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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
ABR INFORMATION SERVICES, INC.
(NAME OF SUBJECT COMPANY)
ABR INFORMATION SERVICES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
VOTING COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
00077R108
(CUSIP NUMBER OF CLASS OF SECURITIES)
JAMES P. O'DROBINAK
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
ABR INFORMATION SERVICES, INC.
34125 U.S. HIGHWAY 19 NORTH
PALM HARBOR, FL 34684-2141
(727) 785-2819
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE
AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
WITH COPIES TO:
FRANCIS J. AQUILA, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is ABR Information Services, Inc., a Florida
corporation (the "Company" or "ABR"), and the address of the principal executive
offices of the Company is 34125 U.S. Highway 19 North, Palm Harbor, Florida
34684-2141. The title of the class of equity securities to which this
Solicitation/Recommendation Statement on Schedule 14D-9 (this "Statement")
relates is the voting common stock, par value $0.01 per share, of the Company
(the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer by Spring Acquisition Corp.
("Purchaser"), a Florida corporation and a wholly owned subsidiary of Ceridian
Corporation, a Delaware corporation ("Parent"), to purchase all of the issued
and outstanding Shares at a price of $25.50 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 7, 1999 (the "Offer to Purchase"), and the related Letter of
Transmittal (together, constituting the "Offer").
The Offer is being made in accordance with the Agreement and Plan of Merger,
dated as of April 30, 1999 (the "Merger Agreement"), among the Company, Parent
and Purchaser. The Merger Agreement provides that, as soon as practicable
following the business day on which the last to be satisfied or waived of the
conditions to the Merger (as defined below) set forth in the Merger Agreement is
satisfied or waived, Purchaser will be merged with and into the Company (the
"Merger"). Following consummation of the Merger, the Company will continue as
the surviving corporation (the "Surviving Corporation") and will become a wholly
owned subsidiary of Parent. A copy of the Merger Agreement is filed as Exhibit
(c)(1) hereto and is incorporated herein by reference.
As set forth in the Tender Offer Statement on Schedule 14D-1 of Purchaser
enclosed herewith (the "Schedule 14D-1"), the principal executive offices of
each of Parent and Purchaser are located at 8100 34th Avenue South, Minneapolis,
Minnesota 55425-1640.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person filing
this Statement, are set forth in Item 1 above.
(b) Except as set forth in or incorporated by reference in this Item 3(b),
to the knowledge of the Company, as of the date hereof, there are no material
contracts, agreements, arrangements or understandings and actual or potential
conflicts of interest between the Company or its affiliates and (i) its
executive officers, directors or affiliates or (ii) the Purchaser, Parent or any
of their respective executive officers, directors or any of their respective
affiliates.
The Company has entered into certain employment and severance agreements,
incentive bonus plans, and savings plans, as described on pages 8 and 9 of the
Proxy Statement dated November 16, 1998 for the Company's Annual Meeting of
Stockholders, a copy of which is incorporated by reference to Exhibit (c)(2)
hereto and is incorporated herein by reference.
MERGER AGREEMENT
The Merger Agreement provides for the commencement of the Offer as soon as
reasonably practicable, and in any event within five business days, after the
first public announcement of the Merger Agreement. The obligations of Purchaser
to consummate the Offer and accept for payment or pay for any Shares tendered
pursuant to the Offer is subject only to the satisfaction of certain conditions,
including the satisfaction of the condition requiring that by the Expiration
Date (as defined in the Schedule 14D-1) a number of Shares which together with
any Shares owned by Parent, Purchaser and the Parent Companies (as defined in
the Merger Agreement), constitutue more than 50% of the outstanding Shares (on a
fully diluted basis) be tendered (the "Minimum Condition").
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The Merger Agreement provides that, subject to the terms and conditions of
the Merger Agreement at the Effective Time (as defined in the Merger Agreement),
the Merger will be consummated and the Company will become a wholly owned
subsidiary of Parent. At the Effective Time, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Parent,
Purchaser or any other direct or indirect subsidiary of Parent or Shares that
are owned by the Company or any of its subsidiaries and in each case not held on
behalf of third parties or Shares owned by Dissenting Stockholders (as defined
in the Merger Agreement)) will be canceled, extinguished and converted into the
right to receive, without interest, an amount in cash equal to $25.50 per Share
or such higher price per Share as shall have been paid in the Offer (the "Merger
Consideration").
The Merger Agreement requires the Company to take all necessary actions to
cause prior to the Effective Time each option to purchase Shares (each an
"Option") pursuant to the Stock Plans (as defined in the Merger Agreement) that
had not vested immediately prior to such time to become vested and fully
exercisable. Certain executive officers of the Company have waived all vesting
rights that they may have pursuant to the terms of the Merger Agreement with
respect to all Options beneficially owned by them and issued pursuant to the
Stock Plans. In addition, the Company is obligated to use its reasonable best
efforts to cause each then outstanding Option, whether vested or unvested, to be
canceled, with the holder thereof being entitled to receive, following the
Effective Time, an amount equal to the difference, if any, between $25.50 (or
such higher price per Share as shall have been paid in the Offer) and the
exercise price of such Option. Any Options that are not exercised in full or
surrendered for cancellation ("Remaining Options") will, at the Effective Time,
in accordance with the terms of the Stock Plan pursuant to which such Option was
issued, be deemed to constitute an option to acquire, on the same terms and
conditions as were applicable under such Remaining Option immediately prior to
the Effective Time, (A) a number of shares of Parent's common stock, par value
$.01 per share ("Parent Common Stock"), equal to the product (rounded up to the
nearest whole number) obtained by multiplying (x) the number of Shares the
holder of such Remaining Option would have been entitled to receive immediately
prior to the Effective Time had such holder exercised such Remaining Option in
full immediately prior to the Effective Time and (y) the quotient obtained by
dividing $25.50 (or such higher price as shall have been paid in the Offer) by
the average of the closing prices per share of Parent Common Stock on the New
York Stock Exchange Composite Transactions tape for the five trading days
immediately preceding the date of the Effective Time, as reported in the Wall
Street Journal, New York City edition, and (B) at a price per share of Parent
Common Stock (rounded down to the nearest whole cent) equal to (x) the aggregate
exercise price for the Shares otherwise purchasable pursuant to such Remaining
Option (assuming for such purposes that such Remaining Option was fully
exercisable at such time) divided by (y) the number of full shares of Parent
Common Stock deemed purchasable pursuant to such Remaining Option in accordance
with clause (A) above. Parent has agreed that at the Effective Time it will file
a registration statement on Form S-8, or, if unavailable, a registration
statement on Form S-3 (or any successor forms), or another appropriate form with
respect to the Parent Common Stock subject to Remaining Options, and has agreed
to use its best efforts to cause such registration statement to become and
remain effective, as well as comply with any applicable state securities or
"blue sky" laws, for so long as any Remaining Options remain outstanding. In
addition, prior to the Effective Time, the Board of Directors of Parent (the
"Parent Board") will use reasonable efforts to take all actions necessary to
ensure that the options to purchase Parent Common Stock (resulting from
Remaining Options) held by the officers and directors of the Company shall be
exempt for purposes of Rule 16b-3 under the Securities Exchange Act of 1934 (the
"Exchange Act").
The Merger Agreement contains representations and warranties by the Company
regarding, among other things, its organization, its capitalization, its
authority relative to the Merger Agreement, consents and approvals necessary for
the consummation of the Offer and the Merger, the Company's filings and reports
with and to the Securities and Exchange Commission (the "SEC"), the absence of
certain changes in its business, the absence of litigation, certain employee
matters, compliance with laws,
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inapplicability of takeover statutes, environmental matters, taxes, labor
matters, intellectual property, brokers and finders, year 2000 compliance, and
by each of Parent and Purchaser regarding, among other things, its organization,
its authority relative to the Merger Agreement and the Offer, and consents and
approvals necessary for the Offer and the Merger.
The obligations of the parties to effect the Merger are subject to the
satisfaction or waiver of the following conditions: (i) the Merger Agreement and
the plan of merger having been approved by the requisite vote of the holders of
the Shares; (ii) any waiting period applicable to the consummation of the Merger
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act")
Act having expired or been earlier terminated; (iii) no court or governmental
entity of competent jurisdiction having enacted, issued, promulgated, enforced
or entered any statute, law, ordinance, rule, regulation, judgment, decree,
injunction or other order ("Order") that is in effect and permanently enjoins or
otherwise prohibits consummation of the Merger; and (iv) Purchaser having
purchased Shares in the Offer.
The Company has agreed that, prior to the Effective Time, the Company and
its subsidiaries will each conduct its operations in the ordinary and usual
course, and to the extent consistent therewith, will each use their respective
best reasonable efforts to preserve its business organization intact and
maintain its existing relations and goodwill with customers, suppliers,
distributors, creditors, lessors, employees and business associates. The Company
further agreed that with respect to itself and its subsidiaries prior to the
Effective Time: (i) it would not (A) issue, sell, pledge, dispose of or encumber
any capital stock owned by it in any of its subsidiaries; (B) amend its articles
of incorporation or bylaws or the comparable governing instruments of any of its
subsidiaries; (C) split, combine or reclassify its outstanding shares of capital
stock; (D) declare, set aside or pay any dividend payable in cash, stock or
property in respect of any capital stock other than dividends from its direct or
indirect wholly owned subsidiaries to it or a wholly owned subsidiary; or (E)
repurchase, redeem or otherwise acquire any shares of its capital stock or any
securities convertible into or exchangeable or exercisable for any shares of its
capital stock, except in connection with the Stock Plans, or permit any of its
subsidiaries to purchase or otherwise acquire any shares of its capital stock or
any securities convertible into or exchangeable or exercisable for any shares of
its capital stock; (ii) neither it nor any of its subsidiaries shall (A) issue,
sell, pledge, dispose of or encumber any shares of, or securities convertible
into or exchangeable or exercisable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital stock of
any class or any voting debt or any other property or assets (other than Shares
issuable pursuant to options (whether or not vested) currently outstanding under
the Stock Plans); (B) other than in the ordinary and usual course of business,
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other property or assets (including capital stock of any of its
subsidiaries) or incur or modify any material indebtedness for borrowed money or
guarantee any such indebtedness; or (C) by any means, make any significant
acquisition of, or investment in, assets or stock (whether by way of merger,
consolidation, tender offer, share exchange or other activity); (iii) neither it
nor any of its subsidiaries shall terminate, establish, adopt, enter into, make
any new grants or awards under, amend or otherwise modify, any compensation and
benefit plans, or increase the salary, wage, bonus or other compensation of any
employees except for grants or awards or increases under existing compensation
and benefit plans occurring in the ordinary and usual course of business (which
shall include normal periodic performance reviews and related compensation and
benefit increases), annual reestablishment of compensation and benefit plans and
the provision of individual compensation or benefit plans and agreements for
newly hired or appointed officers and employees of the Company and its
subsidiaries or except for actions necessary to satisfy existing contractual
obligations under existing compensation and benefit plans or agreements; and
(iv) neither it nor any of its subsidiaries shall authorize or enter into an
agreement to do anything prohibited by the foregoing.
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The Company has also agreed that none of the Company, any of its
subsidiaries or their respective officers and directors shall, and that it shall
direct and cause its and its subsidiaries' employees, agents and other
representatives (including any investment banker, attorney or accountant
retained by it or any of its subsidiaries) not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate any inquiries or the making
of any proposal or offer with respect to a merger, tender offer, reorganization,
share exchange, consolidation or similar transaction involving, or any purchase
of all or substantially all of the assets or any equity securities of, it or any
of its subsidiaries (any such proposal or offer being an "Acquisition
Proposal"). The Company has further agreed that, except as otherwise provided in
the Merger Agreement, neither it nor any of its subsidiaries nor any of its or
its subsidiaries' officers and directors shall, and that it shall direct and
cause its and its subsidiaries' employees, agents and representatives not to,
directly or indirectly, engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal. Notwithstanding any of the
foregoing, the Company, its representatives and the Board of Directors of the
Company (the "Company Board") have the right to (i) comply with Rule 14e-2 under
the Exchange Act with regard to an Acquisition Proposal or otherwise comply with
the Exchange Act; (ii) provide information in response to a request therefor by
a person who has made an unsolicited Acquisition Proposal; (iii) engage in any
negotiations or discussions with any person who has made an unsolicited
Acquisition Proposal or otherwise facilitate any effort or attempt to implement
an Acquisition Proposal; and (iv) approve and recommend to its stockholders an
Acquisition Proposal if in the cases of clauses (ii), (iii) or (iv) above the
Company Board determines either (A) upon advice of outside legal counsel that
the failure to take such action would constitute a breach of the directors'
fiduciary duties under applicable law or (B) that such Acquisition Proposal
contains terms such that if an agreement relating to such Acquisition Proposal
were entered into, it would be, in the aggregate, more favorable to the Company
than the transactions contemplated by the Merger Agreement (any such more
favorable Acquisition Proposal being referred to as a "Superior Proposal"),
taking into account, at the sole discretion of the Company Board, any of the
matters described in Section 4.5 of the articles of incorporation of the
Company. The Company also has agreed to notify Parent within 48 hours of receipt
of an Acquisition Proposal that would be reasonably likely to result in a
Superior Proposal (including the terms thereof and the identity of the offeror)
and to keep Parent reasonably informed of the status of any such proposal.
Parent has agreed that all rights to indemnification now existing in favor
of the directors, officers, employees and agents of the Company as provided in
the articles of incorporation or bylaws of the Company or otherwise in effect on
the date of the Merger Agreement shall survive the Merger and continue in full
force and effect for a period of six years after the Effective Time. Parent has
also agreed to maintain in effect for a period of six years after the Effective
Time the current policies of directors' and officers' liability insurance
maintained by the Company (provided that Parent may substitute policies on
materially similar terms) so long as the annual premium for such insurance is
not in excess of 250% of the most recent annual premium paid (the "Current
Premium"). If, however, the current policies of directors' and officers'
liability insurance is terminated or canceled during such six-year period,
Parent has agreed to use its best efforts to obtain as much insurance as can be
obtained for the remainder of such period for a premium not in excess (on an
annualized basis) of 250% of the Current Premium and has agreed to indemnify the
directors and officers for any costs not covered by such insurance.
The Merger Agreement provides that, if required by applicable law, the
Company will promptly call a meeting of its stockholders for the purpose of
voting upon the Merger Agreement. In connection therewith, except as otherwise
expressly permitted by the Merger Agreement, the Company will, through the
Company Board, recommend to its stockholders approval of such matters and take
all lawful action to solicit such approval, including without limitation
preparing and filing a proxy statement or information statement under the
Exchange Act.
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The parties have also agreed to use their best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable on its part under the Merger Agreement and applicable laws
and regulations to consummate the Offer and make effective the Merger and the
other transactions contemplated by the Merger Agreement as soon as practicable.
Pursuant to the Merger Agreement, Parent has agreed to maintain for a period
of one year after the Effective Time for the benefit of the employees of the
Company, benefits under employee benefit plans that are no less favorable in the
aggregate than those provided under the Company's current benefit plans;
provided, however, that Parent will not be required to maintain any "change of
control" or similar plans with respect to any change of control occurring after
the Effective Time and excluding benefits provided pursuant to any plan covering
one or a select group of current or former employees. Each employee of the
Company as of the Effective Time will, for purposes of determining eligibility
and vesting under any benefit plan of Parent, be given credit for all service
with the Company prior to the Effective Time. In addition, Parent will cause to
be waived any pre-existing condition limitations under the benefit plans of
Parent and its subsidiaries in which the Company's and its subsidiaries'
employees participate and cause to be credited to any deductible or
out-of-pocket expense of Parent's benefit plans any deductibles or out-of-pocket
expenses incurred by such employees and their beneficiaries and dependents
during the portion of the calendar year prior to participation in the benefit
plans provided by Parent. Parent has also agreed to cause the Company to honor
all of the Company's existing employee benefit obligations to current and former
employees under all compensation and benefit plans, employee severance plans (or
policies) and employment or severance agreements previously disclosed to Parent.
The Merger Agreement provides that, if requested by Parent, the Company will
to the extent permissible, promptly following the purchase by Purchaser of
Shares pursuant to the Offer in accordance with the terms of the Merger
Agreement, take all actions necessary (including calling a special meeting of
the Company Board or the stockholders of the Company for this purpose) to cause
natural persons designated by Parent to become directors of the Company
(including mailing to the Company's stockholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder) so that
the total number of such natural persons equals that number of directors,
rounded up to the next whole number, which represents the product of the total
number of directors on the Company Board multiplied by the percentage that such
number of Shares so accepted for payment plus any Shares beneficially owned by
Parent or Purchaser bears to the total number of Shares outstanding at the time
of such acceptance for payment. At such time, the Company shall also cause
persons designated by Parent to constitute the same percentage (rounded up to
the next whole number) as is on the Company Board of (i) each committee of the
Company Board; (ii) each board of directors (or similar body) of each subsidiary
of the Company; and (iii) each committee (or similar body) of each such board.
To implement the foregoing, the Company has agreed to increase the size of the
Company Board or use its reasonable efforts to secure the resignation of
directors, or both, as is necessary to permit Parent's designees to be elected
to the Company Board; provided, however, that at all times prior to the
Effective Time there shall be at least three members of the Company Board who
are neither officers of Parent nor designees, stockholders or affiliates of
Parent ("Parent Insiders"). In the event that Parent's designees are elected to
the Company Board after the acceptance for payment of Shares pursuant to the
Offer and prior to the Effective Time, the affirmative vote of at least a
majority of the directors of the Company who are not Parent Insiders will be
required to (a) amend or terminate the Merger Agreement by the Company, (b)
exercise or waive any of the Company's rights, benefits or remedies under the
Merger Agreement, (c) extend the time for performance of Parent's and
Purchaser's respective obligations under the Merger Agreement, or (d) take any
other action by the Company Board under or in connection with the Merger
Agreement which would adversely affect the ability of the Company's stockholders
to receive the Merger Consideration.
Parent has agreed to cause the Company to use its best efforts to cause the
Shares to be removed from quotation on the Nasdaq National Market System and
deregistered under the Exchange Act as
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soon as practicable following the Effective Time. Unless required by the rules
of the National Association of Securities Dealers, Inc., subsequent to
Purchaser's payment for Shares and prior to the Effective Time, the Company has
agreed not to take any action to cause the Shares to be removed from quotation
on the Nasdaq National Market System and deregistered under the Exchange Act.
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether prior to or after approval by the stockholders of the Company of
the Merger Agreement: (a) by mutual written consent of the Board of Directors of
Parent (the "Parent Board"), the Board of Directors of Purchaser and the Company
Board; (b) by either the Company or Parent, if any Order permanently
restraining, enjoining or otherwise prohibiting consummation of the Merger shall
have become final and non-appealable after the parties have used their
respective best efforts to have such order removed, repealed or overturned; or
(c) by the Company if (i) the Company Board withdraws or adversely modifies its
adoption of the Merger Agreement, its recommendation of the Offer or its
recommendation that the Company's stockholders approve the Merger Agreement
(including, without limitation, taking no position in response to a tender offer
by a person other than Parent, Purchaser or any of their affiliates), (ii) there
has been a material breach by Parent or Purchaser of any material covenant or
agreement contained in the Merger Agreement that is not curable or, if curable,
is not cured prior to the earlier of (x) 30 days after written notice of such
breach is given by the Company to the party committing such breach or (y) two
business days prior to any date on which the Offer is scheduled to expire (so
long as at such time specified in clause (y) neither the Company nor Parent has
indicated that it intends to request (and has the right under the Merger
Agreement to have such request honored) that the Offer be extended in accordance
with the terms of the Merger Agreement), provided that Parent shall have been
given notice of such breach at least two business days prior to termination, or
(iii) Purchaser (or any of the Parent Companies) shall have (x) terminated the
Offer, or (y) failed to pay for Shares pursuant to the Offer on a timely basis
following the expiration of the Offer, if the Offer has not been extended in
accordance with the terms of the Merger Agreement.
