData will become an indirect, wholly-owned
subsidiary of GE Capital.
Your Preferred Securities may not be tendered
directly into the tender offer. You must first convert the
Preferred Securities into AmeriData common stock and tender
your certificate(s) for the AmeriData common stock into the
tender offer. To convert your Preferred Securities into
AmeriData common stock, you must deliver an irrevocable notice
(the "Conversion Notice") to AmeriData Delaware, L.L.C.
("AmeriData Delaware")(which can be done through AmeriData)
setting forth the number of Preferred Securities to be
converted and the name or names in which the shares of
AmeriData common stock should be issued. As promptly as
practicable after receipt of the Conversion Notice, AmeriData
Delaware (through AmeriData) will distribute such shares of
AmeriData common stock to you in exchange for your Preferred
Securities. The Conversion Notice is included as a part of the
security for holders with physical certificates representing
their Preferred Securities.
If you are not a holder of a physical certificate for
your Preferred Securities, you must notify the institution in
whose name your Preferred Securities are held of record in the
Depository Trust Company ("DTC") system in order to convert
your Preferred Securities to AmeriData common stock. This is
likely to be the broker dealer, bank or other institution
through which you initially purchased your Preferred
Securities. If your Preferred Securities are held in the DTC
system, you will be able to convert those Preferred Securities
by book entry. You may also tender into the tender offer your
common stock received upon conversion by book entry, as will be
described in full in the Offer to Purchase relating to the
tender offer you will receive shortly. The only way for you to
receive the $16.00 per share tender offer price is to convert
your Preferred Securities into AmeriData common stock.
This letter shall not be deemed an offer to purchase
any security of AmeriData. The tender offer for AmeriData
common stock will be made solely pursuant to an Offer to
Purchase and the related documents you will receive shortly.
Preferred Securities shall be deemed to have been
converted immediately prior to the close of business on the day
on which the Notice of Conversion is validly delivered to
AmeriData (the "Conversion Date"). If you convert your
Preferred Securities, you will be treated for all purposes as a
record holder of AmeriData common stock as of the Conversion
Date.
If you have any questions with respect to the
foregoing, please call Jonathan Freedman of Dewey Ballantine at
(212) 259-6680.
Yours truly,
AMERIDATA TECHNOLOGIES, INC.,
as Manager of
AmeriData Delaware, L.L.C.
By:
------------------------------
Name:
Title:
<PAGE>
CONFORMED COPY
AMERIDATA TECHNOLOGIES, INC.
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY,
as Trustee
_____________
8% Convertible Subordinated Debentures
Due 2003
_____________
First Supplemental Indenture
Dated as of May 17, 1996
_____________
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of May 17,
1996 (herein called the "First Supplemental Indenture"),
between AMERIDATA TECHNOLOGIES, INC., a Delaware corporation
(hereinafter referred to as the "Company") and CONTINENTAL
STOCK TRANSFER & TRUST COMPANY, a New York limited purpose
trust company (hereinafter referred to as the "Trustee").
WITNESSETH:
WHEREAS, The Company has heretofore executed and
delivered to the Trustee that certain Indenture, dated as of
June 5, 1995 (hereinafter called the "Original Indenture")
for the equal and ratable benefit of the registered holders
of the Company's 8% Convertible Subordinated Debentures due
2003 (the "Subordinated Debentures") and, as provided
therein, the registered holders of AmeriData Delaware
Preferred Securities (as defined in the Original Indenture);
and
WHEREAS, the Company desires and has requested the
Trustee to join with it in the execution and delivery of
this First Supplemental Indenture on the terms set forth
herein; and
WHEREAS, Section 11.1(c) of the Original Indenture
provides, among other things, that the Company and the
Trustee may enter into indentures supplemental to the
Original Indenture for the purpose of curing any omission,
without notice to or consent of any Securityholder; and
WHEREAS, the Company has represented to the
Trustee that all acts and things necessary to make this
First Supplemental Indenture a valid and binding agreement
of the Company and the Trustee have been done and performed;
and
WHEREAS, the Company has determined that the
Original Indenture should be modified by the amendment of
Section 4.12(a), Section 6.11(6) and Section 8.1(3) and
addition of Section 4.12(c), each as set forth in this First
Supplemental Indenture; and
WHEREAS all capitalized terms used herein without
definition have the meanings ascribed thereto in the
Original Indenture;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE
WITNESSETH:
2
<PAGE>
That in consideration of the premises and of the
acceptance of this trust by the Trustee, the Company
covenants and agrees with the Trustee as follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.2. is hereby amended to add the
following definition in its appropriate alphabetical
placement:
Defined in
Term Section
"Transaction" . . . . . . . . . . . . . . . . . 4.2(c)
ARTICLE 4
CONVERSION
1. The first sentence of Section 4.12(a) of the Original
Indenture is hereby deleted in its entirety and
substituting in lieu thereof the following:
"(a) Notwithstanding any other provision in this
Article to the contrary, but subject to the provisions
of subsection (c) of this Section 4.12, if any
Fundamental Change (as defined in subsection (b))
occurs, then the conversion price in effect will be
adjusted immediately after such Fundamental Change as
described in this Section 4.12."
2. A new subsection (c) shall be added to Section 4.12 of
the Original Indenture as follows:
"(c) In the event that the Company is a party to
any transaction (including, without limitation, a
merger, consolidation, sale of all or substantially all
of the Company's assets, recapitalization or
reclassification of Common Stock or any compulsory
share exchange (each of the foregoing being referred to
as a "Transaction")), in each case, as a result of
which shares of Common Stock shall be converted into
the right (a) in the case of any Transaction other than
a Transaction involving a Common Stock Fundamental
Change, to receive securities, cash, or other property,
each Security shall thereafter be convertible into the
kind and amount of securities, cash, and other property
receivable upon the consummation of such Transaction by
a holder of that number of shares of Common Stock into
which a Security was convertible immediately prior to
such Transaction, or (b) in the case of a Transaction
involving a Common Stock Fundamental Change to receive
common stock of the kind received by holders of Common
Stock (but in each case after giving effect to any
3
<PAGE>
adjustment provided for above relating to a Fundamental
Change if such Transaction constitutes a Fundamental
Change). Without limiting the effect of Section 7.1,
the holders of Securities have no voting rights with
respect to any Transaction described in this section."
ARTICLE 6
COVENANTS
3. Section 6.11(6) is hereby deleted in its entirety and
substituting in lieu thereof the following:
"(6) to issue and deliver Common Stock or such
other securities, cash or other property as the
Securityholders are entitled to receive pursuant to
Section 4.12 hereof, upon an election by AmeriData
Delaware to convert the Securities."
ARTICLE 8
DEFAULT AND REMEDIES
4. Section 8.1(3) is hereby deleted in its entirety and
substituting in lieu thereof the following:
"(3) The Company shall fail to deliver shares of
Common Stock or such other securities, cash or other
property, as the Securityholders are entitled to
receive pursuant to Section 4.12 hereof, upon an
election by any Holder to convert Securities; AmeriData
Delaware shall fail to convert Securities into shares
of Common Stock or such other securities, cash or other
property, as the Securityholders are entitled to
receive pursuant to Section 4.12 hereof or to deliver
such shares of Common Stock or such other securities,
cash or other property, as the Securityholders are
entitled to receive pursuant to Section 4.12 hereof, to
any holder of AmeriData Delaware Preferred Securities
who elects to convert AmeriData Delaware Preferred
Securities into shares of Common Stock or such other
securities, cash or other property, as the
Securityholders are entitled to receive pursuant to
Section 4.12 hereof; or AmeriData Delaware shall fail
to distribute Securities to holders of AmeriData
Delaware Preferred Securities when required pursuant to
Section 7.2(h)(iv) of the Operating Agreement;"
Except as amended by this First Supplemental
Indenture, the Original Indenture is hereby ratified and
confirmed in all respects.
4
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused
this First Supplemental Indenture to be duly executed by its
duly authorized representative as of the day and year first
above written.
AMERIDATA TECHNOLOGIES, INC.
By:/s/ Gerald A. Poch
---------------------------
Name: Gerald A. Poch
Title: Co-President
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY, as Trustee
By:/s/ Michael Nelson
---------------------------
Name: Michael Nelson
Title: President
5
<PAGE>
EXHIBIT S
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
|
KENNETH STEINER, Individually and | Civil Action No. 15005
on behalf of all others similarly |
situated |
Plaintiff | SUMMONS
|
v. |
|
LEONARD J. FASSLER, EDWARD A. |
KERBS, GERALD M. LeBOW, |
GERALD A. POCH, ANTHONY P. TOWELL, |
JAMES K. McCLEARY, RICHARD J. |
WILLIAMS, AMERIDATA TECHNOLOGIES, |
INC. AND GE CAPITAL SERVICES, INC. |
|
Defendants |
|
|
|
THE STATE OF DELAWARE
TO THE SPECIAL PROCESS SERVER
YOU ARE COMMANDED:
To Summon the above named defendants so that, within 20 days after
service hereof upon defendants, exclusive of the day of service, defendants
shall serve upon Joseph A. Rosenthal, Esquire, plaintiff's attorney whose
address is Suite 1401, Mellon Bank Center, PO Box 1070, Wilm., DE an answer to
the complaint.