The Merger Agreement may be terminated by Parent (a) at any time prior to
the Effective Time, by action of the Parent Board if due to an occurrence or
circumstance which resulted in a failure to satisfy any of the Offer Conditions
(as defined in the Merger Agreement), and Purchaser shall have terminated the
Offer in accordance with the terms of the Merger Agreement, (b) prior to the
purchase of Shares by Purchaser pursuant to the Offer if (i) the Company Board
withdraws or adversely modifies its adoption of the Merger Agreement, its
recommendation of the Offer or its recommendation that the Company's
stockholders approve the Merger Agreement (including, without limitation, taking
no position in response to a tender offer by a person other than Parent,
Purchaser or any of their affiliates), (ii) there has been a material breach by
the Company of any material covenant or agreement contained in the Merger
Agreement that is not curable or, if curable, is not cured prior to the earlier
of (x) 30 days after written notice of such breach is given by Parent to the
party committing such breach or (y) two business days prior to any date on which
the Offer is scheduled to expire; provided, however, that at such time specified
in this clause (y) neither the Company nor Parent has indicated that it intends
to request (and has the right under the Merger Agreement to have such request
honored) that the Offer be extended in accordance with the terms of the Merger
Agreement (provided that the Company shall have been given notice of such breach
at least two business days prior to termination), or (iii) the Minimum Condition
shall not have been satisfied by the expiration of the Offer (as it may have
been extended from time to time), and at or prior to such time any person (other
than Parent, Purchaser or any of their affiliates) shall have made a public
announcement with respect to a bona fide Acquisition Proposal that contemplates
a per Share consideration in excess of the Merger Consideration (a "Third Party
Offer").
In the event the Merger Agreement is terminated in accordance with the terms
of the Merger Agreement by Parent as a result of a material breach by the
Company of any material covenant or agreement contained in the Merger Agreement,
then the Company shall promptly, but in no event later than two days after the
date of such termination, pay Parent a termination fee of $29.4 million (the
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"Termination Fee"). In the event that (i) (a) an Acquisition Proposal shall have
been made to the Company or any person (other than Parent, Purchaser or any of
their affiliates) shall have publicly announced an intention to make an
Acquisition Proposal with respect to the Company and thereafter the Merger
Agreement is terminated (x) by the Company as a result of the termination of the
Offer by Purchaser or (y) by Parent due to an occurrence or circumstance which
resulted in a failure to satisfy any of the Offer Conditions under circumstances
that would have permitted Parent to terminate the Merger Agreement as a result
of a material breach by the Company or (b) the Merger Agreement is terminated
(x) by the Company or Parent as a result of the Company Board withdrawing or
adversely modifying its adoption of the Merger Agreement, its recommendation of
the Offer or its recommendation that the stockholders of the Company approve the
Merger Agreement or (y) by Parent as a result of the Minimum Condition not
having been satisfied by the Expiration Date and at or prior to such time the
public announcement of a Third Party Offer and (ii) (a) the person making the
Third Party Offer (the "Acquiring Party") has acquired, by purchase, merger,
consolidation, sale, assignment, lease, transfer or otherwise, in one
transaction or any related series of transactions within 12 months after a
termination of the Merger Agreement, a majority of the voting power of the
outstanding securities of the Company or (b) there has been consummated a
merger, consolidation or similar business combination between the Company or one
of its subsidiaries and the Acquiring Party within 12 months after the relevant
termination of the Merger Agreement, then the Company shall pay Parent the
Termination Fee.
The foregoing description of the terms and provisions of the Merger
Agreement is qualified in its entirety by reference to the text of the Merger
Agreement, which is filed as Exhibit (c)(1) to this Statement and is available
for inspection and copying at the principal office of the SEC or may be viewed
and printed from the SEC web site at HTTP://WWW.SEC.GOV.
KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENTS
On April 30, 1999, ABR entered into Key Executive Employment and Severance
Agreements (each a "KESA") with James E. MacDougald, Chairman of the Board,
President and Chief Executive Officer of the Company, James P. O'Drobinak,
Senior Vice President and Chief Financial Officer of the Company, Robert M.
Pariseau, a Senior Vice President of the Company, Dennis A. Sweeney, a Senior
Vice President of the Company, William R. Povilus, a Senior Vice President of
the Company, and Dorothy F. Watkins, a Senior Vice President of the Company
(each an "executive"). With respect to Messrs. MacDougald and O'Drobinak, the
KESA supersedes the KESA previously in effect between the executive and the
Company. Each KESA provides that if a Change in Control (as defined in the KESA)
of the Company occurs during the term of an executive's employment with the
Company or any of its subsidiaries, the Company shall (or shall cause the
executive's employer to) continue to employ the executive for a period (the
"Employment Period") commencing on the date of the Change in Control and ending
on the third anniversary of the Change in Control (or, if earlier, the last day
in the Company's fiscal year in which the executive attains age 65). The
consummation of the transactions contemplated by the Merger Agreement will
constitute a Change in Control for purposes of the KESAs.
Pursuant to the KESAs, each executive will, in the same capacities and
positions held by the executive at the time of the Change in Control, or in such
other capacities and positions as may be agreed to by the Company and the
executive in writing, devote the executive's best efforts and all of the
executive's business time, attention and skill to the business and affairs of
the executive's employer.
During the Employment Period, the executive will receive an annual base
salary in cash equivalent to not less than executive's annual base salary as in
effect immediately prior to the Change in Control, and an annual cash bonus in
an amount not less than the average cash bonuses earned (whether or not yet
paid) by the executive in respect of the three fiscal years immediately
preceding the Change in Control (or, if the executive has not been employed by
the Company for such three-fiscal-year period,
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in respect of such fiscal years during which the executive has been employed by
the Company). In addition, the executive shall receive fringe benefits at least
equal in value to those provided for the executive immediately prior to the
Change in Control, and shall be reimbursed, at such intervals and in accordance
with such standard policies as may be in effect immediately prior to the Change
in Control, for any and all monies advanced in connection with the executive's
employment for reasonable and necessary expenses incurred by the executive on
behalf of the Company, including travel expenses.
Pursuant to each KESA, during the Employment Period the executive shall be
included, to the extent eligible thereunder (which eligibility shall not be
conditioned on the executive's salary grade or on any other requirement which
excludes persons of comparable status to the executive unless such exclusion was
in effect for such plan or an equivalent plan immediately prior to the Change in
Control), in any and all plans providing benefits for salaried employees in
general, including but not limited to group life insurance, hospitalization,
medical, dental, pension and profit sharing plans; provided, that, in no event
will the aggregate level of benefits under such plans in which the executive is
included be less than the aggregate level of benefits under plans of the Company
of the type referred to above in which the executive was participating
immediately prior to the Change in Control. In addition, during the Employment
Period, the executive will annually be entitled to not less than the amount of
paid vacation and not fewer than the number of paid holidays to which the
executive was entitled annually immediately prior to the Change in Control or
such greater amount of paid vacation and number of paid holidays as may be made
available annually to other executives of the Company of comparable status and
position to the executive.
During the Employment Period, the executive will also be included in all
plans providing additional benefits to executives of the Company of comparable
status and position to the executive, including but not limited to deferred
compensation, split-dollar life insurance, supplemental retirement, stock
option, stock appreciation, stock bonus and similar or comparable plans;
provided, that, in no event shall the aggregate level of benefits under such
plans be less than the aggregate level of benefits under plans of the Company of
the type referred to above in which the executive was participating immediately
prior to the Change in Control. In addition, the executive shall be included in
a bonus plan of the Company which shall satisfy the standards described below
(such plan, the "Bonus Plan"). Bonuses under the Bonus Plan shall be payable
upon the achievement of such financial or other goals reasonably related to the
business of the Company and its subsidiaries as the Company shall establish, all
of which shall be attainable, prior to the end of the Employment Period, with
approximately the same degree of probability as the goals under the Company's
bonus plan or plans as in effect immediately prior to the Change in Control and
in view of the Company's existing and projected financial and business
circumstances applicable at the time. The amount of the bonus that the executive
is eligible to earn under the Bonus Plan shall be no less than the amount of the
executive's maximum award provided in such Bonus Plan, which shall be no less
than the maximum award the executive is eligible to receive under the Company's
existing bonus plan, and in the event the goals are not achieved such that the
entire maximum award is not payable, the Bonus Plan shall provide for a payment
of an amount equal to a portion of the maximum award reasonably related to that
portion of the goals which were achieved.
In the event an executive's employment is terminated during the Employment
Period by the Company for Cause (as defined in his or her KESA) or by the
executive other than for Good Reason (as defined in the KESA), the executive
shall be entitled to receive only the following benefits under the KESA (the
"Accrued Benefits"): (1) all base salary for the time period ending with the
executive's date of termination; (2) reimbursement for any and all reasonable
expenses incurred by the executive on behalf of the Company for the time period
ending with the date of termination; and (3) any and all compensation or other
cash earned through the date of termination and deferred at the election of the
executive or pursuant to any deferred compensation plan then in effect. Payment
shall be made promptly in accordance with the Company's prevailing practice with
respect to clauses (1) and (2) above or, with respect to clause (3), pursuant to
the terms of the benefit plan or practice establishing such benefits.
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In the event an executive's employment is terminated during the Employment
Period by the executive for Good Reason or by the Company other than by reason
of death, disability or Cause, the executive shall be entitled to receive the
following benefits under the KESA: (1) the Accrued Benefits; (2) a lump sum
payment of the bonus or incentive compensation otherwise payable to the
executive with respect to the year in which termination occurs under any bonus
or incentive compensation plan in which the executive is a participant; (3) all
other payments and benefits to which the executive (or in the event of the
executive's death, the executive's surviving spouse or other beneficiary) may be
entitled as compensatory fringe benefits or under the terms of any benefit plan
of the Company, excluding severance payments under any Company severance policy,
practice or agreement in effect immediately prior to the Change in Control; (4)
in lieu of further base salary for periods following the termination date, as
liquidated damages and additional severance pay and in consideration of the
executive's covenants regarding confidentiality and competition (described
below), the "Termination Payment" (described below); (5) at the expense of the
Company, outplacement services, on an individualized basis at a level of service
commensurate with the executive's status with the Company immediately prior to
the Change in Control (or, if higher, immediately prior to the termination of
the executive's employment), provided by a nationally recognized executive
placement firm selected by the Company; provided that the cost to the Company of
such services shall not exceed 30% of the executive's annual base salary in
effect immediately prior to the Change in Control; and (6) the Company shall
continue to provide, until the expiration of the Employment Period (assuming
that the executive had not incurred a termination of employment), executive (and
executive's dependents, if applicable) with the same level of medical, dental,
accident, disability and life insurance benefits upon substantially the same
terms and conditions (including contributions required by the executive for such
benefits) as existed immediately prior to the executive's date of termination
(or, if more favorable to the executive, as such benefits and terms and
conditions existed immediately prior to the Change in Control); provided, that,
if the executive cannot continue to participate in the Company plans providing
such benefits, the Company shall otherwise provide such benefits on the same
after-tax basis as if continued participation had been permitted.
Notwithstanding the foregoing, in the event the executive becomes reemployed
with another employer and becomes eligible to receive welfare benefits from such
employer, the welfare benefits described in clause (6) above shall be secondary
to such benefits during the period of the executive's eligibility, but only to
the extent that the Company reimburses the executive for any increased cost and
provides any additional benefits necessary to give the executive the benefits
provided hereunder.
The "Termination Payment" is an amount equal to (x) the product of (A) the
sum of (1) the executive's annual base salary, as in effect immediately prior to
the Change in Control, plus (2) the amount of the average annual bonus award
(determined on an annualized basis for any bonus award paid for a period of less
than one year and excluding any year for which the executive did not participate
in any bonus plan) paid to the executive with respect to the three complete
fiscal years (or portion thereof) preceding the date of termination (the sum of
the amounts set forth in this clause (A) is "Annual Cash Compensation"),
multiplied by (B) the number of years and fractional portion thereof remaining
in the Employment Period determined as of the date of termination; provided,
however, that such amount shall not be less than the greater of (i) the amount
of the executive's Annual Cash Compensation or (ii) the severance benefits to
which the executive would have been entitled under the Company's severance
policies and practices in effect immediately prior to the Change in Control;
plus (y) the value of the additional Company contributions that would have been
made during the period described by (B) above to the executive's account under
the Company's tax-qualified defined contribution plan (assuming for such purpose
that the executive had not terminated employment and would have earned annually
during such period the Annual Cash Compensation). The Termination Payment shall
be paid to the executive in a cash equivalent as soon as practicable but in no
event later than ten business days after the executive's date of termination.
Such lump sum payment shall not be reduced by any present value or similar
factor, and the executive shall not be required to mitigate the amount of
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the Termination Payment by securing other employment or otherwise, nor will such
Termination Payment be reduced by reason of the executive securing other
employment or for any reason. The Termination Payment shall be in lieu of, and
acceptance by the executive of the Termination Payment shall constitute the
executive's release of any rights of the executive to, any other severance
payments under any Company severance policy, practice or agreement of the
Company. If each executive's employment was terminated on the date of the Change
of Control under circumstances entitling such executive to the Termination
Payment, and assuming for purposes of calculating the Termination Payment that
(i) the applicable bonus amount was equal to the bonuses paid for the Company's
1998 fiscal year and (ii) current salary levels, the Termination Payments
payable under the KESAs would be approximately equal to $1,020,000 for Mr.
MacDougald, $825,000 for Mr. O'Drobinak, $645,000 for Mr. Pariseau, $615,000 for
Mr. Povilus, $564,000 for Mr. Sweeney and $480,000 for Ms. Watkins.
In the event it shall be determined that any payment, award, benefit or
distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a Change in Control to or for the benefit of the executive
(whether pursuant to the terms of a KESA or otherwise, but determined without
regard to any Gross-Up Payment (as defined below)) (the "Payments") would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended, or any interest or penalties are incurred by the executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then the Company shall pay to the executive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the executive of all
taxes (including any Excise Tax) imposed upon the Gross-Up Payment, the
executive retains an amount of the Gross-Up Payment equal to the sum of (x) the
Excise Tax imposed upon the Payments and (y) the product of any deductions
disallowed because of the inclusion of the Gross-up Payment in the executive's
adjusted gross income and the highest applicable marginal rate of federal income
taxation for the calendar year in which the Gross-up Payment is to be made. In
addition, the Company shall bear the cost of up to $25,000 in the aggregate of
reasonable fees and expenses of consultants and/or legal, tax or accounting
advisors actually incurred by the executive to advise the executive as to
matters relating to the Termination Payment, the Excise Tax, the Gross-Up
Payment and all related determinations.
Pursuant to each KESA, the executive agrees that, in the event of any
termination of employment where the executive is entitled to the Termination
Payment, the executive shall not, for a period expiring one year after the
executive's date of termination, without the prior written approval of the
Company Board, participate in the management of, be employed by or own any
business enterprise the principal office of which is located within the
Southeastern United States that engages in substantial competition with the
Company or any of its subsidiaries, where such enterprise's revenues from such
competitive activities amounted to 50% or more of such enterprise's net revenues
and sales for its most recently completed fiscal year; provided, however, that
nothing shall prohibit the executive from owning stock or other securities
amounting to less than five (5) percent of the outstanding capital stock of any
entity; and provided, further, that if for any reason the Company does not pay
the executive the amounts and make available to the executive the benefits
provided in and required by this Agreement, then the executive will have no
further obligation to the Company in respect of such covenant not to compete. In
addition, during and following the executive's employment by the Company, the
executive shall hold in confidence and not directly or indirectly disclose or
use or copy or make lists of any confidential information or proprietary data of
the Company (including that of the executive's employer), except to the extent
authorized in writing by the Company Board or required by any court or
administrative agency, other than to an employee of the Company or a person to
whom disclosure is reasonably necessary or appropriate in connection with the
performance by the executive of duties as an executive officer of the Company.
The form of KESA is attached to this Statement as Exhibit (c)(3) and is
incorporated herein by reference. The foregoing description is qualified in its
entirety by reference to the form of KESA.
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AMENDMENT TO EMPLOYMENT AGREEMENT
On April 30, 1999, the Company and Mr. MacDougald amended Mr. MacDougald's
employment agreement with the Company (the "MacDougald Amendment"). In
recognition of Mr. MacDougald's prior contributions and service to the Company,
and notwithstanding any provision to the contrary in any agreement between Mr.
MacDougald and the Company, the Company shall continue, following Mr.
MacDougald's termination of employment, to keep in full force and effect (or
otherwise provide) for the remainder of Mr. MacDougald's lifetime, all policies
of medical insurance with respect to Mr. MacDougald and his dependents, with the
same level of coverage, upon the same terms and otherwise to the same extent as
such policies shall have been in effect immediately prior Mr. MacDougald's date
of termination, and the Company and Mr. MacDougald shall share the costs of the
continuation of such insurance coverage in the same proportion as such costs
were shared immediately prior to Mr. MacDougald's date of termination. The
MacDougald Amendment is attached to this Statement as Exhibit (c)(4) and is
incorporated herein by reference. The foregoing description is qualified in its
entirety by reference to the MacDougald Amendment.
AMENDMENT TO INCENTIVE BONUS PLAN
The Company has amended its annual incentive bonus plan (the "Incentive
Amendment") to provide that upon an occurrence of a Change in Control (as
defined in the Company's 1997 Stock Option Plan), each participant in the bonus
plan shall be entitled to receive a payment in respect of the calendar year in
which the Change in Control occurs in an amount equal to the product of (1) such
particpant's target bonus for such calendar year under the bonus plan and (2)
the fraction obtained by dividing (x) the number of days in the calendar year
that have elapsed through the date on which the Change in Control occurs by (y)
365. Such amount shall be payable to the participants as soon as practicable,
but in no event later than three days following the date on which the Change in
Control occurs. The consummation of the transactions contemplated by the Merger
Agreement will constitute a Change in Control as defined in the Company's 1997
Stock Option Plan. The text of the Incentive Amendment is attached to this
Statement as Exhibit (c)(5) and is incorporated herein by reference. The
foregoing description is qualified in its entirety by reference to the text of
the Incentive Amendment.
RETENTION BONUS PLAN
On April 30, 1999, the Company Board adopted the ABR Information Services,
Inc. Retention Bonus Plan (the "Retention Bonus Plan") for the benefit of
certain key employees of the Company to secure the continued services,
dedication and objectivity of such employees in expectation of and following a
Change in Control (as defined in the Retention Bonus Plan). Pursuant to the
Retention Bonus Plan, in the event the Company enters into an agreement, the
consummation of the transactions contemplated thereby which would result in a
Change in Control, certain key employees designated by the Company who are
continuously employed during the period (the "Benefit Period") commencing on the
date such agreement is entered into and ending on a date specified by the
Company shall be entitled to receive a special retention payment in an amount
determined by the Company. Each such employee shall also be entitled to the
special retention payment in the event his or her employment is terminated by
the Company other than for Cause (as defined in the Retention Bonus Plan). The
special retention payment shall be payable in a single lump sum cash payment no
later than 10 days following the expiration of the Benefit Period (or, in the
event such employee's employment is terminated by the Company without Cause
prior to the expiration of the Benefit Period, no later than 10 days following
such employee's date of termination). The aggregate maximum amount payable to
all participants under the Retention Bonus Plan is $1,000,000. The Retention
Bonus Plan is attached hereto as Exhibit (c)(6) and is incorporated herein by
reference. The foregoing description is qualified in its entirety by reference
to the Retention Bonus Plan.
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CONFIDENTIALITY AGREEMENT
On February 4, 1999, prior to receiving a copy of the Company's confidential
memorandum and confidential information relating to the Company. Parent and
Goldman Sachs, on behalf of the Company entered into a confidentiality agreement
(the "Confidentiality Agreement"). Pursuant to the Confidentiality Agreement,
Parent agreed that for five years it would treat certain information furnished
to it by the Company as confidential and further agreed that it would not and it
would cause certain representatives of Parent not to propose to the Company or
any other person any transaction between Parent and the Company and/or its
security holders or involving any of its securities or security holders unless
the Company had requested in writing that Parent make such a proposal, and that
Parent would not (i) acquire, or assist, advise or encourage any other persons
in acquiring, directly or indirectly, any of the Company's securities,
businesses or assets (including rights or options to acquire such ownership) for
a period of three years from February 4, 1999 unless the Company has consented
in advance in writing to such acquisition, (ii) seek or propose to influence,
advise, change or control the management, the Company Board, governing
instruments or policies or affairs of the Company during such three-year period
or (iii) make any public disclosure, or take any action which could require the
Company to make any public disclosure (under any law, rule or regulation or rule
or regulation of a national securities exchange), with respect to any of the
matters set forth in the Confidentiality Agreement, or enter into any agreement
related to any of the foregoing. A copy of the Confidentiality Agreement is
attached hereto as Exhibit (c)(7) and is incorporated herein by reference and
the foregoing description is qualified in its entirety by reference to the
Confidentiality Agreement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) Recommendation of the Board of Directors; Background of the Transaction
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Company Board, at a meeting held on April 30, 1999, determined
unanimously that the Offer and the Merger are fair to, and in the best interests
of, the Company and its stockholders and recommends that stockholders of the
Company accept the Offer and tender their Shares to Purchaser pursuant to the
Offer. A letter to the stockholders of the Company communicating the
recommendation of the Company Board is attached hereto as Exhibit (a)(2) and is
incorporated herein by reference.
BACKGROUND OF THE TRANSACTION
Throughout 1998, the Company received inquiries from companies, including
Parent, seeking to enter into strategic transactions with the Company. As a
result of those inquiries management of the Company believed that it would be in
the best interests of the Company to retain experienced financial advisors. The
Company determined to request that Goldman, Sachs & Co. ("Goldman Sachs") act as
its financial advisor. The Company and Goldman Sachs entered into an engagement
letter dated July 31, 1998 (the "Engagement Letter") pursuant to which Goldman
Sachs agreed to act as financial advisor to assist the Company in its analysis
and consideration of various financial alternatives, including investments,
acquisitions, divestitures, financial restructuring, strategic alliances, public
or private financing, the sale of all or a portion of the Company, or other
operations involving the Company.
During late January and throughout February 1999, Goldman Sachs contacted
approximately 20 different companies to inquire as to the interests of those
companies in engaging in a strategic transaction with the Company. Following
those initial contacts by Goldman Sachs, six companies requested a confidential
memorandum and entered into confidentiality agreements with respect to the
Company. In connection with the distribution of the confidential memorandum,
Goldman Sachs requested that initial indications of interests be submitted on
February 26, 1999. Parent and one other potential bidder (the "Other Bidder")
provided initial indications of interests on February 26, 1999.
On March 1, 1999, the Company Board met with senior management of the
Company and the Company's financial and legal advisors and discussed the initial
indications of interest provided by Parent and the Other Bidder.
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Beginning on March 16, 1999, Parent and the Other Bidder were permitted to
conduct a due diligence investigation of the Company and began receiving
management presentations from senior management of the Company. Management
presentations and due diligence reviews continued with these two companies
throughout March.
On March 26, 1999, Mr. MacDougald, Lawrence Perlman, Chairman and Chief
Executive Officer of Parent and Ronald L. Turner, President and Chief Operating
Officer of Parent met, at Mr. Turner's request, to discuss a potential
transaction between the Company and Parent. At that meeting, Messrs. Perlman and
Turner suggested that Parent might submit a proposal that provided for a
structure that was different than the structure contemplated by the form of
merger agreement.
In early April 1999 a form of agreement and plan of merger contemplating a
stock-for-stock transaction (reflecting the Company's and Goldman Sachs' belief
that the bidders would prefer to consummate a stock transaction), in which the
Shares would be converted into the right to receive securities of the
counterparty, was provided to Parent and the Other Bidder together with an
instructions letter from Goldman Sachs requiring definitive offers with respect
to a transaction involving the Company by April 16, 1999, including any proposed
revisions to the form of merger agreement. After the form of agreement was
distributed, Mr. Turner again requested a meeting with Mr. MacDougald at which
time he and Mr. Perlman reiterated that the proposed structure to be suggested
by Parent would be different from the structure set forth in the form of merger
agreement.
On April 14, 1999, Mr. MacDougald met with and had discussions with
representatives of the Other Bidder.
On April 16, 1999, Parent provided to the Company a proposal for a strategic
alliance between Parent and the Company which would not involve the payment of
any consideration for Shares. The Other Bidder provided a proposal to the
Company for a merger in which each Share would be converted into a fixed number
of shares of the Other Bidder's stock, subject to "collars" providing that the
value of the stock to be received by stockholders of the Company at the closing
of that merger would not be greater or less than certain specified amounts.
Between April 16, 1999 and April 19, 1999, Mr. MacDougald and Mr. O'Drobinak
discussed with the Company's legal and financial advisors the terms of each of
the proposals received.
On April 20, 1999, the Company Board met in Palm Harbor, Florida with the
Company's legal and financial advisors to discuss each of the proposals that had
been received by the Company on April 16th. Following that meeting, the Company
Board instructed Goldman Sachs to inform Parent that Parent's alliance proposal
had been rejected and that Parent would have to provide a proposal contemplating
a business combination with the Company in which consideration would be paid for
Shares by no later than April 23rd. The Company Board also instructed
representatives of Goldman Sachs to inform the Other Bidder that the issues
raised by its proposal, including the value of the consideration offered, the
range of the collars, the Company's ability to terminate its obligation with
respect to that transaction if a more attractive proposal was received by the
Company, certain of the conditions to consummating the transaction, as well as
the conditional nature of the proposal submitted, were problematic for the
Company. The Other Bidder was informed that it needed to consider those matters
and would be expected to reply to the Company with a revised offer by no later
than April 26th.
During discussions with the Other Bidder, representatives of the Other
Bidder clarified with representatives of Goldman Sachs its request with respect
to the Company's year 2000 preparedness. On April 22nd and April 23rd,
representatives of the Company and the Other Bidder had comprehensive
discussions relating to the steps taken by the Company with respect to year 2000
preparedness.
On April 23, 1999, Parent submitted a proposal to the Company, subject to
approval from the Parent Board, contemplating an all cash offer for all of the
outstanding Shares at a price of $24.00 per Share. Representatives of Parent
indicated that this proposal might be conditioned upon obtaining financing.
Representatives of Parent also indicated certain limited additional due
diligence would be required. After discussing the proposal with representatives
of the Company, at the direction of the
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Company, representatives of Goldman Sachs contacted representatives of Parent
and requested that Parent provide its comments on the proposed merger agreement
to permit the Company to review any additional issues inherent in Parent's
proposal. At such time, representatives of Goldman Sachs discussed with
representatives of Parent whether Parent expected that the transaction would be
subject to a financing condition and suggested based on suggestions made by the
Company that such a condition would not be not be viewed favorably by the
Company. Representatives of Goldman Sachs requested that Parent's revised merger
agreement be provided to the Company by April 26th.
On April 26th, Parent contacted the Company and provided suggested revisions
to the proposed merger agreement. Parent indicated that it would not condition
its transaction on obtaining financing, but that it wanted a "break-up" option
to purchase 19.9% of the Shares from the Company which would be exercisable if
the transaction was terminated for certain reasons (which option, the Company
believed, would have the effect of making it difficult for other companies that
might want to acquire the Company following the execution of the Merger
Agreement in a "pooling of interests" transaction). The suggested revisions also
indicated other issues which the parties would discuss.
On April 27th, the Other Bidder submitted a revised proposal with a
decreased exchange ratio, but increased nominal value as a result of increases
in the per share market price of the Other Bidder's stock. This revised proposal
also increased both the upper and lower ranges of the collar. The proposal was
conditioned upon successful negotiation of a merger agreement, approval by the
Other Bidder's board of directors (which would not be sought until the Company
executed an exclusivity agreement with the Other Bidder), specified revisions to
agreements with certain members of management of the Company, assumption of
control by the Other Bidder during the period prior to the closing of a merger
with the Other Bidder over portions of the Company's year 2000 preparedness
process and suggestions that additional due diligence might be required. After
discussion with the Company, representatives of Goldman Sachs informed
representatives of the Other Bidder that the consideration offered by the Other
Bidder needed to be increased and that the year 2000 proposal was unacceptable
to the Company. From time to time on April 27th, Mr. MacDougald discussed with
individual members of the Company Board and the Company Board as a group the two
proposals as presented to the Company.
Thereafter representatives of Goldman Sachs contacted representatives of
both Parent and the Other Bidder to discuss increasing the considerations being
offered. Late in the evening on April 27th in a conversation between Mr. Turner
and Mr. MacDougald, Mr. Turner indicated that Parent would be willing to concede
most of the contractual points raised by the Company in response to Parent's
comments to the merger agreement and would be willing to pay $25.00 per Share in
cash for all of the Shares, but, since it was aware there were other
participants in the process it desired to conclude negotiations quickly. Mr.
Turner advised Mr. MacDougald that there was going to be a meeting of the Parent
Board in the afternoon of April 29, 1999. Mr. Turner and other representatives
of Parent came to Palm Harbor, Florida on April 28th to conduct additional due
diligence on the Company.
On April 28, 1999, the Company Board and representatives of the Company
discussed by telephone the various proposals available. The Company Board
determined that the Company should provide Parent with a revised draft merger
agreement early in the morning on April 29th following discussions between
representatives of Parent and representatives of Goldman Sachs. The Company
Board instructed Goldman Sachs to inform Parent that at that time the Company
would consider entering into the transaction with Parent on the terms that had
been discussed, including the proposed consideration, but that, because other
matters and discussions were continuing, further discussions relating to the
consideration to be paid for Shares might be necessary. The Company determined
to take such actions if discussions between representatives of Goldman Sachs and
the Other Bidder did not result in the Other Bidder increasing the consideration
proposed by it, and instructed Goldman Sachs to contact the Other Bidder to
determine whether it would increase the value of its proposed consideration. In
subsequent discussions with representatives of Goldman Sachs, the Other Bidder
indicated that it would consider raising the value of its consideration to
$25.50 per Share and submitting a revised proposal in writing the following day,
but that any such revised proposal would constitute its best and highest
proposal.
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On the afternoon of April 29th, shortly before the meeting of the Parent
Board to discuss the proposed transaction, the Other Bidder submitted a written
proposal to the Company contemplating a "stock-for-stock" merger in which each
Share would be converted into stock of the Other Bidder with a value equal to
$25.50 per Share, subject to a right for the Other Bidder to terminate the
agreement if its stock price declined by a specified percentage. The revised
proposal from the Other Bidder also reiterated that such transaction would not
be presented to its board of directors until a merger agreement had been fully
negotiated, which would not occur until an exclusivity arrangement had been
entered into between the Other Bidder and the Company. The proposal further
noted that it was subject to confirmation of various due diligence matters,
including matters relating to contracts between the Company and its clients,
intellectual property ownership and clarification of certain other items. As a
result of the receipt of this proposal, Mr. MacDougald called Mr. Turner
immediately prior to the meeting of the Parent Board to inform Mr. Turner that
he did not believe that Parent's proposal would receive the support of the
Company Board unless the price per Share was increased.
During the afternoon and early evening of April 29th, the Parent Board met
to discuss the proposed transaction. Following the meeting of the Parent Board,
representatives of Parent indicated that the Company would be provided with a
proposed merger agreement signed by Parent and that if the Company did not
execute the agreement by 1:00 a.m. (eastern time) on April 30th then Parent's
offer would expire and it would terminate its discussions with the Company.
Parent later reiterated that it was unwilling to raise its offered consideration
to an amount in excess of $25.00 per Share. The Company Board met several times
by telephone late in the evening of April 29th (the last of such meetings
concluding early in the morning of April 30th) to discuss the proposal from
Parent and the proposal from the Other Bidder. The Company Board noted that
while the value of the consideration offered by the Other Bidder was greater
than the $25.00 in cash being offered by Parent, the Other Bidder's transaction
was subject to significantly greater uncertainty both as a result of the
suggested revisions to the proposed merger agreement and the additional
information requested by the Other Bidder. Given the competitive nature of the
bidding process, the Company was reluctant to provide either bidder with an
exclusive negotiating arrangement, a condition precedent to the Other Bidder's
obtaining approval of its board of directors for its offer. After discussions
among the Company Board, senior management of the Company and legal and
financial advisors of the Company, the Company Board determined that it was not
prepared to enter into a transaction with Parent on the terms proposed and that
the Other Bidder should be contacted in an effort to discuss the matters noted
in that company's April 29th proposal.
Following the completion of the last of the meetings of the Company Board,
Mr. MacDougald called Mr. Turner to inform Mr. Turner that the Company could not
proceed on the terms proposed by Parent. It was, however, indicated that certain
officers would be willing to forego vesting of the Options owned by them at the
Effective Time if Parent increased the value of its offer. Mr. Turner indicated
that he was not prepared to increase the per Share price offered by Parent. Mr.
MacDougald and Mr. Turner agreed, however, that it would be productive if their
respective legal counsels began discussing the issues raised by Parent's
suggested revisions to the proposed merger agreement.
Legal counsel to Parent and the Company negotiated the terms of the Merger
Agreement throughout the early morning hours of April 30th and came to agreement
on substantially all of the issues (other than the consideration offered and
certain employee issues).
On the morning of April 30th, representatives of the Company, Goldman Sachs
and the Company's legal counsel discussed by telephone the due diligence matters
raised by the April 29th proposal from the Other Bidder with representatives of
the Other Bidder and its legal counsel. The discussions focused on the provision
of information to the Other Bidder with the Other Bidder suggesting that it
would be willing to have representatives go to the Company's offices the next
day to begin reviewing some of the documentary information that would be
required to be produced in connection with its informational requests. While
representatives of the Company and the Other Bidder were engaged in
15
<PAGE>
such discussions, representatives of Bear, Stearns & Co. Inc., financial advisor
to Parent telephoned representatives of Goldman Sachs to indicate that Parent
would be willing to increase its offer to $25.50 per Share in cash, subject to
successful negotiation of a merger agreement, but that it was imperative to
Parent that the Merger Agreement be entered into that day. Mr. MacDougald and
Mr. Turner then discussed the other remaining issues relating to the transaction
which resulted in a proposal by Parent that Mr. MacDougald determined was
sufficient to recommend to the Company Board.
The Company convened a meeting of the Company Board later that day to
consider and discuss the terms of the proposed merger agreement, including the
consideration to be offered to its stockholders in the transaction and the
proposal submitted by the Other Bidder. Mr. MacDougald discussed with the
Company Board the proposal from Parent, and Goldman Sachs and the Company's
legal counsel also discussed the transaction with the Company Board.
Representatives of Goldman Sachs also made a presentation relating to its
financial analyses of the proposed transaction with Parent and the most recent
proposal of the Other Bidder and indicated that if the Merger Agreement was
entered into on terms substantially similar to the terms previously reviewed by
Goldman Sachs, that Goldman Sachs would be able to deliver an opinion to the
effect that, as of April 30, 1999 and based upon and subject to specified
considerations and limitations, the $25.50 per Share to be received by the
holders of Shares pursuant to the Offer and the Merger was fair to the
stockholders of the Company from a financial point of view (Goldman Sachs
subsequently provided such opinion in writing dated April 30, 1999). The Company
Board then authorized management to complete negotiation of and enter into an
acceptable merger agreement on terms substantially similar to those presented to
the Company Board.
Early in the evening on April 30th the parties entered into the Merger
Agreement.
(b) Reasons for the Recommendation
In reaching the recommendation referred to in Item 4(a), the Company Board
took into account numerous factors, including but not limited to the following:
1. The familiarity of the Company Board with the financial condition,
results of operations, competitive position, business and prospects of the
Company, as reflected in the Company's historical and projected financial
information, current economic and market conditions and the nature of the
industry in which it operates.
2. The presentation of Goldman Sachs at the April 30, 1999 meeting of
the Company Board and the opinion of Goldman Sachs dated April 30, 1999 (the
"Opinion") to the effect that, as of the date of such Opinion and based upon
and subject to the considerations and limitations set forth therein, the
$25.50 in cash per Share to be received by the holders of Shares in the
Offer and the Merger was fair to such holders from a financial point of
view. The full text of the Opinion, setting forth the procedures followed,
the matters considered, the scope of the review undertaken and the
assumptions made by Goldman Sachs in arriving at the Opinion, is attached
hereto as Exhibit (a)(1) and is incorporated herein by reference. Holders of
Shares are urged to, and should, read such Opinion carefully and in its
entirety. The Opinion was provided for the information and assistance of the
Company Board in connection with its consideration of the Offer and the
Merger. The Opinion addresses only the fairness from a financial point of
view of the consideration to be received by the stockholders of the Company
in the Offer and the Merger and does not constitute a recommendation to any
stockholder as to whether to tender shares in the Offer or to vote in favor
of the approval of the Merger Agreement.
3. The historical market prices of, and recent trading activity in, the
Shares, particularly the fact that the Offer and the Merger will enable the
stockholders of the Company to quickly realize a premium of approximately
46% over the closing price of the Shares on the last trading day prior
16
<PAGE>
to the public announcement of the Merger Agreement on May 3, 1999 and a
premium of approximately 61.8% over the average of the closing prices of the
Shares during the thirty days preceding the date of the Merger Agreement.
4. The financial and other terms and conditions of the Offer, the Merger
and the Merger Agreement including, the terms and conditions of the Merger
Agreement, including (i) the provision permitting the Company Board to amend
or withdraw its recommendation made above, if it determines that it is
consistent with its fiduciary duties to do so, (ii) the provision permitting
the Company Board to terminate the Merger Agreement if it withdraws or
adversely modifies its recommendation referred to above, (iii) the provision
which, while prohibiting the Company and its officers, directors and agents
from directly or indirectly initiating, soliciting, encouraging or otherwise
facilitating any Acquisition Proposal, permits the Company and its officers,
directors and agents, to the extent that the Company Board had determined
that it would be a breach of its fiduciary duties as advised by outside
legal counsel to not do so or if the Company Board determines that an
Acquisition Proposal contains terms which would result in a Superior
Proposal, to engage in negotiations or discussions concerning, or provide
any information, to any person relating to an Acquisition Proposal, and (iv)
the amount of the Termination Fee and the circumstances under which it would
become payable.
5. The fact that the obligations of Parent and Purchaser to consummate
the Offer and the Merger pursuant to the terms of the Merger Agreement are
not conditioned upon obtaining financing and that Parent and Purchaser have
represented in the Merger Agreement that they will have the funds necessary
to consummate the Offer and the Merger.
6. The fact that an alternative to the Offer and the Merger was a stock
merger which would be expected to require a much greater amount of time than
the Offer and the Merger.
7. The fact that (i) the proposed ability to terminate the proposed
stock merger of the Other Bidder if the stock price of the Other Bidder
declined by a certain percentage created a risk that the stock merger would
not be consummated at all simply as a result of a decline in the stock
markets generally and (ii) the other conditions to the stock transaction
proposed by the Other Bidder made it a more difficult transaction to
consummate.
8. The Company's prospects if it were to remain independent, including
the risks of competing against companies which have far greater resources,
distribution capacity, product offerings and market reach than the Company.
9. Parent's acceptance of the Company's rejection of an option to
purchase 19.9% of the Shares, which the Company believed would adversely
impact the ability of another company to engage in a pooling of interests
transaction with the Company.
10. Parent's insistence of entering into an agreement on an expeditious
basis and the uncertainty as to whether the Other Bidder's proposal would
have resulted in a transaction on terms that would have been acceptable to
the Company Board.