To serve upon defendants a copy hereof and of the complaint.
/s/ Priscilla B. Rakestraw
--------------------------
Register in Chancery
Dated May 21, 1996
TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within 20 days after service hereof upon you,
exclusive of the day of service, to serve on plaintiff's attorney named above
an answer to the complaint, judgement by default will be rendered against you
for the relief demanded in the complaint.
/s/ Priscilla B. Rakestraw
--------------------------
Register in Chancery
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- - - - - - - - - - - - - - - - - - - - - x
:
KENNETH STEINER, Individually and :
On Behalf of All Others Similarly : Civil Action No. 15005
Situated, :
:
:
Plaintiff, : CLASS ACTION
: COMPLAINT
- v. - :
:
LEONARD J. FASSLER, EDWARD A. :
KERBS, GERALD M. LeBOW, GERALD A. :
POCH, ANTHONY P. TOWELL, JAMES K. :
McCLEARY, RICHARD J. WILLIAMS, :
AMERIDATA TECHNOLOGIES, INC. and GE :
CAPITAL SERVICES, INC. :
:
Defendants. :
:
- - - - - - - - - - - - - - - - - - - - - x
Plaintiff alleges on information and belief, except
as to the allegations of paragraph 2 which are alleged on
knowledge, as follows:
1. Plaintiff brings this action as a class action
on behalf of himself and all other stockholders of AmeriData
Technologies, Inc. ("AmeriData" or the "Company") who are
similarly situated, to enjoin certain actions of the
defendants related to the proposed purchase of the outstanding
shares of AmeriData stock by defendant GE Capital Services,
Inc. ("GE").
PARTIES
2. Plaintiff is and has been at all relevant times
the owner of shares of AmeriData common stock.
<PAGE>
3. (a) Defendant AmeriData, a corporation
organized and existing under the laws of the State of
Delaware, provides computer products and services to
commercial, governmental and educational users. The Company
also designs, manufactures and sells public alerting,
notification and emergency response systems for use in the
event of natural disasters. As of March 31, 1996, AmeriData
had approximately 22.1 million shares of common stock issued
and outstanding held by 6,900 shareholders of record.
(b) AmeriData is named herein as nominal
defendant in order to effectuate the relief sought.
4. (a) Defendant Leonard J. Fassler ("Fassler")
is and was at all relevant times AmeriData's Co-Chairman.
Fassler is also President of Sage Equities, Inc., a private
investment company.
(b) Defendant James K. McCleary ("McCleary")
it and was at all relevant times AmeriData's Co-Chairman and
Co-President.
(c) Defendant Gerald A. Poch ("Poch") is and
was at all relevant times AmeriData's Co-Chairman, Co-
President and Chief Executive Officer.
(d) Defendant Gerald M. LeBow ("LeBow") is and
was at all relevant times AmeriData'a Executive Vice
President, General Manager and a director.
(e) Defendants Edward A. Kerbs ("Kerbs")
Anthony P. Towell ("Towell") and Richard J. Williams
2
<PAGE>
("Williams") are and were at all relevant times directors of
AmeriData. Defendant Williams is also a principal of Triumph
Connecticut Limited Partnership ("TCLP") an entity which has
invested in the Company.
5. Defendant GE is a New York corporation and a
wholly-owned subsidiary of General Electric Company, which
through General Electric Pension Trust owns 2,101,404 shares
of AmeriData common stock representing 9.7% of the Company's
outstanding common stock. GE is named herein as an aider and
abettor of the individual defendants' breach of fiduciary
duty.
6. By virtue of the individual defendants'
positions as directors and officers of AmeriData, said
defendants were and are in a fiduciary relationship with
plaintiff and the other public stockholders of the Company,
and owe to plaintiff and the other members of the Class the
highest obligations of good faith and fair dealing.