The Company Board did not assign relative weights to the factors or
determine that any factor was of particular importance. Rather, the Company
Board viewed their position and recommendation as being based on the totality of
the information presented to and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to the Engagement Letter, the Company engaged Goldman Sachs as the
Company's financial advisor to assist the Company in its analysis and
consideration of various financial alternatives.
17
<PAGE>
Pursuant to the terms of the Engagement Letter, the Company paid Goldman
Sachs a fee of $200,000 on the date of the Engagement Letter and will pay
Goldman Sachs a fee equal to approximately $7,300,000 upon completion of the
Offer. The Company has also agreed to reimburse Goldman Sachs for its reasonable
expenses, including the fees and disbursements of Goldman Sachs's attorneys,
plus any sales, use or similar taxes in connection with Goldman Sachs's
engagement, and to indemnify Goldman Sachs against certain liabilities,
including liabilities under the U.S. federal securities laws.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. In the ordinary course
of business, Goldman Sachs and its affiliates may actively trade or hold the
securities of the Company and Parent for their own accounts or for the accounts
of customers and, accordingly, may at any time hold a long or short position in
such securities.
Except as disclosed herein, 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) On March 10, 1999, Mr. MacDougald purchased 11,446 Shares pursuant to
previously granted options to purchase Shares at a price of $4.09 per Share. On
March 10, 1999, Suzanne M. MacDougald purchased 3,916 Shares pursuant to
previously granted options to purchase Shares at a price of $4.09 per Share.
Except as set forth in this Item 6, no transactions in the Shares have been
effected during the past 60 days by the Company or, to the best of the Company's
knowledge, by any executive officer, director, affiliate or subsidiary of the
Company.
(b) To the best of the Company's knowledge, except for Shares the sale of
which may trigger liability for the holder(s) under Section 16(b) of the
Exchange Act each executive officer, director and affiliate of the Company
currently intends to tender all Shares to the Purchaser over which he or she has
sole dispositive power as of the expiration date of the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Statement and the Merger Agreement, no
negotiation is being undertaken or is underway by the Company in response to the
Offer which relates to or would result in (i) an extraordinary transaction, such
as a merger or reorganization, involving the Company or any 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.
(b) Except as set forth in this Statement and the Merger Agreement, there
are no transactions, resolutions of the Company Board, agreements in principle,
or signed contracts in response to the Offer that relate to or would result in
one or more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
ANTITRUST
Under the HSR Act, and the rules that have been promulgated thereunder by
the Federal Trade Commission (the "FTC"), certain acquisition transactions may
not be consummated unless certain information has been furnished to the
Antitrust Division of the United States Department of Justice
18
<PAGE>
(the "Antitrust Division") and the FTC and certain waiting period requirements
have been satisfied. The acquisition of Shares by Purchaser pursuant to the
Offer is subject to such requirements.
Pursuant to the requirements of the HSR Act, Parent and the Company intend
to file the required Notification and Report forms (the "Forms") with the
Antitrust Division and the FTC as soon as reasonably practicable. The statutory
waiting period applicable to the purchase of Shares pursuant to the Offer is to
expire at 11:59 P.M., New York City time, on the fifteenth day after Parent has
filed its Form. However, prior to such date, the Antitrust Division or the FTC
may extend the waiting periods by requesting additional information or
documentary material relevant to the acquisition. If such a request is made, the
waiting period will be extended until 11:59 P.M., New York City time on the
tenth day after substantial compliance by the Parent with such request.
Thereafter, such waiting periods can be extended only by court order. A request
is expected to be made pursuant to the HSR Act for early termination of the
applicable waiting period. There can be no assurance, however, that the waiting
period will be terminated early.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions. At any time before or after the consummation
of any such transaction, the Antitrust Division or the FTC could,
notwithstanding termination of the waiting period, take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or
seeking divestiture of the Shares so acquired or divestiture of substantial
assets of the Purchaser or the Company. Private parties may also bear legal
actions under the antitrust laws. 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,
what the result will be.
STATE TAKEOVER LAWS
The Company is incorporated under the laws of the State of Florida. The
Florida Business Corporation Act (the "FBCA") contains certain provisions
relating to "affiliated transactions" which regulate, among other things,
certain business combinations, including mergers and consolidations, involving a
Florida corporation with any person who is the beneficial owner of more than 10
percent of the outstanding voting shares of such corporation (an "Interested
Shareholder"). Under Section 607.0901 of the FBCA (the "Affiliated Transactions
Statute"), with certain exceptions, a corporation incorporated under the laws of
Florida shall not engage in such a transaction with an Interested Shareholder
unless the transaction is approved by the holders of two-thirds of the voting
shares other than the shares owned by the Interested Shareholder. Such
exceptions include transactions approved by a majority of the corporation's
directors who are not affiliated or associated with the Interested Shareholder.
At a telephonic meeting held on April 30, 1999, the Company Board none of the
members of which are affiliated or associated with Purchaser or Parent,
unanimously approved the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and determined that each of the
Offer and Merger are fair to and in the best interests of the stockholders of
the Company.
The FBCA also contains provisions relating to acquisitions of "control
shares," which is defined as shares that entitle a person to exercise more than
certain specified proportions of the voting power of a public corporation
incorporated under the laws of Florida (commencing with the acquisition of 20%
or more of the voting shares of such corporation). Section 607.0902 of the FBCA
(the "Control Share Acquisitions Statute") limits the voting rights of control
shares acquired in certain types of acquisitions (a "control-share acquisition")
unless the acquisition of the control shares has been approved by the board of
directors of such corporation or certain other statutory conditions have been
met. At the meeting of the Company Board held on April 30, 1999, the Company
Board unanimously approved the acquisition of the Shares pursuant to the Merger
Agreement (including the Offer and the Merger).
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<PAGE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------------------------------------
<C> <S>
(a)(1) Opinion of Goldman, Sachs & Co., dated April 30, 1999*
(a)(2) Letter to Stockholders, dated as of May 7, 1999*
(c)(1) Agreement and Plan of Merger, dated as of April 30, 1999, among the Company, Parent and Purchaser
(c)(2) Proxy Statement, dated November 16, 1998, for the Company's Annual Meeting of Stockholders
(incorporated by reference herein)
(c)(3) Form of Key Executive Employment and Severance Agreement
(c)(4) Amendment to Employment Agreement between the Company and James E. MacDougald
(c)(5) Text of Amendment to ABR Information Services, Inc. Bonus Plan
(c)(6) ABR Information Services, Inc. Retention Bonus Plan
(c)(7) Confidentiality Agreement, dated February 4, 1999, between Parent and Goldman Sachs on behalf of the
Company.
</TABLE>
- ------------------------
* Included in the Schedule 14D-9 mailed to the Company's stockholders.
20
<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 7, 1999
<TABLE>
<S> <C> <C>
ABR INFORMATION SERVICES, INC.
By: /s/ JAMES E. MACDOUGALD
----------------------------------------
Name: James E. MacDougald
Title: President and Chief Executive
Officer
</TABLE>
21
<PAGE>
ANNEX I
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
GENERAL
This Information Statement is being mailed on or about May 7, 1999, as part
of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") of ABR Information Systems, Inc., a Florida corporation (the "Company"),
with respect to the tender offer by Spring Acquisition Corp., a Florida
corporation ("Purchaser") and a wholly owned subsidiary of Ceridian Corporation,
a Delaware corporation ("Parent"), to the holders of record of the issued and
outstanding voting common stock, par value $0.01 per share, of the Company
("Shares"). Capitalized terms used and not otherwise defined herein shall have
the meaning set forth in the Schedule 14D-9. This Information Statement is being
distributed in connection with the possible election of persons designated by
Parent to a majority of the seats on the Company Board. The tender offer is
being made by Purchaser for all of the outstanding Shares at a price of $25.50
per Share net to the Seller in cash, pursuant to the terms of the Agreement and
Plan of Merger (the "Merger Agreement"), dated as of April 30, 1999, by and
among the Company, Parent and Purchaser. The Merger Agreement provides that,
subject to the terms and conditions of the Merger Agreement, following the
purchase of Shares pursuant to Offer, at the effective time of the Merger, the
Purchaser will be merged with and into the Company, and the Company will be the
surviving corporation and become a wholly owned subsidiary of the Parent.
The Merger Agreement provides that, if requested by Parent, the Company
shall to the extent permissible, promptly following the purchase of Shares by
Purchaser pursuant to the Offer, take all action necessary to cause such number
of persons designated by Parent to become directors of the Company so that the
total number of such persons equals that number of directors, rounded up to the
next whole number, on the Company Board as will give Purchaser representation on
the Company Board equal to the product of the total number of directors on the
Company Board (giving effect to the directors to be elected pursuant to the
Merger Agreement) multiplied by the percentage that the number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser bears to the total
number of Shares then outstanding. At such time, the Company shall also cause
persons designated by Parent to constitute the same percentage (rounded up to
the next whole number) as is on the Company Board of (i) each committee of the
Company Board (ii) each board of directors (or similar body) of each subsidiary
of the Company, and (iii) each committee (or similar body) of each such board.
In furtherance thereof, the Company will increase the size of the Company Board
or use its reasonable efforts to secure the resignation of directors, or both,
as is necessary to permit Parent's designees to be elected to the Company Board,
in each case only to the extent permitted by law.
This Information Statement is required by Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder. You are urged to read this Information
Statement carefully. You are not, however, required to take any action in
connection with this Information Statement.
The Offer commenced on May 7, 1999 and is scheduled to expire at 12:00
midnight, New York City time, on June 4, 1999, at which time, if all conditions
to the Offer have been satisfied or waived and certain other circumstances do
not exist, Purchaser will purchase all of the Shares validly tendered pursuant
to the Offer and not withdrawn.
The information contained in this Information Statement concerning
Purchaser, Parent and the Acquisition Designees (as defined below) has been
furnished to the Company by Parent, and the Company assumes no responsibility
for the accuracy or completeness of any such information.
I-1
<PAGE>
At the close of business on April 29, 1999, there were 28,762,983 issued and
outstanding Shares, which is the only class of securities the Company has
outstanding. Each Share entitles its record holder to one vote.
DESIGNEES TO THE COMPANY BOARD
Purchaser has informed the Company that it currently intends to choose the
designees (the "Acquisition Designees") it has the right to designate to the
Company Board pursuant to the Merger Agreement from among the executive officers
of Parent and Purchaser listed in Schedule A of the Offer to Purchase, a copy of
which is being mailed to stockholders of the Company.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE AND OTHER INFORMATION
- --------------------------------------------- --------- ----------------------------------------------------------
<S> <C> <C>
EXECUTIVE OFFICERS:
Lawrence Perlman............................. 61 Chairman and Chief Executive Officer of Parent. Mr.
Perlman was appointed Chairman of Parent in November 1992,
and has been Chief Executive Officer of Parent since
January 1990. Mr. Perlman was President of Parent from
January 1990 to April 1998. He is a director of Seagate
Technology, Inc., The Valspar Corporation, Computer
Network Technology Corporation and Amdocs Limited. Mr.
Perlman has been a director of Parent since 1985.
Ronald L. Turner............................. 52 President and Chief Operating Officer of Parent. Mr.
Turner has been President and Chief Operating Officer of
Parent since April 1998. He was Executive Vice President
of Operations of Parent from March 1997 to April 1998; an
Executive Vice President of Parent and President and Chief
Executive Officer of Parent's Computing Devices
International division from January 1996 to March 1997;
and Vice President of Parent and President of Computing
Devices International from January 1993 to January 1996.
John R. Eickhoff............................. 59 Executive Vice President and Chief Financial Officer of
Parent. Mr. Eickhoff has been Executive Vice President and
Chief Financial Officer of Parent since May 1995, and was
Vice President and Chief Financial Officer of Parent from
June 1993 to May 1995. Mr. Eickhoff was Vice President and
Corporate Controller of Parent from July 1989 to June
1993.
Gary M. Nelson............................... 47 Vice President, General Counsel and Secretary of Parent.
Mr. Nelson has been Vice President and General Counsel of
Parent since July 1997 and Secretary of Parent since
October 1998. From 1983 to July 1997, Mr. Nelson was a
partner in the Oppenheimer Wolff & Donnelly LLP law firm.
</TABLE>
I-2
<PAGE>
It is expected that the first of the Acquisition Designees to assume office
would assume office at any time following the purchase by Purchaser of a number
of Shares in an amount equal to or greater than the number of Shares necessary
to satisfy the Minimum Condition, which purchase cannot be earlier than June 4,
1999, and that, upon assuming office, the Acquisition Designees will thereafter
constitute at least a majority of the entire Company Board. This step will be
accomplished at a meeting or by written consent of the Company Board provided
that the size of the Company Board will be increased and sufficient numbers of
current directors will resign such that, immediately following such action, the
number of vacancies to be filled by the Acquisition Designees will constitute at
least a majority of the available positions on the Company Board or such greater
percentage as may be required pursuant to the terms of the Merger Agreement. It
is currently not known which, if any, of the current directors of the Company
will resign. Purchaser has informed the Company that each of the officers listed
above has consented to act as a director of the Company, if so designated.
None of the executive officers and directors of Parent or Purchaser
currently is a director of, or holds any position or office with, the Company.
Lawrence Perlman, Chairman and Chief Executive Officer of Parent, and John R.
Eickhoff, Executive Vice President and Chief Financial Officer of Parent, own
2,000 and 500 Shares, respectively, together representing less than 1% of the
outstanding Shares. Except as set forth in the preceding sentence, the Company
has been advised that, to the best knowledge of Parent and Purchaser, none of
Parent's or Purchaser's directors or executive officers beneficially owns any
equity securities, or rights to acquire any equity securities, of the Company
and none has been involved in any transactions with the Company or any of its
directors, executive officers, affiliates or associates which are required to be
disclosed pursuant to the rules and regulations of the SEC.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE AND OTHER INFORMATION
- --------------------------------------------- --- ------------------------------------------------------------
<S> <C> <C>
Mark M. Goldman.............................. 56 Mr. Goldman has served as a Director of the Company (and its
predecessors) since 1987. For the last five years, Mr.
Goldman has served as Vice Chairman and Chief Financial
Officer of Phone Programs Financial Corp., Boca Raton,
Florida, a consulting and management company. Mr. Goldman's
current term as a director expires in 2001.
James E. MacDougald.......................... 55 Mr. MacDougald has served as Chairman of the Board,
President, Chief Executive Officer and a Director of the
Company (and its predecessors) since 1982. Mr. MacDougald's
current term as a director expires in 1999
Thomas F. Costello........................... 57 Mr. Costello has served as a Director of the Company (and
its predecessors) since 1989. For the last five years, Mr.
Costello has served as Chairman and Chief Executive Officer
of the Costello Group, New York, New York, an insurance and
real estate brokerage company. Mr. Costello's current term
as a director expires in 1999.
Suzanne M. MacDougald........................ 55 Mrs. MacDougald has served as Senior Vice President,
Secretary and a Director of the Company
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE AND OTHER INFORMATION
- --------------------------------------------- --- ------------------------------------------------------------
(and its predecessors) since 1982. Mrs. MacDougald's current
term as a director expires in 2000.
<S> <C> <C>
Peter A. Sullivan............................ 46 Mr. Sullivan has served as a director of the Company since
September 1997. Mr. Sullivan has served as President of
Arlen Corporation, Providence, Rhode Island, an
insurance-related financial products sale and service
company, since 1988. Mr. Sullivan's current term as a
director expires in 2000.
James P. O'Drobinak.......................... 38 Mr. O'Drobinak has served as Senior Vice President and Chief
Financial Officer of the Company since 1997. From 1995 to
1997, Mr. O'Drobinak served as Chief Financial
Officer--North America for Danka Industries, Inc. From 1983
to 1995, Mr. O'Drobinak held various positions with Deloitte
& Touche LLP, an international accounting and consulting
firm, most recently as a Senior Manager in the Tampa,
Florida office.
</TABLE>
CURRENT BOARD OF DIRECTORS OF THE COMPANY
GENERAL
The Company Board has established the Audit Committee of the Company Board
(the "Audit Committee"), the Compensation Committee of the Company Board (the
"Compensation Committee") and the Stock Option Committee of the Company Board
(the "Stock Option Committee"). The Audit Committee, which is comprised of
Thomas F. Costello, Mark M. Goldman and Peter A. Sullivan, is responsible for
recommending to the Company Board the appointment of independent auditors,
reviewing with the independent auditors the scope of the annual audit
engagement, and establishing and reviewing the Company's financial policies and
control procedures. The Compensation Committee, which is comprised of James E.
MacDougald and Messrs. Costello, Goldman and Sullivan, is responsible for
establishing the compensation of the Company's directors, officers and other
managerial personnel, including salaries, bonuses and other forms of
compensation. The Stock Option Committee, which is comprised of Messrs.
Costello, Goldman and Sullivan, is responsible for administering the Company's
stock option plans.
The Company Board held eight meetings during the fiscal year ended July 31,
1998. The Company Board also took certain actions by unanimous written consent
in lieu of a meeting, as permitted by the FBCA. The Audit Committee met three
times, the Compensation Committee met two times, and the Stock Option Committee
met three times. All directors attended all meetings of the Company Board and
all committees of the Company Board on which they served during the fiscal year
ended July 31, 1998.
DIRECTOR COMPENSATION
Directors who are executive officers of the Company receive no compensation
for service as members of either the Company Board or committees thereof.
Directors who are not executive officers of the Company receive an annual fee of
$15,000, plus $1,000 for each meeting of the Company Board attended and $1,000
per committee meeting attended.
I-4
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During the fiscal year ended July 31, 1998, the executive officers and
directors of the Company filed with the SEC on a timely basis all required
reports relating to transactions involving equity securities of the Company
beneficially owned by them, except that a Form 5 reporting the grant to Peter A.
Sullivan on September 12, 1997 of options to purchase 5,000 Shares under the
Company's 1996 Non-Employee Director Stock Option Plan was filed late. The
Company has relied on the written representation of its executive officers and
directors and copies of the reports they have filed with the SEC in providing
this information.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 29, 1999, certain information
regarding stock ownership by beneficial owners of more than five percent of the
Shares (based on reports filed by them with the SEC) and, as of April 29, 1999,
by Directors and the executive officers and by all Directors and executive
officers as a group, each of whom has sole voting and investment power, except
as indicated.
<TABLE>
<CAPTION>
NAME SHARES PERCENT
- -------------------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
James E. MacDougald(1)(2)(3)................................................................ 1,625,877 5.6%
James P. O'Drobinak(1)(4)................................................................... 48,613 *
Suzanne M. MacDougald(1)(5)(6).............................................................. 1,274,502 4.4
Thomas F. Costello(7)(8).................................................................... 636,374 2.2
Mark M. Goldman(9)(10)...................................................................... 280,474 1.0
Peter A. Sullivan(11)....................................................................... 47,100 *
Capital Research Company(12)................................................................ 3,360,000 11.7
Nationwide Investing Foundation III(13)..................................................... 1,883,000 6.5
Firstar Corporation(14)..................................................................... 1,654,000 5.8
Directors and executive officers as a group (six persons)(15)............................... 2,698,938 9.3
</TABLE>
* Less than 1%.
(1) The business address of Messrs. MacDougald and O'Drobinak and Mrs.
MacDougald is 34125 U.S. Highway 19 North, Palm Harbor, Florida 34684.
(2) Includes 1,214,002 Shares benefically owned jointly with his spouse, Suzanne
M. MacDougald.
(3) Includes 245,000 Shares issuable under currently exercisable options.
(4) Includes 47,500 Shares issuable under currently exercisable options.
(5) Includes 1,214,002 Shares benefically owned jointly with her spouse, James
E. MacDougald.
(6) Includes 56,250 Shares issuable under currently exercisable options.
(7) Mr. Costello's business address is c/o The Costello Group, 116 Central Park
South, Suite 6, New York, NY 10019. Includes 21,250 Shares issuable under
currently exercisable options.
(8) Includes 165,000 Shares held by Mr. Costello's spouse.
(9) Mr. Goldman's business address is 34125 U.S. Highway 19 North, Palm Harbor,
Florida 34684. Includes 25,700 Shares held by Mr. Goldman's spouse, and
5,000 Shares held by trusts over which Mr. Goldman has shared investment and
voting power.
(10) Includes 21,250 Shares issuable under exercisable options.
(11) Mr. Sullivan's business address is c/o Arlen Corporation, 1 Providence
Washington Plaza, 7th Floor, Providence, RI 02903. Includes 5,000 Shares
issuable under currently exercisable options.
I-5
<PAGE>
(12) The business address of Capital Research Company is 333 South Hope Street,
Los Angeles, California 90071.
(13) The business address of Nationwide Investing Foundation III is Three
Nationwide Plaza, Columbus, Ohio 43215-2220.
(14) The business address of Firstar Corporation is 777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202.
(15) See notes (2) to (11) above.
STOCK PRICE PERFORMANCE GRAPH
The following graph presents a comparison of the cumulative total
stockholder return on the Shares with the Nasdaq Stock Market (U.S.) Index and
the Nasdaq Computer and DP Index. This graph assumes that $100 was invested on
May 26, 1994, the date of the Company's initial public offering through July 31,
1998. The stock price performance shown below is not necessarily indicative of
future price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STOCK PRICE PERFORMANCE GRAPH
<S> <C> <C> <C> <C>
Measurement Period The Nasdaq Stock Market Nasdaq Computer
(Fiscal Year Covered) Company (U.S.) Index and Data Processing Index
5/26/94 100 100 100
7/31/94 119 99 95
7/31/95 323 139 164
7/31/96 1171 151 184
7/31/97 1258 223 287
7/31/98 808 263 380
</TABLE>
I-6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
paid to or earned by the Company's President and Chief Executive Officer and
each of the Company's two other most highly compensated executive officers who
earned more than $100,000 for the fiscal years ended July 31, 1998, 1997 and
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME AND PRINCIPAL FISCAL NUMBER OF ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS/SARS COMPENSATION(1)
- ------------------------------------------------ ----------- ---------- ---------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
James E. MacDougald,............................ 1998 $ 190,000 $ 110,000 100,000 $ 5,304
President and Chief Executive Officer 1997 190,000 310,000 80,000 4,750
1996 175,000 315,000 180,000 4,396
James P. O'Drobinak,............................ 1998 134,000 100,000 30,000 3,025
Senior Vice President and 1997 66,000 20,000 80,000 --
Chief Financial Officer(2) 1996 -- -- -- --
Suzanne M. MacDougald,.......................... 1998 40,000 -- -- 1,117
Senior Vice President and Secretary 1997 40,000 -- -- 1,000
1996 67,000 58,000 30,000 11,686
</TABLE>
- ------------------------
(1) Includes allocations to the accounts of the executive officers under the
Company's defined contribution savings plan.
(2) Mr. O'Drobinak became Senior Vice President and Chief Financial Officer of
the Company on January 30, 1997.
The following table sets forth information with respect to grants of stock
options during fiscal 1998 to the executive officers named in the Summary
Compensation Table.
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------- STOCK PRICE ANNUAL RATES OF
% OF TOTAL ------------------------ APPRECIATION FOR
OPTIONS GRANTED EXERCISE OPTION TERMS
OPTIONS TO EMPLOYEES IN PRICE PER EXPIRATION --------------------------
GRANTED(1) FISCAL 1998 SHARE DATE 5%(2) 10%(2)
----------- ------------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
James E. MacDougald....................... 11,000 2.0% $ 26.12 9/12/07 $ 180,694 $ 457,914
89,000 16.1% $ 24.08 12/6/07 1,347,796 3,415,581
James P. O'Drobinak....................... 30,000 5.4% $ 26.12 9/12/07 492,802 1,248,857
Suzanne M. MacDougald..................... -- -- -- -- -- --
</TABLE>
(1) Options granted under the Company's 1987 Amended and Restated Stock Option
Plan, 1993 Amended and Restated Stock Option Plan and 1997 Stock Option Plan
are exercisable by the named executive officer to the extent of 25% of the
Shares subject to such options each year beginning one year after the date
of grant subject to certain conditions.
(2) Assumes rates of Shares price appreciation that are prescribed by the SEC.
I-7
<PAGE>
The following table sets forth information with respect to the aggregate
stock option exercises by the executive officers named in the Summary
Compensation Table during fiscal 1998 and the year-end value of unexercised
options held by such executive officers.
AGGREGATED OPTION EXERCISES IN FISCAL 1998
AND YEAR-END OPTIONS VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
NUMBER OF SHARES OPTIONS AT YEAR-END OPTIONS AT YEAR-END(1)
ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE REALIZED UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
- ------------------------------- --------------------- ------------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
James E. MacDougald............ -- -- 244,786 205,000 $ 1,466,977 $ 378,300
James P. O'Drobinak............ -- -- 27,500 82,500 (2) (2)
Suzanne M. MacDougald.......... -- -- 58,370 26,250 525,164 136,913
</TABLE>
(1) Represents the number of Shares that may be acquired upon the exercise of
options, multiplied by the difference between (i) the closing sales price
per Share as of the end of fiscal 1998 ($17.50 per share) and (ii) the
exercise price per Share.
(2) Exercise price per Share exceeded the closing sales price per Share as of
the end of fiscal 1998.
EMPLOYMENT AND SEVERANCE AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
In March, 1994, the Company entered into one-year employment agreements with
each of Mr. MacDougald and Mrs. MacDougald. These agreements have been renewed
annually, most recently in March, 1999 for an additional one-year term, and
currently provide for annual base salaries of $230,000 and $44,000,
respectively. Each employment agreement provides that the executive officer will
not, in the event of any covered termination where the executive is entitled to,
and is granted by the Company Board, accrued benefits and the termination
payment during a period of not less than one year nor more than two years
following termination of employment, as determined by the Company Board, in any
area in which the Company's business is then conducted, directly or indirectly
compete with the Company, or participate as an officer, employee, partner,
director or otherwise, or have any financial interest, in any business that is
in competition with the business of the Company, subject to certain limitations.
Each employment agreement automatically renews for successive one-year terms
unless terminated by either party, and provides that if the employment agreement
is terminated for any reason other than the respective executive officer's death
or disability, or for cause (as defined therein), the Company will pay the
executive officer severance during the period following termination of
employment in which the executive officer is required not to compete with the
Company, based on the executive officer's annual base salary during the year of
termination. Such severance payment may, upon the executive officer's election,
be paid in one lump sum. Under each employment agreement, the executive officer
is entitled to participate in such bonus programs and other benefit plans as are
generally made available to senior management of the Company. Mr. MacDougald's
employment agreement was amended on April 30, 1999. The amendment is described
in Item 3 of the Schedule 14D-9, and is incorporated herein by reference.
The Company also has entered into KESAs with its executives, including
Messrs. MacDougald and O'Drobinak. Each of the KESAs was entered into on April
30, 1999. Each of the KESAs previously entered between the Company and Messrs.
MacDougald and O'Drobinak was superceded in connection with the adoption of the
KESAs. The KESAs are described in Item 3 of the Schedule 14D-9 and are
incorporated herein by reference.
I-8
<PAGE>
INCENTIVE BONUS PLAN
Effective August 1, 1993, the Company adopted an Incentive Bonus Plan, which
provides for the discretionary payment of annual incentive awards to key
employees pursuant to a formula related to the Company's pre-tax profits (income
before income taxes), based on the attainment of pre-established goals related
to the Company's pre-tax margin (income before income taxes divided by revenues)
and its revenue growth (based on annual increases in revenues). Payments under
the Incentive Bonus Plan are discretionary, based on the determination of the
Company Board, and are subject to certain limitations as provided in the
Incentive Bonus Plan. Quarterly advances against estimated annual payments may
be made at the Company's discretion. No bonus can be earned under the Incentive
Bonus Plan in any fiscal year unless the Company's revenues increase by at least
20% over the prior fiscal year, and the Company's pre-tax margin is at least
16%, including the effect of the bonus on pre-tax margin. The maximum amount of
the bonus pool in any fiscal year is limited to the amount that would be
determined if revenue growth were 50% over the prior fiscal year, and the
pre-tax margin is 20%, including the effect of the bonus on pre-tax margin. The
Company amended the Incentive Bonus Plan on April 30, 1999. This amendment is
described in Item 4 of the Schedule 14D-9 and is incorporated herein by
reference.
SAVINGS PLAN
Effective January 1, 1992, the Company established a defined contribution
savings plan (the "Savings Plan") covering substantially all employees. The
Savings Plan consists of an employee elective contribution and a company
matching contribution for each eligible participant. The Company's matching
contribution is determined by the Company Board on a discretionary basis. The
Company's contributions under the Savings Plan in fiscal 1998, 1997 and 1996
were approximately $357,054, $261,944 and $167,969, respectively.
RETENTION BONUS PLAN
On April 30, 1999, the Company Board adopted the Retention Bonus Plan for
the benefit of certain key employees of the Company. This Retention Bonus Plan
is described in Item 3 of the Schedule 14D-9 and is incorporated herein by
reference.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. MacDougald, the Company's Chairman of the Board, President and Chief
Executive Officer, is a member of the Compensation Committee of the Board. As a
result, Mr. MacDougald participated in deliberations regarding the compensation
to be paid to executive officers of the Company during fiscal 1998, 1997 and
1996. The other members of the Compensation Committee are Messrs. Costello,
Goldman and Sullivan.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
INTRODUCTION
Under the rules of the SEC, the Company is required to provide certain
information concerning compensation provided to the Company's chief executive
officer and its executive officers. The disclosure requirements for the
executive officers include the use of tables and a report of the Compensation
Committee responsible for compensation decisions for the named executive
officers, explaining the rationale and considerations that led to those
compensation decisions. The most recently prepared report of the Compensation
Committee is the report included in the Company's proxy statement for the 1998
meeting of its stockholders, the following report was included in that proxy
statement.
I-9
<PAGE>
COMPENSATION COMMITTEE ROLE
The Compensation Committee of the Board of Directors and the Stock Option
Committee are responsible for separate aspects of the Company's compensation
program for its executive officers, including the named executive officers. The
Compensation Committee is responsible for making recommendations to the Board of
Directors concerning the salaries of executive officers. The Compensation
Committee is also responsible for overseeing other forms of cash compensation
and benefits to other senior officers. The Compensation Committee's
responsibilities include reviewing salaries, benefits and other compensation of
senior officers and making recommendations to the full Board of Directors with
respect to these matters. The Stock Option Committee is responsible for making
stock option grants under the Company's stock option plans to executive officers
of the Company.
COMPENSATION PHILOSOPHY
The compensation philosophy for executive officers conforms generally to the
compensation philosophy followed for all of the Company's employees. The
Company's compensation is designed to maintain executive compensation programs
and policies that enable the Company to attract and retain the services of
highly qualified executives. In addition to base salaries, executive
compensation programs and policies consisting of discretionary cash bonuses and
periodic grants of stock options are designed to reward and provide incentives
for individual contributions as well as overall Company performance.
The Compensation Committee monitors the operation of the Company's executive
compensation policies. In August, 1993, the Company implemented the
recommendations of independent compensation consultants that were retained by
the Company to assess the effectiveness of the Company's executive compensation
programs by comparing the Company's compensation programs to various other
information services companies and other companies with similar growth
characteristics to those of the Company. Key elements of the Company's
compensation program consists of base salary, discretionary annual cash bonuses
and periodic grants of stock options. The Company's policies with respect to
these elements, including the basis for the compensation awarded the Company's
chief executive officer, are discussed below. While the elements of compensation
described below are considered separately, the Compensation Committee takes into
account the full compensation package offered by the Company to the individual,
including healthcare and other insurance benefits and contributions made by the
Company under the Company's Savings Plan.
Base Salaries. The Company has established competitive annual base salaries
for all executive officers, including the named executive officers. The Company
has entered into one-year employment agreements with James E. MacDougald,
President and Chief Executive Officer, and Suzanne M. MacDougald, Senior Vice
President and Secretary. Each employment agreement automatically renews for
successive one-year terms unless terminated by either party. The annual base
salaries for each of the Company's executive officers, including the Company's
chief executive officer, reflect both the recommendations of the Company's
compensation consultants and the subjective judgment of the Compensation
Committee based on the consideration of the executive officer's position with
the Company, the executive officer's tenure, the Company's needs, and the
executive officer's individual performance, achievements and contributions to
the growth of the Company. Mr. MacDougald's annual base salary as the Company's
chief executive officer is currently $190,000. The Compensation Committee
believes that this annual base salary is consistent with the salary range
established for this position based on the Company's discussions with outside
consultants, the factors noted above and Mr. MacDougald's prior experience and
managerial expertise, his knowledge of the Company's operations and the industry
in which it operates.
Annual Bonus. The Company's executive officers are eligible for an annual
cash bonus under the Company's Incentive Bonus Plan, which was implemented based
on its discussions with independent compensation consultants in August, 1993.
The Incentive Bonus Plan provides for the discretionary
I-10
<PAGE>
payment of annual incentive awards to key employees, including executive
officers of the Company, pursuant to a formula related to the Company's pre-tax
profits (income before income taxes), based on the attainment of preestablished
goals related to the Company's pre-tax margin (income before income taxes
divided by revenues) and its revenue growth (based on annual increases in
revenues). Payments under the Incentive Bonus Plan are discretionary, and are
subject to certain limitations as provided in the Incentive Bonus Plan.
The amount of the cash bonus paid to Mr. MacDougald as the Company's chief
executive officer under the Incentive Bonus Plan was $110,000 for the fiscal
year ended July 31, 1998, and was determined in accordance with the provisions
of the Incentive Bonus Plan.
Stock Options. Under the Company's 1987 Stock Option Plan, 1993 Stock Option
Plan and 1997 Stock Option Plan (together, the "Plans"), stock options may be
granted to key employees, including executive officers of the Company. The Plans
are administered by the Stock Option Committee in accordance with the
requirements of Rule 16b-3.
During the fiscal year ended July 31, 1998, options to purchase 100,000
Shares under the Plans were granted to Mr. MacDougald. The principal factors
considered in determining the granting of stock options to executive officers of
the Company, including the Company's chief executive officer, were the executive
officer's tenure with the Company, his or her total cash compensation for the
prior year, the executive officer's acceptance of additional responsibilities
and his or her contributions toward the Company's attainment of strategic goals.
SECTION 162(M) LIMITATIONS
Under Section 162(m) of the Internal Revenue Code, a tax deduction by
corporate taxpayers, such as the Company, is limited with respect to the
compensation of certain executive officers unless such compensation is based
upon performance objectives meeting certain regulatory criteria or is otherwise
excluded from the limitation. Based upon the Compensation Committee's commitment
to link compensation with performance as described in this report, the
Compensation Committee currently intends to qualify compensation paid to the
Company's executive officers for deductibility by the Company under Section
162(m).
I-11
<PAGE>
Exhibit 99(a)(1)
[LETTERHEAD OF GOLMAN SACHS]
PERSONAL AND CONFIDENTIAL
- --------------------------------------------------------------------------------
April 30, 1999
Board of Directors
ABR Information Services, Inc.
34125 U.S. Highway 19 North
Palm Harbor, FL 34684-2116
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders (other than Ceridian Corporation ("Ceridian") and its
subsidiaries) (the "Holders") of the outstanding shares of voting Common Stock,
par value $0.01 per share (the "Shares"), of ABR Information Services, Inc. (the
"Company") of the $25.50 per Share in cash proposed to be received by the
Holders in the Tender Offer and the Merger (as defined below) pursuant to the
Agreement and Plan of Merger, dated as of April 30, 1999, among Ceridian, Spring
Acquisition Corp., a wholly-owned subsidiary of Ceridian, and the Company (the
"Agreement"). The Agreement provides for a tender offer for all of the Shares
(the "Tender Offer") pursuant to which Spring Acquisition Corp. will pay $25.50
per Share in cash for each Share accepted. The Agreement further provides that
following completion of the Tender Offer, Spring Acquisition Corp. will be
merged into the Company (the "Merger") and each outstanding Share (other than
Excluded Shares (as defined in the Agreement)) will be converted into the right
to receive $25.50 in cash.
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement. Goldman,
Sachs & Co. provides a full range of financial advisory and securities services
and, in the course of its normal trading activities, may from time to time
effect transactions and hold securities, including derivative securities, of the
Company or Ceridian for its own account and for the accounts of customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company for the five fiscal years ended July 31, 1998; certain interim reports
to stockholders and Quarterly Reports on Form 10-Q of the Company; certain other
communications from the Company to its
<PAGE>
ABR Information Services, Inc.
April 30, 1999
Page Two
stockholders; and certain internal financial analyses and forecasts for the
Company prepared by its management. We also have held discussions with members
of the senior management of the Company regarding its past and current business
operations, financial condition and future prospects. In addition, we have
reviewed the reported price and trading activity for the Shares, compared
certain financial and stock market information for the Company with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations in
the benefits and payroll outsourcing industries specifically and in other
industries generally and performed such other studies and analyses as we
considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. In addition, we have not made an
independent evaluation or appraisal of the assets and liabilities of the Company
or any of its subsidiaries and we have not been furnished with any such
evaluation or appraisal. Our opinion does not address the relative merits of the
transaction contemplated pursuant to the Agreement as compared to any
alternative business transaction that might be available to the Company. Our
advisory services and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of the Company in
connection with its consideration of the transaction contemplated by the
Agreement and such opinion does not constitute a recommendation as to whether or
not any holder of Shares should tender such Shares in connection with such
transaction.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the $25.50 per
Share in cash to be received by the Holders of Shares in the Tender Offer and
the Merger is fair from a financial point of view to such Holders.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
- ------------------------------
GOLDMAN, SACHS & CO.
<PAGE>
ABR INFORMATION SERVICES, INC.
34125 U.S. Highway 19 North
Palm Harbor, Florida 34684-2141
[LOGO]
May 7, 1999
Dear fellow stockholder:
I am pleased to inform you that on April 30, 1999, our company, ABR
Information Services, Inc., entered into a Merger Agreement with Ceridian
Corporation and Spring Acquisition Corp., a wholly owned subsidiary of Ceridian.
Pursuant to the Merger Agreement, Spring Acquisition Corp. is today commencing a
tender offer to purchase all outstanding shares of voting common stock, par
value $0.01 per share, of the Company at a price of $25.50 per Share, which
represents approximately a 46% premium to ABR's closing stock price on April 30,
1999, the last trading day prior to the announcement of this transaction. The
Merger Agreement provides that each Share not acquired by the Purchaser in the
Offer will be exchanged for the same consideration payable pursuant to the Offer
in cash in connection with the merger of the Purchaser with and into the
Company, which is expected to occur as soon as practicable following the
purchase of Shares in the Offer.
Your Board of Directors has unanimously approved the Merger Agreement and
determined that the Offer and the Merger are fair to, and in the best interests
of, the stockholders of the Company. Accordingly, your Board of Directors
recommends that you accept the Offer and tender your Shares to Spring
Acquisition Corp. pursuant to the Offer.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors which are described in the enclosed
Schedule 14D-9, including, among others, the opinion of Goldman, Sachs & Co.,
the Company's financial advisor, to the effect that, as of April 30, 1999 and
based upon and subject to the considerations and limitations set forth in the
opinion, the $25.50 in cash per Share to be received by the stockholders of the
Company in the Offer and the Merger was fair from a financial point of view to
such holders. The full text of the written opinion of Goldman, Sachs & Co. is
attached to the enclosed Schedule 14D-9, and you are urged to read the opinion
carefully and in its entirety.
Additional information with respect to the transaction is contained in the
enclosed Schedule 14D-9.