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this action for declaratory,
injunctive and other relief on his own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of
Chancery and on behalf of all common stockholders of AmeriData
(except defendants herein and any person, firm, trust,
corporation or other entity related to or affiliated with any
of the defendants) or their successors in interest, who are
being deprived of the opportunity to maximize the value of
3
<PAGE>
their AmeriData shares by the wrongful acts of the defendants
as described herein.
8. This action is properly maintainable as a class
action for the following reasons:
(a) The Class of stockholders for whose
benefit this action it brought is so numerous that joinder of
all Class members is impracticable. There are more than 9
million common shares of AmeriData outstanding, owned by
thousands of stockholders. Members of the Class are scattered
throughout the United States.
(b) There are questions of law and fact which
are common to members of the Class and which predominate over
all questions affecting only individual members, including
whether the defendants have breached the fiduciary duties owed
by them to plaintiff and members of the Class by reason of the
acts described herein.
(c) The claims of plaintiff are typical of the
claims of the other members of the Class and plaintiff has no
interests that are adverse or antagonistic to the interests of
the Class.
(d) Plaintiff is committed to the vigorous
prosecution of this action and has retained competent counsel
experienced in litigation of this nature. Accordingly,
plaintiff is an adequate representative of the Class and will
fairly and adequately protect the interests of the Class.
- 4 -
<PAGE>
(e) The prosecution of separate actions by
individual members of the Class would create a risk of
inconsistent or varying adjudications with respect to
individual members of the Class and establish incompatible
standards of conduct for the party opposing the Class.
(f) Defendants have acted and are about to act
on grounds generally applicable to the Class, thereby making
appropriate final injunctive or corresponding declaratory
relief with respect to the Class as a whole.
FACTUAL BACKGROUND
9. On or about May 20, 1996, GE announced that it
has entered into a definitive agreement to acquire AmeriData.
Pursuant to the terms of the agreement, GE will pay $16 cash
per share for each share of AmeriData common stock (the
"Transaction").
10. The Transaction will be effected in two steps,
commencing with a tender offer by GE for the Company's
outstanding common stock at $16 cash per share. Shares not
purchased in the tender offer will be acquired in a subsequent
merger at $16 per share.
11. The market price of AmeriData closed at $15 3/8
per share on the trading day prior to the announcement of the
Transaction.
12. AmeriData just released, on May 14, 1996, its
financial results for the quarter ended March 31, l996, which
results were outstanding. The Company reported revenues of
-5-
<PAGE>
$452,799,000 and net income of $3,451,000 or $0.15 per share,
compared with revenues of $274,901,000 and net income of
$1,604,000 or $0.08 per share for the same period in 1995.
The news propelled the Company's stock to close at $15 3/8 per
share by May 17, 1996.
13. Additionally, on April 1, 1996, AmeriData
confirmed to the investment community that it expected to
record revenue of $2 billion for the 1996 fiscal year,
exclusive of additional acquisitions in 1996.
14. AmeriData's growth has been fueled in part by
the acquisition of nearly 36 smaller re-sellers and service
companies over the past few years. In fact, in January 1996,
the Company, in a stock swap, purchased Brenner Technology,
Inc., a company which provides consulting services in the New
York City area. Thus, the market has yet to fully absorb all
the information about the Company, and the corresponding
impact which this news will have on AmeriData's future trading
price.
15. By virtue of its ownership in AmeriData, GE has
been privy to material non-public information concerning
AmeriData's business, products and financial results.
Accordingly, GE has, in part based upon non-public
information, positioned itself to purchase the remaining
interest in AmeriData at an unreasonably low and unfair price,
to the detriment of plaintiff and the other public
stockholders of the Company.
-6-
<PAGE>
16. The Transaction, if consummated, will transfer
control of AmeriData and its valuable assets and businesses
from its present stockholders to GE. The individual
defendants are obligated in connection with any contemplated
transfer of such control of AmeriData to seek to maximize
shareholder value by such means as an auction, active market
check or other exploration of strategic alternatives under the
circumstances. The individual defendants have failed to
implement such procedures for the maximization of shareholder
value and are permitting the transfer of control of AmeriData
and its assets at a value which fails to reflect the long-term
value of its stock given the positive trends AmeriData has
shown, as described above. Defendants have not engaged in any
effort to solicit competing bids for the Company or to explore
other strategic alternatives involving other potential
parties.
17. If consummated, the merger agreement will deny
Class members their right to share proportionately in the true
value of AmeriData's valuable assets, profitable businesses
and future growth.