Also enclosed are Spring Acquisition Corp.'s Offer to Purchase, dated May 7,
1999, and related materials, including a Letter of Transmittal to be used for
tendering your Shares. These documents set forth the terms and conditions of the
tender offer and provide instructions as to how to tender your Shares. On behalf
of the Company, I urge you to read the enclosed material and consider this
information carefully and I would like to personally thank you for your time as
a stockholder of the Company.
Sincerely,
/s/ James E. MacDougald
James E. MacDougald
Chairman of the Board,
Chief Executive Officer
and President
<PAGE>
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
Among
ABR INFORMATION SERVICES, INC.
CERIDIAN CORPORATION
and
SPRING ACQUISITION CORP.
Dated as of April 30, 1999
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of April 30, 1999, among ABR Information Services, Inc., a Florida
corporation (the "Company"), Ceridian Corporation, a Delaware corporation
("Parent"), and Spring Acquisition Corp., a Florida corporation and a
wholly-owned subsidiary of Parent ("Merger Sub").
RECITALS
WHEREAS, the respective boards of directors of each of Parent, Merger
Sub and the Company have approved this Agreement and adopted the plan of merger
set forth herein whereby Merger Sub will merge with and into the Company upon
the terms and subject to the conditions set forth in this Agreement (the
"Merger");
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
The Tender Offer
1.1. Tender Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Article IX hereof and none of the events set
forth in paragraphs (a) through (g) of Annex A hereto shall have occurred or be
existing and the other conditions to the Offer specified in Annex A shall have
been satisfied (together with such events, the "Offer Conditions"), as soon as
reasonably practicable, and in any event within five Business Days after public
announcement of this Agreement, Merger Sub will commence a tender offer (the
"Offer") for all of the outstanding Shares (as defined below) at a price of
$25.50 per Share in cash, net to the seller, and, subject
<PAGE>
only to and in accordance with the terms and conditions of the Offer, accept for
payment Shares that are validly tendered and not withdrawn immediately following
(unless the Offer shall have been extended in accordance with the terms hereof)
the later of (i) the date on which the waiting period under the HSR Act has
expired or has been terminated and (ii) the twentieth Business Day after the
commencement of the Offer; provided, however, and notwithstanding anything to
the contrary in the foregoing, it is understood and agreed that (A) if any of
the Offer Conditions specified in paragraphs (a) through (h) of Annex A exists
at the time of the scheduled expiration date of the Offer or if, the applicable
waiting periods under the HSR Act have not expired or been earlier terminated,
Merger Sub may extend and reextend the Offer on one or more occasions for
periods of time (not to exceed ten Business Days for any particular extension)
so that the expiration date of the Offer (as so extended) is as soon as
reasonably practicable or advisable after the date on which the particular Offer
Condition no longer exists, and (B) Merger Sub may extend and reextend the Offer
on one or more occasions for periods of time (not to exceed ten Business Days
for any particular extension) for an aggregate period not to exceed twenty
Business Days if on such expiration date there shall not have been validly
tendered and not withdrawn at least the number of Shares necessary to permit the
Merger to be effected without a meeting of the Company's stockholders, and;
provided, further, that all extensions of the Offer made by Merger Sub (other
than at the request of the Company) shall not extend the Offer beyond September
5, 1999. Parent and Merger Sub agree that until September 5, 1999 Merger Sub
shall from time to time extend the Offer at such times as the Company may
request for five Business Days for each extension, but shall in no event extend
the Offer beyond September 5, 1999. Merger Sub shall not, without the prior
written consent of the Company, decrease the price per Share offered in the
Offer, change the form of consideration offered or payable in the Offer,
decrease the numbers of Shares sought in the Offer, change the conditions to the
Offer, impose additional conditions to the Offer, amend any term of the Offer in
any manner adverse to the holders of Shares or waive the Minimum Conditions (as
defined in Annex A).
(b) As soon as reasonably practicable on the date the Offer is
commenced, Merger Sub shall file a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with the SEC with respect to the Offer. The Schedule 14D-1
shall
-2-
<PAGE>
contain an Offer to Purchase and forms of the related letter of transmittal and
other documents relating to the Merger (which Schedule 14D-1, Offer to Purchase,
letter of transmittal and other documents, together with any supplements or
amendments thereto, are referred to herein collectively as the "Offer
Documents"). Parent and Merger Sub agree that the Company and its counsel shall
be given an opportunity to review the Schedule 14D-1 before it is filed with the
SEC. Parent, Merger Sub and the Company each agrees promptly to correct any
information provided by it for use in the Offer Documents that shall have become
false or misleading in any material respect, and Parent and Merger Sub further
agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to
be filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and Merger Sub also agree that the
Offer Documents shall comply with the requirements of the Securities Exchange
Act of 1934 (the "Exchange Act") and the rules and regulations thereunder.
(c) The Company's Board of Directors shall recommend acceptance of the
Offer to its stockholders in a Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9") to be filed with the Securities and Exchange
Commission (the "SEC") substantially contemporaneously with the filing of the
Schedule 14D-1; provided, however, that if the Company's Board of Directors
determines consistent with its fiduciary duties to amend or withdraw such
recommendation, such amendment or withdrawal shall not constitute a breach of
this Agreement. Merger Sub and its counsel shall be given an opportunity to
review the Schedule 14D-9 before it is filed with the SEC. Parent, Merger Sub
and the Company each agrees promptly to correct any information provided by it
for use in the Schedule 14D-9 that shall have become false or misleading in any
material respect, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9, as so corrected to be disseminated to holders of
shares, in each case as and to the extent required by the applicable federal
securities laws. The Company also agrees that the Schedule 14D-9 shall comply
with the requirements of the Exchange Act and the rules and regulations
thereunder.
(d) In connection with the Offer, if requested by Parent, the Company
will promptly notify its Transfer Agent
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to furnish to Merger Sub a list, as of a recent date, of the names and addresses
of the record holders of Shares and a copy of the names and addresses of
participants identified in the most recent security position listing of any
clearing agency which is within the access of the Company. If Merger Sub needs
to disseminate amendments to the Offer Documents, the Company, if requested by
Parent, shall furnish Merger Sub with updated names and addresses of record
holders of Shares not previously furnished to Merger Sub which is within the
access of the Company. For purposes of this Agreement, the term "Business Day"
means any day other than Saturday, Sunday or a federal holiday.
ARTICLE II
The Merger; Closing; Effective Time
2.1. The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, at the Effective Time, Merger Sub shall be merged with and
into the Company and the separate corporate existence of Merger Sub shall
thereupon cease. The Company shall be the surviving corporation in the Merger
(sometimes hereinafter referred to as the "Surviving Corporation"), and the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in Article III. The Merger shall have the effects specified
in the Florida Business Corporation Act (the "FBCA").
2.2. Closing. The closing of the Merger (the "Closing") shall take
place (i) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New
York at 10:00 A.M. on the business day on which the last to be satisfied or
waived of the conditions set forth in Article VIII hereof shall be satisfied or
waived in accordance with this Agree ment or (ii) at such other place and time
and/or on such other date as the Company and Parent may agree in writing (the
"Closing Date").
2.3. Effective Time. As soon as practicable following the Closing, the
Company and Parent will cause Articles of Merger reflecting the provisions set
forth in this Agreement (the "Articles of Merger") to be executed (by the
Company and Merger Sub) and delivered for filing to the Department of State of
the State of Florida (the
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"Department") as provided in Section 607.1105 of the FBCA. The Merger shall
become effective at the time when the Articles of Merger have been duly filed
with the Department or at such later time agreed by the parties in writing and
provided in the Articles of Merger (the "Effective Time").
ARTICLE III
Articles of Incorporation and By-Laws
of the Surviving Corporation
3.1. The Articles of Incorporation. The articles of incorporation of
the Company as in effect immediately prior to the Effective Time shall be the
articles of incorporation of the Surviving Corporation (the "Articles"), until
duly amended as provided therein or by applicable law, except that Article III
of the articles of incorporation of the Company shall be amended in its entirety
to read as follows: "The total number of shares of all classes of capital stock
that the Corporation shall have authority to issue shall be 1,000 shares of
Common Stock, par value $.01 per share." and Article IV of the articles of
incorporation of the Company shall be amended in its entirety to read as
follows: "The total number of directors of the Corporation shall be fixed from
time to time pursuant to the by-laws of the Corporation."
3.2. The By-Laws. The by-laws of the Company in effect at the Effective
Time shall be the by-laws of the Surviving Corporation (the "By-Laws"), until
thereafter amended as provided therein or by applicable law.
ARTICLE IV
Officers and Directors of the Company
and the Surviving Corporation
4.1. Directors. The directors of Merger Sub at the Effective Time
shall, from and after the Effective Time, be the directors 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 Articles and the By-Laws as in effect from time to time.
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4.2. Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the 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
Articles and the By-Laws.
4.3. Board of Directors. If requested by Parent, the Company shall to
the extent permissible, promptly following the purchase by Merger Sub of Shares
pursuant to the Offer in accordance with the terms hereunder, take all actions
necessary (including calling a special meeting of the Board of Directors of the
Company or the stockholders of the Company for this purpose) to cause natural
Persons designated by Parent to become directors of the Company so that the
total number of such natural Persons equals that number of directors, rounded up
to the next whole number, which represents the product of (x) the total number
of directors on the board of directors of the Company multiplied by (y) the
percentage that the number of Shares so accepted for payment plus and shares
beneficially owned by Parent or its affiliates on the date hereof bears to the
number of Shares outstanding at the time of such acceptance for payment. At such
time, the Company shall also cause persons designated by Parent to constitute
the same percentage (rounded up to the next whole number) as is on the Company's
Board of Directors of (i) each committee of the Company's Board of Directors;
(ii) each board of directors (or similar body) of each Subsidiary of the
Company, and (iii) each committee (or similar body) of each such board. In
furtherance thereof, the Company will increase the size of the board of
directors of the Company, or use its reasonable efforts to secure the
resignation of directors, or both, as is necessary to permit Parent's designees
to be elected to the board of directors of the Company; provided, however, that
prior to the Effective Time, the board of directors of the Company shall always
have at least three members who are neither officers of Parent nor designees,
stockholders or affiliates of Parent ("Parent Insiders"). The Company's
obligations to appoint designees to the board of directors of the Company now
shall be subject to Section 14(f) of the Exchange Act and Rule 14(f)-l
thereunder. The Company shall promptly take all actions required pursuant to
such Section and Rule in order to fulfill its obligations under this Section 4.3
and shall include in the Schedule 14D-9 such information as is required under
such Section and Schedule. Parent agrees to
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furnish to the Company all information concerning Parent's designees which may
be necessary to comply with the foregoing and agrees that such information will
comply with the Exchange Act and the rules and regulations thereunder and other
applicable laws. Notwithstanding anything in this Agreement to the contrary, in
the event that Parent's designees are elected to the Board of Directors of the
Company after the acceptance for payment of Shares pursuant to the Offer and
prior to the Effective Time, the affirmative vote of at least a majority of the
directors of the Company who are not Parent Insiders shall be required to (a)
amend or terminate this Agreement by the Company, (b) exercise or waive any of
the Company's rights, benefits or remedies hereunder, (c) extend the time for
performance of Parent's and Merger Sub's respective obligations hereunder, or
(d) take any other action by the Company's Board of Directors under or in
connection with this Agreement which would adversely affect the ability of the
stockholders of the Company to receive the Merger Consideration.
ARTICLE V
Effect of the Merger on Capital Stock;
Exchange of Certificates
5.1. Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any capital stock of
the Company:
(a) Merger Consideration. Each share of the voting Common Stock, par
value $0.01 per share, of the Company (a "Share" and, collectively, the
"Shares") issued and outstanding immediately prior to the Effective Time (other
than Shares owned by Parent, Merger Sub or any other direct or indirect
Subsidiary of Parent (collectively, the "Parent Companies"), Shares that are
owned by the Company or any direct or indirect Subsidiary of the Company and in
each case not held on behalf of third parties or Shares that are owned by
Dissenting Stockholders (collectively, "Excluded Shares")) shall be cancelled,
extinguished and converted into the right to receive, without an interest, an
amount in cash equal to $25.50 per Share (the "Merger Consideration") or such
greater amount which may be paid pursuant to the Offer. At the Effective Time,
all Shares shall no longer be outstanding and shall be cancelled and retired and
shall cease to exist, and each certificate (a "Certificate")
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formerly representing any of such Shares (other than Excluded Shares) shall
thereafter represent only the right to the Merger Consideration for each Share
upon the surrender of such Certificate in accordance with Section 5.2 or the
right, if any, to receive payment from the Surviving Corporation of the "fair
value" of such Shares as determined in accordance with Section 607.1302 of the
FBCA.
(b) Cancellation of Shares. Each Excluded Share shall, by virtue of the
Merger and without any action on the part of the holder thereof, cease to be
outstanding, shall be cancelled and retired without payment of any considera
tion therefor and shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of Common Stock, par
value $.01 per share, of Merger Sub issued and outstanding immediately prior to
the Effective Time shall be converted into one share of common stock of the
Surviving Corporation.
5.2. Surrender of Certificates. (a) Paying Agent. Immediately prior to
the Effective Time, Parent shall deposit, or shall cause to be deposited, with a
paying agent (the "Paying Agent"), selected by Parent (within 15 days after the
date hereof) with the Company's prior approval for the benefit of the holders of
Shares, an amount in cash sufficient in the aggregate to provide all funds
necessary for the Paying Agent to make payments of the Merger Consideration to
all holders of Shares, (such cash being hereinafter referred to as the "Exchange
Fund"). To the extent not required within five Business Days for payment with
respect to surrendered Shares, proceeds in the Exchange Fund shall be invested
by the Paying Agent, as directed by Parent (as long as such investments do not
impair the rights of holders of Shares) in direct obligations of the United
States of America, obligations for which the faith and credit of the United
States of America is pledged to provide for the payment of principal and
interest, or certificates of deposit issued by a commercial bank having at least
$10 billion in assets, and any net earnings with respect thereto shall be paid
to Parent as and when requested by the Parent; provided that at no time may the
amount of the Exchange Fund be reduced below an amount necessary to make
payments of the Merger Consideration to all Shares not theretofore submitted.
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(b) Exchange Procedures. At the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each holder of record of
Shares at the Effective Time (other than holders of Excluded Shares) (i) a
letter of transmittal specifying that delivery of the Certificates shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates (or affidavits of loss in lieu thereof) to the
Paying Agent, such letter of transmittal to be in such form and have such other
provisions as Parent and the Company may reasonably agree, and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for the
amounts of cash payable hereunder to a Person other than the Person in whose
name the surrendered Certificate is registered on the transfer books of the
Company). Subject to Section 5.2(e), upon surrender of a Certificate for
cancellation to the Paying Agent together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a check in an amount equal to (after giving effect to any
required tax withholdings) the Merger Consideration multiplied by the number of
Shares formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or accrued on
any amount payable upon due surrender of the Certificates. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, a check in the amount payable hereunder, upon due surrender of
the Certificate, may be paid to such a transferee if the Certificate formerly
representing such Shares is presented to the Paying Agent, accompanied by all
documents required to evidence and effect such transfer.
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity or other entity of any kind or
nature.
(c) Transfers. After the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the Shares that were outstanding
immediately prior to the Effective Time. From and after the Effective Time, the
holders of Certificates evidencing ownership of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares
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except as otherwise provided for herein or by applicable law.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains unclaimed by the stockholders of the Company for one year after the
Effective Time shall be returned to Parent. Any stockholders of the Company who
have not theretofore complied with this Article V shall thereafter look only to
Parent for payment of the Merger Consideration upon due surrender of their
Certificates (or affidavits of loss in lieu thereof), in each case, without any
interest thereon.
(e) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by such Person of a
bond in customary amount as indemnity against any claim that may be made against
it with respect to such Certificate, the Paying Agent will issue in exchange for
such lost, stolen or destroyed Certificate the amount of cash such Persons are
entitled to hereunder upon due surrender of the Shares represented by such
Certificate pursuant to this Agreement.
5.3. Dissenters' Rights. Notwithstanding anything in this Agreement to
the contrary, if available under the FBCA, Shares that are issued and
outstanding immediately prior to the Effective Time and which are held by
stockholders ("Dissenting Stockholders") who have not voted in favor of or
consented to the Merger and in the manner provided in Section 607.1320 of the
FBCA shall have delivered a written notice of intent to demand payment for such
Shares if the Merger is effectuated in the time and manner provided in FBCA and
shall not have failed to perfect or shall not have effectively withdrawn or lost
their rights to appraisal and payment under the FBCA shall not be converted into
the right to receive the Merger Consideration, but shall, in lieu thereof, be
entitled to receive the consideration as shall be determined pursuant to
Sections 607.1301 through 607.1320 of the FBCA; provided, however, that any such
holder who shall have failed to perfect or shall have effectively withdrawn or
lost his, her or its right to appraisal and payment under the FBCA, shall
thereupon be deemed to have had such Person's Shares converted, at the Effective
Time, into the right to receive
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the Merger Consideration set forth herein, without any interest thereon.
5.4. Adjustments to Prevent Dilution. In the event that the Company
changes the number of Shares or securities convertible or exchangeable into or
exercisable for Shares, issued and outstanding prior to the Effective Time as a
result of a reclassification, stock split (including a reverse split), stock
dividend or distribution, recapitalization, merger, subdivision, issuer tender
or exchange offer, or other similar transaction, the Merger Consideration shall
be equitably adjusted.
ARTICLE VI
Representations and Warranties
6.1. Representations and Warranties of the Company. Except as set forth
in the disclosure letter delivered to Parent by the Company on or prior to
entering into this Agreement (the "Company Disclosure Letter"), the Company
hereby represents and warrants to Parent and Merger Sub that:
(a) Organization, Good Standing and Qualifica tion. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing or of active status, as applicable, under the laws of its
respective jurisdiction of organization and has all requisite corporate or
similar power and authority to own and operate its properties and assets and to
carry on its business as presently conducted and is qualified to do business and
is in good standing as a foreign corporation in each jurisdiction where the
ownership or operation of its properties or conduct of its business requires
such qualification, except where the failure to be so qualified or in good
standing would not have a Company Material Adverse Effect. The Company has made
available to Parent complete and correct copies of the Company's and its
Subsidiaries' articles of incorporation and by-laws (or comparable governing
instruments), as amended to the date hereof. The Company's and its Subsidiaries'
articles of incorporation and by-laws (or comparable governing instruments) so
delivered are in full force and effect.
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As used in this Agreement, the term "Subsidiary" means, with respect to
the Company, Parent or Merger Sub, as the case may be, any entity, whether
incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
is directly or indirectly owned or controlled by such party or by one or more of
its respective Subsidiaries or by such party and any one or more of its
respective Subsidiaries.
As used in this Agreement, the term "Company Material Adverse Effect"
means a material adverse effect on the financial condition, properties, business
or results of operations of the Company and its Subsidiaries taken as a whole;
provided, however, that any such effect resulting from any change (i) in law,
rule, regulation or generally accepted accounting principles ("GAAP") or
interpretations thereof, (ii) in economic or business conditions generally which
does not have a disproportionate effect on the Company and its Subsidiaries
taken as a whole or (iii) resulting from the execution and delivery of this
Agreement and the contemplated consummation of the transactions contemplated
hereby shall not be considered when determining if a Company Material Adverse
Effect has occurred.
(b) Capital Structure. The authorized capital stock of the Company
consists of 100,000,000 Shares, of which 28,762,983 Shares were outstanding as
of the close of business on April 29, 1999, 250,000 shares of nonvoting common
stock par value $0.01 per share, of the Company, of which no shares were
outstanding as of the date hereof and 2,000,000 shares of Preferred Stock, par
value $0.01 per share (the "Preferred Shares"), of the Company, of which no
shares were outstanding as of the date hereof. All of the issued and outstanding
Shares have been duly authorized and are validly issued, fully paid and
nonassessable. The Company has no Shares reserved for or subject to issuance,
except that, as of April 29, 1999, there were 3,313,104 Shares reserved in the
aggregate for issuance pursuant to the Company 1997 Stock Option Plan, the
Company 1993 Amended and Restated Stock Option Plan, the Company 1987 Amended
and Restated Stock Option Plan, the Company 1995 Non-Employee Director Stock
Option Plan and the Company 1996 Non-Employee Director Stock Option Plan
(collectively, the "Stock Plans"). Each of the outstanding shares of capital
stock or other securities of each of the Company's
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Subsidiaries is duly authorized, validly issued, fully paid and nonassessable
and owned by the Company or a direct or indirect wholly-owned Subsidiary of the
Company, free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth above, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements or
commitments to issue or to sell any shares of capital stock or other securities
of the Company or any of its Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of the Company or any of its
Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. The Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter ("Voting
Debt").
(c) Corporate Authority; Approval and Fairness.
(i) The Company has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute, deliver and perform
its obligations under this Agreement and to consummate, subject only to approval
of this Agreement by the holders of a majority of the outstanding Shares, the
Merger. This Agreement has been duly executed and delivered by the Company, and
assuming due authorization, execution and delivery of this Agreement by Parent
and Merger Sub, is a valid and legally binding agreement of the Company
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (the "Bankruptcy and Equity Exception").
(ii) The Board of Directors of the Company (A) has approved this
Agreement and the Offer and adopted the plan of merger set forth herein and (B)
has received the opinion of its financial advisors, Goldman, Sachs & Co., to the
effect that the Merger Consideration and the consideration to be paid pursuant
to the Offer pursuant to this Agreement are fair from a financial point of view
to the holders of Shares.
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(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to the FBCA, (B)
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and (C) under the Securities Exchange Act of 1934 (the "Exchange
Act"), no notices, reports or other filings are required to be made by the
Company with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company from, any governmental or
regulatory authority, agency, commission, body or other governmental entity
(each a "Governmental Entity"), in connection with the execution and delivery of
this Agreement by the Company and the consummation by the Company of the Merger
and the other transactions contemplated hereby, except for those that the
failure to make or obtain would not have a Company Material Adverse Effect or
prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by the
Company do not, and the consummation by the Company of the Merger and the other
transactions contemplated hereby will not, constitute or result in (A) a breach
or violation of, or a default under, either the articles of incorporation of the
Company or by-laws of the Company or the comparable governing instruments of any
of its Subsidiaries, (B) a breach or violation of, or a default under, the
acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of the Company or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation ("Contracts") or any Law or governmental or non-governmental permit
or license to which the Company or any of its Subsidiaries is subject or (C) any
change in the rights or obligations of any party under any of the Contracts,
except, in the case of clause (B) or (C) above, for any breach, violation,
default, acceleration, creation or change that would not have a Company Material
Adverse Effect or prevent, materially delay or materially impair the ability of
the Company to consummate the transactions contemplated by this Agreement.
(e) Company Reports; Financial Statements. The Company has made
available to Parent each registration
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statement, report, proxy statement or information statement filed by it since
July 31, 1997 and prior to the date hereof, including (i) the Company's Annual
Report on Form 10-K for the fiscal year ended July 31, 1998, and (ii) the
Company's Quarterly Reports on Form 10-Q for the quarterly periods ended October
31, 1998, and January 31, 1999, each in the form (including exhibits, annexes
and any amendments thereto) filed with the Securities and Exchange Commission
(the "SEC") (collectively, including amendments of any such reports as amended,
the "Company Reports"). Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents the consolidated financial position of the
Company and its Subsidiaries as of its date and each of the consolidated
statements of income and of consolidated statements of cash flow included in or
incorporated by reference into the Company Reports (including any related notes
and schedules) fairly presents the results of operations, retained earnings and
changes in financial position, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to the absence of notes and normal year-end audit
adjustments), in each case in accordance with GAAP consistently applied during
the periods involved, except as may be noted therein. None of the Company
Reports (in the case of Company Reports filed pursuant to the Securities Act),
as of their effective dates, contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading and none of the Company Reports (in the case of
Company Reports filed pursuant to the Exchange Act), as of their respective
dates contains any statement which, at the time and in the light of the
circumstances under which it was made, was false or misleading with respect to
any material fact, or omits to state any material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Since January 1, 1996, no Subsidiary of the Company has
been required to file any forms, reports or other documents with the SEC.
(f) Absence of Certain Changes. Except as disclosed in the Company
Reports or as permitted hereunder, since July 31, 1998 (the "Audit Date"), the
Company and its Subsidiaries taken as a whole have conducted their business
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only in, and have not engaged in any material transaction other than according
to, the ordinary and usual course of such business and there has not been (i)
any change in the financial condition, properties, business or results of
operations of the Company and its Subsidiaries that has had a Company Material
Adverse Effect; (ii) any material damage, destruction or other casualty loss
with respect to any material asset or material property owned, leased or
otherwise used by the Company or any of its Subsidiaries, not covered by
insurance; (iii) any declaration, setting aside or payment of any dividend or
other distribution in respect of the capital stock of the Company; or (iv) any
change by the Company in accounting principles, practices or methods which is
not required or permitted by GAAP. Since the Audit Date and through the date
hereof, except as provided for herein or as disclosed in the Company Reports,
there has not been any material increase in the compensation payable or that
could become payable by the Company or any of its Subsidiaries to officers or
key employees or any material amendment of any of the Compensation and Benefit
Plans other than increases or amendments in the ordinary course which increases
or amendments have not had a Company Material Adverse Effect.
(g) Litigation and Liabilities. Except as disclosed in the Company
Reports, there are no civil, criminal or administrative actions, suits, claims,
hearings, investigations or proceedings pending or, to the knowledge of the
executive officers of the Company, threatened against the Company or any of its
Subsidiaries, except for those that would not have a Company Material Adverse
Effect or prevent or materially burden or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement. Neither
the Company nor any of its Subsidiaries has any liabilities or obligations of
any nature (whether absolute, accrued or contingent)which would have a Company
Material Adverse Effect except (i) liabilities or obligations that are accrued
for or reserved against in the Company's consolidated balance sheet as of
January 31, 1999 and (ii) liabilities or obligations arising since January 31,
1999 in the ordinary course of business and consistent with past practice.
(h) Employee Benefits.
(i) A copy of each bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings,
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employee stock ownership, stock bonus, stock purchase, restricted stock, stock
option, employment, termination, severance, compensation, medical, health, life,
disability, cafeteria, paid time off, perquisites, fringe benefits or other
plan, agreement, policy or arrangement that covers employees or former employees
of the Company and/or its Subsidiaries ("Employees"), or directors or former
directors of the Company and/or its Subsidiaries (the "Compensation and Benefit
Plans") and any trust agreement or insurance contract forming a part of such
Compensation and Benefit Plans has been made available or provided to Parent
prior to the date hereof. The Compensation and Benefit Plans are listed in
Section 6.1(h) of the Company Disclosure Letter and any Compensation and Benefit
Plans containing "change of control" or similar provisions therein are
specifically identified in Section 6.1(h) of the Company Disclosure Letter.
(ii) All Compensation and Benefit Plans covering Employees (the
"Plans") have been operated in all material respects in accordance with their
terms and in substantial compliance with all applicable Laws. Each Plan that is
an "employee pension benefit plan" within the meaning of Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") (a
"Pension Plan") and that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service (the "IRS") with respect to "TRA" (as defined in Section 1 of Rev. Proc.
93-39), and none of the executive officers of the Company has knowledge of any
circumstances reasonably likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the knowledge of the
executive officers of the Company, threatened litigation relating to the
Compensation and Benefit Plans. Neither the Company nor any of its Subsidiaries
has engaged in a transaction with respect to any Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject the
Company or any of its Subsidiaries to a material tax or penalty imposed by
either Section 4975 of the Code or Section 502(i) of ERISA.
(iii) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by the Company or any Subsidiary with respect to
any ongoing, frozen or terminated "single-employer plan", within the meaning of
Section 4001(a)(15) of ERISA, currently or for-
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merly maintained by any of them, or the single-employer plan of any entity which
is considered one employer with the Company under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). The Company and its Subsidiaries
have not incurred and do not expect to incur, directly or indirectly, any
withdrawal liability with respect to a multiemployer plan under Subtitle E to
Title IV of ERISA. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof or will be
required to be filed in connection with the transactions contemplated by this
Agreement.
(iv) All contributions and premiums required to be made under the terms
of any Compensation and Benefit Plan as of the date hereof have been timely made
or have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports. Neither any Pension Plan nor
any single-employer plan of an ERISA Affiliate has an "accumulated funding
deficiency," within the meaning of Section 412 of the Code or Section 302 of
ERISA and no ERISA Affiliate has an outstanding funding waiver (whether or not
waived) as of the last day of the most recent plan year ended prior to the date
hereof. Neither the Company nor its Subsidiaries has provided, or is required to
provide, security to any Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code. No insurance policy or
Contract with respect to any Compensation and Benefit Plans requires or permits
retroactive increases in premiums or payments due thereunder.
(v) Under each Pension Plan which is a single employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Pension Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Pension
Plan, and there has been no material change in the financial condition of such
Pension Plan since the last day of the most recent plan year.
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(vi) Neither the Company nor its Subsidiaries have any obligations for
retiree health and life benefits under any Compensation and Benefit Plan.
(vii) The consummation of the Merger and the other transactions
contemplated by this Agreement will not (x) entitle any Employees to severance
pay, (y) accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to, any of the Compensation and Benefit Plans or (z) result in any
breach or violation of, or a default under, any of the Compensation and Benefit
Plans. The Company may amend or terminate any Compensation and Benefit Plan in
accordance with its express terms or under applicable Law.
(viii) Notwithstanding anything to the contrary contained in this
Section 6.1(h), the representations and warranties contained in this Section
6.1(h) shall be deemed to be true and correct unless such failures to be true
and correct are reasonably likely to have a Company Material Adverse Effect.
(i) Compliance with Laws. The business of the Company and its
Subsidiaries is not being conducted in violation of any federal, state, local or
foreign law, statute, ordinance, rule, regulation, judgment, order, injunction,
decree, arbitration award, agency requirement, license or permit of any
Governmental Entity (collectively, "Laws"), except for violations that would not
have a Company Material Adverse Effect or prevent or materially burden or
materially impair the ability of the Company to consummate the transactions
contemplated by this Agreement. No investigation or review by any Governmental
Entity with respect to the Company or any of its Subsidiaries is pending or, to
the knowledge of the executive officers of the Company, threatened, nor has any
Governmental Entity indicated an intention to conduct the same, except for those
the outcome of which would not have a Company Material Adverse Effect or prevent
or materially burden or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement. The Company and its
Subsidiaries each has all permits, licenses, franchises, variances, exemptions,
orders and other governmental authorizations, consents and approvals from
Governmental Entities necessary to conduct its business as presently
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conducted, except for those the absence of which would not have a Company
Material Adverse Effect or prevent or materially burden or materially impair the
ability of the Company to consummate the Merger and the other transactions
contemplated by this Agreement.
(j) Takeover Statutes. No "fair price," "moratorium," "control share
acquisition," "interested stockholder" or other similar anti-takeover statute or
regulation (including, without limitation, Sections 607.0901 and 607.0902 of the
FBCA) (each a "Takeover Statute") or restrictive provision of any applicable
anti-takeover provision in the articles of incorporation of the Company or
by-laws of the Company is, applicable to the Company, the Shares, the Offer, the
Merger or any of the other transactions contemplated by this Agreement.
(k) Environmental Matters. Except as disclosed in the Company Reports
and except for such matters that would not have a Company Material Adverse
Effect: the Company and its Subsidiaries (i) are in substantial compliance with
all applicable Environmental Laws; (ii) have not received any notice from any
Governmental Entity or any third party alleging any violation of, or liability
under, any applicable Environmental Laws; (iii) are not subject to any court
order, administrative order or decree arising under any Environmental Law; (iv)
to the knowledge of the executive officers of the Company do not own or operate
any property that has been contaminated with any Hazardous Substance and (v) are
not subject to any claims, demands or notifications concerning liability for any
Hazardous Substance disposal or contamination.
Parent and Merger Sub acknowledge that the representations and
warranties contained in this Section 6.1(k) are the only representations and
warranties being made by the Company with respect to compliance with, or
liability or claims under, Environmental Laws or with respect to permits issued
or required under Environmental Laws, that no other representation by the
Company contained in this Agreement shall apply to any such matters and that no
other representation or warranty, express or implied, is being made with respect
thereto.
As used herein, the term "Environmental Law" means any federal, state,
local or foreign statute, law, regulation, order, decree, permit, authorization,
common law
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or agency requirement as in effect and as interpreted relating to: (A) the
protection, investigation or restoration of the environment, health, safety, or
natural resources or (B) the handling, use, presence, disposal, release or
threatened release of, or exposure to, any Hazardous Substance.
As used herein, the term "Hazardous Substance" means any substance that
is listed, classified or regulated pursuant to any Environmental Law including
any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
material or radon.
(l) Taxes. The Company and each of its Subsidiaries (i) have duly and
timely filed (taking into account any extension of time within which to file)
all Tax Returns (as defined below) required to be filed by any of them and all
such filed Tax Returns are complete and accurate in all material respects; (ii)
have paid all Taxes (as defined below) that are shown as due on such filed Tax
Returns or that the Company or any of its Subsidiaries are obligated to withhold
from amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith and would not have a Company Material Adverse
Effect; and (iii) have not waived any statute of limitations with respect to
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency, except, in each case, for those failures to file or pay or those
waivers that would not have a Company Material Adverse Effect. There are not
pending or, to the knowledge of the executive officers of the Company,
threatened in writing, any audits, examinations, investigations or other
proceedings in respect of Taxes or Tax matters.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes", and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severances, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect of such penalties and
additions, and (ii) the term "Tax Return"
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includes all returns and reports (including elections, declarations,
disclosures, schedules, estimates and informa tion returns) required to be
supplied to a Tax authority relating to Taxes.
(m) Labor Matters. Neither the Company nor any of its Subsidiaries is
the subject of any proceeding asserting that the Company or any of its
Subsidiaries has committed an unfair labor practice nor is there pending or, to
the knowledge of the executive officers of the Company, threatened, nor since
January 1, 1996 has there been any labor strike, dispute, walk-out, work
stoppage, slow-down or lockout involving the Company or any of its Subsidiaries,
except in each case for those that would not have a Company Material Adverse
Effect or prevent or materially burden or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement.
(n) Intellectual Property.
(i) The Company and/or one or more of its Subsidiaries owns, or is
licensed or otherwise possesses valid rights to use, all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
technology, know-how, computer software programs or applications, and tangible
or intangible proprietary information or materials that are used in the business
of the Company and its Subsidiaries, except for any such failures to own, be
licensed or possess that would not have a Company Material Adverse Effect, and
to the knowledge of the executive officers of the Company all patents,
trademarks, trade names, service marks and copyrights owned by the Company
and/or its Subsidiaries are valid and subsisting, except for those that would
not have a Company Material Adverse Effect.
(ii) Except as disclosed in Company Reports or except as would not have
a Company Material Adverse Effect:
(A) the Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and
other agreements as to which the Company is a party as of the date
hereof and pursuant to which the Company is authorized to use any
third-party patents, trademarks, service marks, copyrights, trade
secrets or computer
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software (collectively, "Third-Party Intellectual Property
Rights");
(B) no claims with respect to (I) the patents, registered and
material unregistered trademarks and service marks, registered
copyrights, trade names, and any applications therefor, trade secrets
or computer software owned by the Company or any of its Subsidiaries
(collectively, the "Company Intellectual Property Rights"); or (II)
Third-Party Intellectual Property Rights are currently pending or, to
the knowledge of the executive officers of the Company, are threatened
by any Person;
(C) to the knowledge of the executive officers of the Company
there are not any valid grounds for any bona fide claims (I) to the
effect that the sale, licensing or use of any service as used, sold or
licensed by the Company or any of its Subsidiaries, infringes on any
copyright, patent, trademark, service mark or trade secret; (II)
against the use by the Company or any of its Subsidiaries of any
Company Intellectual Property Rights or the Third-Party Intellectual
Property Rights used in the business of the Company or any of its
Subsidiaries as currently conducted; (III) challenging the ownership,
validity or enforceability of any of the Company Intellectual Property
Rights; or (IV) challenging the license or legally enforceable right to
use of the Third-Party Intellectual Rights by the Company or any of its
Subsidiaries; and
(D) to the knowledge of the executive officers of the Company,
there is no unauthorized use, infringement or misappropriation of any
of the material Intellectual Property Rights by any third party,
including any employee or former employee of the Company or any of its
Subsidiaries.
(o) Brokers and Finders. Except for Goldman, Sachs & Co., neither the
Company nor any of its officers, directors or employees has employed any broker
or finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the Merger or the other transactions
contemplated by this Agreement.
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(p) Year 2000. The Company has developed a plan which it reasonably
believes is designed to confirm that all computer software and systems
(including hardware, firmware, operating system software, utilities, embedded
processors and application's software) used in and material to the business of
the Company are designed to operate during and after the calendar year 2000 to
accurately process data (including but not limited to calculating, comparing and
sequencing) from, into and between the twentieth and twenty-first centuries,
including leap year calculations and the Company is not aware of any flaws in
any of the computer software and systems owned by it and used in and material to
the business of the Company that would have a Company Material Adverse Effect.
(q) Waiver of Vesting. The individuals listed in Schedule 6.1(q) of the
Company Disclosure Letter have waived all vesting rights that they may have
pursuant to the terms of Section 7.8 hereof with respect to all options to
purchase shares beneficially owned by them and issued pursuant to the Stock
Plans. The Company has provided Parent with copies of each such waiver.
(r) No other Representations or Warranties. Except for the
representations and warranties contained in this Section 6.1, neither the
Company nor any other Person makes any other express or implied representation
or warranty on behalf of the Company or any of its Affiliates.
6.2. Representations and Warranties of Parent and Merger Sub. Except as
set forth in the disclosure letter delivered to the Company by Parent on or
prior to entering into this Agreement (the "Parent Disclosure Letter"), Parent
and Merger Sub each hereby represent and warrant to the Company that:
(a) Capitalization of Merger Sub. The authorized capital stock of
Merger Sub consists of 1,000 shares of Common Stock, par value $.01 per share,
of Merger Sub all of which are validly issued and outstanding. All of the issued
and outstanding capital stock of Merger Sub is, and at the Effective Time will
be, owned by Parent, and there are (i) no other shares of capital stock or
voting securities of Merger Sub authorized, (ii) no securities of Merger Sub con
vertible into or exchangeable for shares of capital stock or voting securities
of Merger Sub and (iii) no options or other rights to acquire from Merger Sub,
and no obligations
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of Merger Sub to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Merger Sub. Merger Sub has not conducted any business prior to the date hereof
and has no, and prior to the Effective Time will have no, assets, liabilities or
obligations of any nature other than those incident to its formation and
pursuant to or in connection with this Agreement, the Offer and the Merger and
the other transactions contemplated by this Agreement.
(b) Organization, Good Standing and Qualification. Each of Parent and
Merger Sub is a corporation duly organized, validly existing and in good
standing (or active status) under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing (or
active status) as a foreign corporation in each jurisdiction where the ownership
or operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing
would not have a Parent Material Adverse Effect. Parent has made available to
the Company a complete and correct copy of Parent's and Merger Sub's
certificates of incorporation and by-laws (or comparable governing instruments),
as amended to the date hereof. Parent's and Merger Sub's certificates of
incorporation and by-laws (or comparable governing instruments) so delivered are
in full force and effect.