18. The actions taken by the individual defendants
are in gross disregard of their fiduciary duties owed to
plaintiff and the other members of the Class
19. AmeriData knowingly aided and abetted the
breaches of fiduciary duty committed by the individual
defendants complained of herein. Indeed, the Transaction
- 7 -
<PAGE>
between AmeriData and GE could not take place without the
knowing participation of AmeriData.
20. Plaintiff and the other members of the Class
will suffer irreparable injury unless the Transaction is
enjoined.
21. Plaintiff and the Class have no adequate remedy
at law.
WHEREFORE, plaintiff demands judgment and
preliminary and permanent relief, including injunctive relief,
in his favor and in favor of the Class and against defendants
as follows:
A. Declaring that this action is properly
maintainable as a class action, and certifying plaintiff as
class representative;
B. Enjoining the Transaction;
C. Ordering the individual defendants to carry out
their fiduciary duties to plaintiff and other members of the
Class by announcing their intention to:
(i) cooperate fully with any person or entity,
having a bona fide interest in proposing any transaction which
would maximize shareholder value, including, but not limited
to, a buyout or takeover of the Company;
(ii) undertake an appropriate evaluation of
AmeriData's worth as a merger acquisition candidate;
- 8 -
<PAGE>
(iii) take all appropriate steps to enhance
AmeriData's value and attractiveness as a merger/acquisition
candidate;
(iv) take all appropriate steps to effectively
expose AmeriData to the market place to create an active
auction of AmeriData;
(v) act independently so that the interests of
AmeriData's public shareholders will be protected; and
(vi) adequately ensure that no conflicts of
interest exist between the individual defendants' own
interests and their fiduciary obligation to maximize
shareholder value or, if such conflicts exist, ensure that all
conflicts are resolved in the best interests of AmeriData's
public shareholders.
D. Awarding plaintiff and the Class rescissory
damages, if the Transaction is consummated before judgment,
and compensatory damages;
E. Awarding plaintiff the costs and disbursements
of this action, including reasonable attorneys' and experts'
fees; and
- 9 -
<PAGE>
F. Granting such other and further relief as this
Court may deem just and proper.
Dated: May 20, 1996
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Authorized Signature
-----------------------------
Mellon Bank Center, Suite 1401
919 North Market Street
Wilmington, Delaware 18801
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
GOODKIND LABATON RUDOFF & SUCHAROW
100 Park Avenue
New York, New York 10017
(212) 907-0700
- 10 -
<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
|
KENNETH STEINER, Individually and | Civil Action No. 15005
on behalf of all others similarly |
situated |
Plaintiff | SUMMONS PURSUANT
| TO 10 DEL.C. SECTION 3114
v. |
|
LEONARD J. FASSLER, EDWARD A. |
KERBS, GERALD M. LeBOW, |
GERALD A. POCH, ANTHONY P. TOWELL, |
JAMES K. McCLEARY, RICHARD J. |
WILLIAMS, AMERIDATA TECHNOLOGIES, |
INC. AND GE CAPITAL SERVICES, INC. |
|
Defendants |
|
|
|
THE STATE OF DELAWARE
TO THE SPECIAL PROCESS SERVER
YOU ARE COMMANDED:
To Summon the above named individual defendants by service pursuant to
10 Del. C. Section 3114 upon their designated agent for service of process in
Delaware, The Prentice-Hall Corporation Systems, Inc. being the registered agent
for Ameridata Technologies, Inc., a Delaware corporation, so that within the
time required by law, such defendants shall serve upon Joseph A. Rosenthal,
Esquire, plaintiff's attorney whose address is Suite 1401, PO Box 1070, Wilm.,
DE an answer to the complaint.
To serve upon defendants a copy hereof, of the complaint and of a
statement of plaintiff filed pursuant to Chancery Court Rule 4(dc) ( l ).
/s/ Priscilla B. Rakestraw
--------------------------
Dated May 21, 1996 Register in Chancery
TO THE ABOVE NAMED DEFENDANTS:
In case of your failure, within the time permitted by l0 Del. C.
Section 3114*, to serve on plaintiff's attorney named above an answer to the
complaint, judgment by default may be rendered against you for the relief
demanded in the complaint.
/s/ Priscilla B. Rakestraw
-------------------------
Register in Chancery
*The text of 10 Del. C. Section 3114 is set out on the reverse of this Summons.
CIVIL ACTION NO. 15005
KENNETH STEINER
Plaintiff
v.
LEONARD J. FASSLER, ET AL
Defendant
SUMMONS
1. Leonard J. Fassler
2. Edward A. Kerbs
3. Gerald M. LeBow
4. Gerald A. Poch
5. Anthony P. Towell
6. James K. McCleary
7. Richard J. Williams
by serving the registered agent for Ameridata Technologies, Inc.
The Prentice-Hall Corporation Systems, Inc.
c/o The Corporation Service Company
1013 Centre Road
Wilmington, De
SERVICE TO BE COMPLETED BY SPECIAL PROCESS SERVER
Section 3114. Service of process on non-resident directors, trustees or
members of the governing body of Delaware corporations.
(a) Every non-resident of this State who after September 1, 1977,
accepts election or appointment as a director, trustee or member of the
governing body of a corporation organized under the laws of this State or
who after June 30, 1978, serves in such capacity and every resident of this
State who so accepts election or appointment or serves in such capacity
and thereafter removes his residence from this State shall, by such
acceptance or by such service, be deemed thereby to have consented to the
appointment of the registered agent of such corporation (or, if there is
none, the Secretary of State) as his agent upon whom service of process may
be made in all civil actions or proceedings brought in this State, by or
on behalf of, or against such corporation, in which such director, trustee
or member is a necessary or proper party, or in any action or proceeding
against such director, trustee or member for violation of his duty in such
capacity, whether or not he continues to serve as such director, trustee or
member at the time suit is commenced. Such acceptance or service as such
director, trustee or member shall be a signification of the consent of such
director, trustee or member that any process when so served shall be of the
same legal force and validity as if served upon such director, trustee or
member within this State and such appointment of the registered agent (or,
if there is none, Secretary of State) shall be irrevocable.
(b) Service of process shall be effected by serving the registered agent
(or, if there is none, the Secretary of State) with 1 copy of such process
in the manner provided by law for service of writs of summons. In addition,
the Prothonotary or the Register in Chancery of the court in which the civil
action or proceeding is pending shall, within 7 days of such service,
deposit in the United States mails, by registered mail, postage prepaid, true
and attested copies of the process, together with a statement that service
is being made pursuant to this section, addressed to such director, trustee or
member at the corporation's principal place of business and at his residence
address as the same appears on the records of the Secretary of State, or, if
no such residence address appears, at his address last known to the party
desiring to make such service.
(c) In any action in which any such director, trustee or member has been
served with process as hereinabove provided, the time in which a defendant
shall be required to appear an file a responsive pleading shall be computed
from the date of mailing by the Prothonotary or the Register in Chancery as
provided in subsection (b) of this section; however, the court in which such
action has been commenced may order such continuance or continuances as may
be necessary to afford such director, trustee or member reasonable
opportunity to defend the action.
(d) Nothing herein contained limits or affects the right to serve process
in any other manner now or hereafter provided by law. This section is an
extension of and not a limitation upon the right otherwise existing of service
of legal process upon non-residents.
(e) The Court of Chancery and the Superior Court may make all necessary
rules respecting the form of process, the manner of issuance and return
thereof and such other rules which may be necessary to implement this section
and are not inconsistent with this section (61 Del. Laws, c. 119, Section 1.)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
- - - - - - - - - - - - - - - - - - - - - x
:
KENNETH STEINER, Individually and :
On Behalf of All Others Similarly : Civil Action No. 15005
Situated, :
:
:
Plaintiff, : CLASS ACTION
: COMPLAINT
- v. - :
:
LEONARD J. FASSLER, EDWARD A. :
KERBS, GERALD M. LeBOW, GERALD A. :
POCH, ANTHONY P. TOWELL, JAMES K. :
McCLEARY, RICHARD J. WILLIAMS, :
AMERIDATA TECHNOLOGIES, INC. and GE :
CAPITAL SERVICES, INC. :
:
Defendants. :
:
- - - - - - - - - - - - - - - - - - - - - x
Plaintiff alleges on information and belief, except
as to the allegations of paragraph 2 which are alleged on
knowledge, as follows:
1. Plaintiff brings this action as a class action
on behalf of himself and all other stockholders of AmeriData
Technologies, Inc. ("AmeriData" or the "Company") who are
similarly situated, to enjoin certain actions of the
defendants related to the proposed purchase of the outstanding
shares of AmeriData stock by defendant GE Capital Services,
Inc. ("GE").
PARTIES
2. Plaintiff is and has been at all relevant times
the owner of shares of AmeriData common stock.
<PAGE>
3. (a) Defendant AmeriData, a corporation
organized and existing under the laws of the State of
Delaware, provides computer products and services to
commercial, governmental and educational users. The Company
also designs, manufactures and sells public alerting,
notification and emergency response systems for use in the
event of natural disasters. As of March 31, 1996, AmeriData
had approximately 22.1 million shares of common stock issued
and outstanding held by 6,900 shareholders of record.
(b) AmeriData is named herein as a nominal
defendant in order to effectuate the relief sought.
4. (a) Defendant Leonard J. Fassler ("Fassler")
is and was at all relevant times AmeriData's Co-Chairman.
Fassler is also President of Sage Equities, Inc., a private
investment company.
(b) Defendant James K. McCleary ("McCleary")
is and was at all relevant times AmeriData's Co-Chairman and
Co-President.
(c) Defendant Gerald A. Poch ("Poch") is and
was at all relevant times AmeriData's Co-Chairman, Co-
President and Chief Executive Officer.
(d) Defendant Gerald M. LeBow ("LeBow") is and
was at all relevant times AmeriData'a Executive Vice
President, General Manager and a director.
(e) Defendants Edward A. Kerbs ("Kerbs")
Anthony P. Towell ("Towell") and Richard J. Williams
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("Williams") are and were at all relevant times directors of
AmeriData. Defendant Williams is also a principal of Triumph
Connecticut Limited Partnership ("TCLP") an entity which has
invested in the Company.
5. Defendant GE is a New York corporation and a
wholly-owned subsidiary of General Electric Company, which
through General Electric Pension Trust owns 2,101,404 shares
of AmeriData common stock representing 9.7% of the Company's
outstanding common stock. GE is named herein as an aider and
abettor of the individual defendants' breach of fiduciary
duty.
6. By virtue of the individual defendants'
positions as directors and officers of AmeriData, said
defendants were and are in a fiduciary relationship with
plaintiff and the other public stockholders of the Company,
and owe to plaintiff and the other members of the Class the
highest obligations of good faith and fair dealing.
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this action for declaratory,
injunctive and other relief on his own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of
Chancery and on behalf of all common stockholders of AmeriData
(except defendants herein and any person, firm, trust,
corporation or other entity related to or affiliated with any
of the defendants) or their successors in interest, who are
being deprived of the opportunity to maximize the value of
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their AmeriData shares by the wrongful acts of the defendants
as described herein.
8. This action is properly maintainable as a class
action for the following reasons:
(a) The Class of stockholders for whose
benefit this action is brought is so numerous that joinder of
all Class members is impracticable. There are more than 9
million common shares of AmeriData outstanding, owned by
thousand of stockholders. Members of the Class are scattered
throughout the United States.
(b) There are questions of law and fact which
are common to members of the Class and which predominate over
all questions affecting only individual members, including
whether the defendants have breached the fiduciary duties owed
by them to plaintiff and members of the Class by reason of the
acts described herein.
(c) The claims of plaintiff are typical of the
claims of the other members of the Class and plaintiff has no
interests that are adverse or antagonistic to the interests of
the Class.
(d) Plaintiff it committed to the vigorous
prosecution of this action and has retained competent counsel
experienced in litigation of this nature. Accordingly,
plaintiff is an adequate representative of the Class and will
fairly and adequately protect the interests of the Class.
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(e) The prosecution of separate actions by
individual members of the Class would create a risk of
inconsistent or varying adjudications with respect to
individual members of the Class and establish incompatible
standards of conduct for the party opposing the Class.
(f) Defendants have acted and are about to act
on grounds generally applicable to the Class, thereby making
appropriate final injunctive or corresponding declaratory
relief with respect to the Class as a whole.
FACTUAL BACGROUND
9. On or about May 20, 1996, GE announced that it
has entered into a definitive agreement to acquire AmeriData.
Pursuant to the terms of the agreement, GE will pay $16 cash
per share for each share of AmeriData common stock (the
"Transaction" ).
10. The Transaction will be effected in two steps,
commencing with a tender offer by GE for the Company's
outstanding common stock at $16 cash per share. Shares not
purchased in the tender offer will be acquired in a subsequent
merger at $16 per share
11. The market price of AmeriData closed at $15-3/8
per share on the trading day prior to the announcement of the
Transaction.
12. AmeriData just released, on May 14, 1996, its
financial results for the quarter ended March 31, 1996, which
results were outstanding. The Company reported revenues of
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$452,799,000 and net income of $3,451,000 or $0.15 per share,
compared with revenues of $274,901,000 and net income of
$1,604,000 or $0.08 per share for the same period in 1995.
The news propelled the Company's stock to close at $15 3/8 per
share by May 17, 1996.
13. Additionally, on April 1, 1996, AmeriData
confirmed to the investment community that it expected to
record revenue of $2 billion for the 1996 fiscal year,
exclusive of additional acquisitions in 1996.
14. AmeriData's growth has been fueled in part by
the acquisition of nearly 36 smaller re-sellers and service
companies over the past few years. In fact, in January 1996,
the Company, in a stock swap, purchased Brenner Technology,
Inc., a company which provides consulting services in the New
York City area. Thus, the market has yet to fully absorb all
the information about the Company, and the corresponding
impact which this news will have on AmeriData's future trading
price.
15. By virtue of its ownership in AmeriData, GE has
been privy to material non-public information concerning
AmeriData's business, products and financial results.
Accordingly, GE has, in part based upon non-public
information, positioned itself to purchase the remaining
interest in AmeriData at an unreasonably low and unfair price,
to the detriment of plaintiff and the other public
stockholders of the Company.
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16. The Transaction, if consummated, will transfer
control of AmeriData and its valuable assets and businesses
from its present stockholders to GE. The individual
defendants are obligated in connection with any contemplated
transfer of such control of AmeriData to seek to maximize
shareholder value by such means as an auction, active market
check or other exploration of strategic alternatives under the
circumstances. The individual defendants have failed to
implement such procedures for the maximization of shareholder
value and are permitting the transfer of control of AmeriData
and its assets at a value which fails to reflect the long-term
value of its stock given the positive trends AmeriData has
shown, as described above. Defendants have not engaged in any
effort to so1icit competing bids for the Company or to explore
other strategic alternatives involving other potential
parties.
17. If consummated, the merger agreement will deny
Class members their right to share proportionately in the true
value of AmeriData's valuable assets, profitable businesses
and future growth.
18. The actions taken by the individual defendants
are in gross disregard of their fiduciary duties owed to
plaintiff and the other members of the Class.
19. AmeriData knowingly aided and abetted the
breaches of fiduciary duty committed by the individual
defendants complained of herein. Indeed, the Transaction
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between AmeriData and GE could not take place without the
knowing participation of AmeriData.
20. Plaintiff and the other members of the Class
will suffer irreparable injury unless the Transaction is
enjoined.
21. Plaintiff and the Class have no adequate remedy
at law.
WHEREFORE, plaintiff demands judgment and
preliminary and permanent relief, including injunctive relief,
in his favor and in favor of the Class and against defendants
as follows:
A. Declaring that this action is properly
maintainable as a class action, and certifying plaintiff as
class representative;
B. Enjoining the Transaction;
C. Ordering the individual defendants to carry out
their fiduciary duties to plaintiff and other members of the
Class by announcing their intention to:
(i) cooperate fully with any person or entity,
having a bona fide interest in proposing any transaction which
would maximize shareholder value, including, but not limited
to, a buyout or takeover of the Company;
(ii) undertake an appropriate evaluation of
AmeriData's worth as a merger/acquisition candidate;
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(iii) take all appropriate steps to enhance
AmeriData's value and attractiveness as a merger/acquisition
candidate;
(iv) take all appropriate steps to effectively
expose AmeriData to the market place to create an active
auction of AmeriData;
(v) act independently so that the interests of
AmeriData's public shareholders will be protected; and
(vi) adequately ensure that no conflicts of
interest exist between the individual defendants' own
interests and their fiduciary obligation to maximize
shareholder value or, if such conflicts exist, ensure that all
conflicts are resolved in the best interests of AmeriData's
public shareholders.
D. Awarding plaintiff and the Class rescissory
damages, if the Transaction is consummated before judgment,
and compensatory damage;
E. Awarding plaintiff the costs and disbursements
of this action, including reasonable attorneys' and experts'
fees; and
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F. Granting such other and further relief as this
Court may deem just and proper.
Dated: May 20, 1996
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By: /s/ Authorized Signature
-----------------------------
Mellon Bank Center, Suite 1401
919 North Market Street
Wilmington, Delaware 18801
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
GOODKIND LABATON RUDOFF & SUCHAROW
100 Park Avenue
New York, New York 10017
(212) 907-0700
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