As used in this Agreement, the term "Parent Material Adverse Effect"
means a material adverse effect on the financial condition, properties, business
or results of operations of Parent and its Subsidiaries taken as a whole;
provided, however, that any such effect resulting from any change in law, rule,
or regulation or GAAP or interpretations thereof shall not be considered when
determining if a Parent Material Adverse Effect has occurred.
(c) Capital Structure. As of the most recently filed Quarterly Report
on Form 10-Q of Parent, the authorized, issued and outstanding capital stock of
Parent is as stated therein. Each of the outstanding shares of capital stock or
other securities of each of Parent's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and owned by Parent or a direct or
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indirect wholly-owned Subsidiary of Parent, free and clear of any lien, pledge,
security interest, claim or other encumbrance. Except as set forth in the most
recently filed Quarterly Report on Form 10-Q of Parent and in the ordinary
course of business, there are no preemptive or other out standing rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements or commitments to issue or
to sell any shares of capital stock or other securities of Parent or any of its
Subsidiaries or any securities or obligations convertible or exchangeable into
or exercisable for, or giving any Person a right to subscribe for or acquire,
any securities of Parent or any of its Subsidiaries, and no securities or
obligations evidencing such rights are authorized, issued or outstanding. Parent
does not have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the stockholders of Parent on any
matter ("Parent Voting Debt").
(d) Corporate Authority; Approval and Fairness.
(i) No vote of holders of capital stock of Parent is necessary to
approve this Agreement, the Offer and the Merger and the other transactions
contemplated hereby. Each of Parent and Merger Sub has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement, and to
consummate the Merger and the transactions contemplated hereby. The consummation
of the transactions contemplated hereby has been duly authorized by the
respective Boards of Directors of Parent and Merger Sub and no other corporate
proceeding on the part of Parent or Merger Sub is necessary to authorize the
execution and delivery of this Agreement by Parent and Merger Sub and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and Merger Sub and, assuming due
authorization, execution and delivery of this Agreement by the Company, is a
valid and legally binding agreement of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms, subject to
the Bankruptcy and Equity Exception.
(ii) The Board of Directors of Parent has received the opinion of its
financial advisors, Bear, Stearns & Co.
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Inc., to the effect that the Merger Consideration and the Consideration to be
paid in the Offer are fair, from a financial point of view, to Parent.
(e) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) pursuant to the FBCA, (B)
under the HSR Act, and (C) the Exchange Act, no notices, reports or other
filings are required to be made by Parent or Merger Sub with, nor are any
consents, registrations, approvals, permits or authorizations required to be
obtained by Parent or Merger Sub from, any Governmental Entity, in connection
with the execution and delivery of this Agreement by Parent and Merger Sub and
the consummation by Parent and Merger Sub of the Merger, the Offer and the other
transactions contemplated hereby, except for those that the failure to make or
obtain would not have a Parent Material Adverse Effect or prevent, materially
delay or materially impair the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub do not, and the consummation by Parent and Merger Sub of
the Offer, the Merger or the other transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of, or a default under, either
the certificate of incorporation or by-laws of Parent and Merger Sub or the
comparable governing instruments of any of Parent's Subsidiaries, (B) a breach
or violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on the assets
of Parent or any of its Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any Contracts or any Law or governmental or non-governmental
permit or license to which Parent or any of its Subsidiaries is subject or (C)
any change in the rights or obligations of any party under any of the Contracts,
except, in the case of clause (B) or (C) above, for any breach, violation,
default, acceleration, creation or change that would not have a Parent Material
Adverse Effect or prevent, materially delay or materially impair the ability of
Parent or Merger Sub to consummate the transactions contemplated by this
Agreement.
(f) Litigation and Liabilities. There are no civil, criminal or
administrative actions, suits, claims,
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hearings, investigations or proceedings pending or, to the knowledge of
the executive officers of Parent, threatened against Parent or any of its
Subsidiaries, which would prevent or materially burden or materially impair the
ability of Parent or Merger Sub to consummate the Offer, the Merger or any of
the other transactions contemplated by this Agreement.
(g) Compliance with Laws. The business of Parent and its Subsidiaries
taken as a whole is not being conducted in violation of any Laws, except for
violations that would not materially burden or materially impair the ability of
Parent to consummate the transactions contemplated by this Agreement. As of the
date hereof, no investigation or review by any Governmental Entity with respect
to Parent or any of its Subsidiaries is pending or, to the knowledge of the
executive officers of Parent, threatened, nor has any Governmental Entity
indicated an intention to conduct the same, except for those the outcome of
which would not prevent or materially burden or materially impair the ability of
Parent to consummate the transactions contemplated by this Agreement. Parent and
its Subsidiaries each has all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
from Governmental Entities necessary to conduct its business as presently
conducted, except for those the absence of which would not prevent or materially
burden or materially impair the ability of Parent or Merger Sub to consummate
the Merger and the other transactions contemplated by this Agreement.
(h) Takeover Statutes. No Takeover Statute or restrictive provision of
any applicable anti-takeover provision in the certificate of incorporation of
Parent or by-laws of Parent is, applicable to Parent, Merger Sub, the Offer, the
Merger or any of the other transactions contemplated by this Agreement.
(i) Brokers and Finders. Except for Bear, Stearns & Co. Inc., neither
Parent nor any of its officers, directors or employees has employed any broker
or finder or incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the Offer, the Merger or the other transactions
contemplated by this Agreement.
(j) Funds. Parent and Merger Sub will have the funds necessary to
consummate the Offer and the Merger.
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(k) No other Representations or Warranties. Except for the
representations and warranties contained in this Section 6.2, neither Parent nor
any other Person makes any other express or implied representation or warranty
on behalf of Parent or any of its Affiliates.
ARTICLE VII
Covenants
7.1. Interim Operations of the Company. From the date hereof through
the Effective Time, the Company covenants and agrees that its business and the
business of its Subsidiaries shall be conducted in the ordinary and usual course
and, to the extent consistent therewith, it and its Subsidiaries shall use their
respective best reasonable efforts to preserve its business organization intact
and maintain its existing relations and goodwill with customers, suppliers,
distributors, creditors, lessors, employees and business associates. Without
limiting the generality of the foregoing, except as otherwise set forth in
Section 7.1(a) of the Company Disclosure Letter, the Company covenants and
agrees as to itself and its Subsidiaries that, from the date hereof and prior to
the Effective Time (unless Parent shall otherwise approve in writing, which
approval shall not be unreasonably withheld or delayed, and except as otherwise
expressly contemplated by this Agreement or by Law):
(i) it shall not (x) issue, sell, pledge, dispose of or encumber any
capital stock owned by it in any of its Subsidiaries; (y) amend its articles of
incorporation or by-laws or the comparable governing instruments of any of its
Subsidiaries; (z) split, combine or reclassify its outstanding shares of capital
stock; (aa) declare, set aside or pay any dividend payable in cash, stock or
property in respect of any capital stock other than dividends from its direct or
indirect wholly-owned Subsidiaries to it or a wholly-owned Subsidiary or (bb)
repurchase, redeem or otherwise acquire any shares of its capital stock or any
securities convertible into or exchangeable or exercisable for any shares of its
capital stock, except, in connection with the Stock Plans, or permit any of its
Subsidiaries to purchase or otherwise acquire, any shares of its capital stock
or any securities convertible into or exchangeable or exercisable for any shares
of its capital stock;
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(ii) neither it nor any of its Subsidiaries shall (x) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any class or
any Voting Debt or any other property or assets (other than Shares issuable
pursuant to options (whether or not vested) outstanding on the date hereof under
the Stock Plans); (y) other than in the ordinary and usual course of business,
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other property or assets (including capital stock of any of its
Subsidiaries) or incur or modify any material indebtedness for borrowed money or
guarantee any such indebtedness or (z) by any means, make any significant
acquisition of, or investment in, assets or stock (whether by way of merger,
consolidation, tender offer, share exchange or other activity);
(iii) neither it nor any of its Subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards under, amend or
otherwise modify, any Compensation and Benefit Plans, or increase the salary,
wage, bonus or other compensation of any employees except for grants or awards
or increases under existing Compensation and Benefit Plans occurring in the
ordinary and usual course of business (which shall include normal periodic
performance reviews and related compensation and benefit increases), annual
reestablishment of Compensation and Benefit Plans and the provision of
individual compensation or benefit plans and agreements for newly hired or
appointed officers and employees of the Company and its Subsidiaries or except
for actions necessary to satisfy existing contractual obligations under
Compensation and Benefit Plans or agreements existing as of the date hereof; and
(iv) neither it nor any of its Subsidiaries will authorize or enter
into an agreement to do anything prohibited by the foregoing.
7.2. Acquisition Proposals. The Company agrees that neither it nor any
of its Subsidiaries nor any of its or its Subsidiaries' officers and directors
shall, and that it shall cause its and its Subsidiaries' employees, agents and
other representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly,
initiate, solicit,
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encourage or otherwise facilitate any inquiries or the making of any proposal or
offer with respect to a merger, tender offer, reorganization, share exchange,
consolidation or similar transaction involving, or any purchase of all or
substantially all of the assets or any equity securities of, it or any of its
Subsidiaries (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal"). The Company further agrees that neither it nor any of
its Subsidiaries nor any of its or its Subsidiaries' officers and directors
shall, and that it shall cause its and its Subsidiaries' employees, agents and
representatives not to, directly or indirectly, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal;
provided, however, that nothing contained in this Agreement shall prevent either
the Company or any of its representatives or the Board of Directors of the
Company from (A) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Acquisition Proposal or otherwise complying with the Exchange
Act; (B) providing information in response to a request therefor by a Person who
has made an unsolicited Acquisition Proposal; (C) engaging in any negotiations
or discussions with any Person who has made an unsolicited Acquisition Proposal
or otherwise facilitating any effort or attempt to implement an Acquisition
Proposal; or (D) recommending such an Acquisition Proposal to the stockholders
of the Company, if, and only to the extent that, in each such case referred to
in clause (B), (C) or (D) above, the Board of Directors of the Company
determines either (x) upon advice of outside legal counsel that the failure to
take such action would constitute a breach of the directors' fiduciary duties
under applicable law or (y) that such Acquisition Proposal contains terms such
that if an agreement relating to such Acquisition Proposal were entered into it
would be, in the aggregate, more favorable to the Company, taking into account,
at the sole discretion of the Board of Directors of the Company, any of the
matters described in Section 4.5 of the articles of incorporation of the
Company, than the transactions contemplated by this Agreement (any such more
favorable Acquisition Proposal being referred to as a "Superior Proposal"). The
Company agrees that it will immediately cease and cause to be terminated any
existing discussions or negotiations with any parties conducted heretofore with
respect to any Acquisition Proposal; it
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being understood that any Acquisition Proposal made prior to the date hereof
may, if made at any time after the date hereof, be deemed a Superior Proposal,
if it would otherwise fulfill the requirements for being deemed a Superior
Proposal hereunder. The Company agrees that it will take the necessary steps to
promptly inform the individuals or entities referred to in the first sentence
hereof of the obligations undertaken in this Section 7.2. The Company will,
within forty-eight hours of receipt of an Acquisition Proposal that would be
reasonably likely to result in a Superior Proposal, notify Parent of the receipt
and terms of such proposal, including the identity of the offeror, and will keep
Parent reasonably informed of the status of any such Proposal. The Company also
agrees that as soon as reasonably practicable after the date hereof it will
request the return of confidential information from any Person previously
receiving such information in connection with such Person's consideration of a
potential Acquisition Proposal.
7.3. Meetings of the Company's Stockholders. If required following
expiration of the Offer and the purchase of Shares thereunder, the Company will
promptly take, consistent with the FBCA and its articles of incorporation and
By-Laws, all action necessary to convene a meeting of holders of Shares as
promptly as practicable to consider and vote upon the approval of the Merger and
this Agreement. Without limiting the generality of the foregoing, if required by
applicable law, the Company and Parent shall immediately following the purchase
of Shares pursuant to the Offer prepare an information or proxy statement (the
"Proxy Statement"), file it with the SEC under the Exchange Act as promptly as
practicable after Merger Sub purchases Shares pursuant to the Offer, and use all
reasonable efforts to have it cleared by the SEC. As promptly as practicable
after the Proxy Statement has been cleared by the SEC, the Company shall mail
the Proxy Statement to the stockholders of the Company as of the record date for
the stockholders' meeting referred to above. If required under applicable law,
the Company and Parent shall prepare the Schedule 13e-3, file it with the SEC
under the Exchange Act as promptly as practicable after Merger Sub purchases
shares pursuant to the Offer and supplement and amend it as shall be required.
The Company will use its best efforts to obtain and furnish the information
required to be included by it in the Proxy Statement and, after consultation
with Parent, respond promptly to any comments of the SEC relating to the
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preliminary proxy or information statement relating to the transactions
contemplated by this Agreement and to cause the definitive Proxy Statement
relating to the transactions contemplated by this Agreement to be mailed to its
stockholders, all at the earliest practical time. Whenever any event occurs
which should be set forth in an amendment or supplement to the Proxy Statement
or any other filing required to be made with the SEC, each party will promptly
inform the other and cooperate in filing with the SEC and/or mailing to
stockholders such amendment or supplement. The Proxy Statement and all
amendments and supplements thereto shall comply with applicable law in all
material respects and be in form and substance satisfactory to Parent. Subject
to fiduciary requirements of applicable Law as advised by outside counsel, the
Board of Directors of the Company shall recommend such approval referral to
which shall be included in the Proxy Statement and the Company shall take all
lawful action to solicit such approval. At any such meeting of the Company all
of the Shares then owned by the Parent Companies will be voted in favor of this
Agreement. The Proxy Statement with respect to such meeting of stockholders, at
the date mailed to stockholders, shall not include an untrue statement of a
material fact or omit 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; provided, however, that the foregoing
shall not apply to the extent that any such untrue statement of a material fact
or omission to state a material fact was made by the Company in reliance upon
and in conformity with written information concerning the Parent Companies
furnished to the Company by Parent for use in the Proxy Statement.
Notwithstanding the foregoing, in the event that Parent or Merger Sub shall
acquire at least 80% of the outstanding shares of each class of capital stock of
the Company pursuant to the Offer, the parties hereto agree, at the request of
Parent, to take all appropriate and necessary action to cause the Merger to
become effective, as soon as practicable after the expiration or termination of
the Offer and the transactions contemplated hereby, without a meeting of
stockholders of the Company, in accordance with the FBCA.
7.4. Filings; Other Actions; Notification. (a) The Company and Parent
shall cooperate with each other and use (and shall cause their respective
Subsidiaries to use) their respective best efforts to take or cause to be taken
all actions, and do or cause to be done all things,
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necessary, proper or advisable on its part under this Agreement and applicable
Laws to consummate the Offer and make effective the Merger and the other
transactions contemplated by this Agreement as soon as practicable, including
preparing and filing as soon as practicable all documentation to effect all
necessary notices, reports and other filings and to obtain as soon as
practicable all consents, registrations, approvals, permits and authorizations
necessary or advisable to be obtained from any third party and/or any
Governmental Entity in order to consummate the Offer, the Merger or any of the
other transactions contemplated by this Agreement. Subject to applicable Laws
relating to the exchange of information, Parent and the Company shall have the
right to review in advance, and to the extent practicable each will consult the
other on, all the information relating to Parent or the Company, as the case may
be, and any of their respective Subsidiaries, that appear in any filing made
with, or written materials submitted to, any third party and/or any Governmental
Entity in connection with the Merger and the other transactions contemplated by
this Agreement. In exercising the foregoing right, each of the Company and
Parent shall act reasonably and as promptly as practicable.
(b) The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with any statement, filing, notice or
application made by or on behalf of Parent, the Company or any of their
respective Subsidiaries to any third party and/or any Governmental Entity in
connection with the Offer, the Merger and the transactions contemplated by this
Agreement.
(c) Subject to any confidentiality obligations and the preservation of
any attorney-client privilege, the Company and Parent each shall keep the other
apprised of the status of matters relating to completion of the transactions
contemplated hereby, including promptly furnishing the other with copies of
notices or other communications received by Parent or the Company, as the case
may be, or any of its Subsidiaries, from any third party and/or any Governmental
Entity with respect to the Offer, the Merger and the other transactions
contemplated by this Agreement.
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(d) Without limiting the generality of the undertakings pursuant to
this Section 7.4, each of the Company and Parent agrees to take or cause to be
taken the following actions: (i) provide promptly to any and all federal, state,
local or foreign courts or Government Entity with jurisdiction over enforcement
of any applicable antitrust laws ("Government Antitrust Entity") information and
documents requested by any Government Antitrust Entity or necessary, proper or
advisable to permit consummation of the Merger and the transactions contemplated
by this Agreement; and (ii) take promptly, in the event that any permanent or
preliminary injunction or other order is entered or becomes reasonably
foreseeable to be entered in any proceeding that would make consummation of the
Merger in accordance with the terms of this Agreement unlawful or that would
prevent or delay consummation of the Offer, the Merger or any of the other
transactions contemplated by this Agreement, any and all steps (including the
appeal thereof or the posting of a bond necessary to vacate, modify or suspend
such injunction or order so as to permit such consummation on a schedule as
close as possible to that contemplated by this Agreement.
7.5. Access. Upon reasonable notice, and except as may otherwise be
required by applicable Law, the Company shall (and shall cause its Subsidiaries
to) afford the other's officers, employees, counsel, accountants and other
authorized representatives ("Representatives") reasonable access, during normal
business hours throughout the period prior to the Effective Time, to its
properties, books, contracts and records and, during such period, each shall
(and shall cause its Subsidiaries to) furnish promptly to Parent all information
concerning its business, properties and personnel as may reasonably be
requested; provided, that no investigation pursuant to this Section shall affect
or be deemed to modify any representation or warranty made by the Company and;
provided, further, that the foregoing shall not require the Company to permit
any inspection, or to disclose any information, that in the reasonable judgment
of the Company would result in the disclosure of any trade secrets of third
parties or violate any of its obligations with respect to confidentiality if the
Company shall have used reasonable efforts to obtain the consent of such third
party to such inspection or disclosure. All requests for information made
pursuant to this Section shall be directed to an executive officer of the
Company or such Person as may be designated by either of its executive officers,
as the
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case may be. All such information shall be governed by the terms of the
Confidentiality Agreement.
7.6. Stock Exchange De-listing. The Surviving Corporation shall use its
best efforts to cause the Shares to be removed from quotation on the NASDAQ
National Market System and de-registered under the Exchange Act as soon as
practicable following the Effective Time. Unless required by the rules of the
National Association of Securities Dealers, subsequent to Merger Sub's payment
for Shares and prior to the Effective Time, the Company shall not take any
action to cause the Shares to be removed from quotation on the NASDAQ National
Market System and de-registered under the Exchange Act.
7.7. Publicity. The initial press release shall be a joint press
release and thereafter the Company and Parent each shall consult with the other
prior to issuing any press releases or otherwise making public announcements
with respect to the Offer, the Merger and the other transactions contemplated by
this Agreement and prior to making any filings with any third party and/or any
Govern mental Entity (including any national securities exchange or national
market systems) with respect thereto, except as may be required by law or by
obligations pursuant to any listing agreement with or rules of any national
securities exchange or national market system.
7.8. Benefits. (a) Stock Options.
(i) The Company shall take all necessary actions to cause (including
plan amendments) prior to the Effective Time each outstanding option to purchase
Shares which had not vested immediately prior to such time to become vested and
fully exercisable.
(ii) Prior to the Effective Time, the Company shall use its reasonable
best efforts to cause each then outstanding option granted under the Stock Plans
to purchase Shares (a "Company Option"), whether vested or unvested, to be
cancelled, with the holder thereof becoming entitled to receive an amount of
cash equal to the product of (x) the amount, if any, by which the Merger
Consideration exceeds the exercise price per Share subject to such Company
Option (whether vested or unvested) and (y) the number of Shares issuable
pursuant to the unexercised portion of such Option, less any required
withholding of taxes (such amount being hereinafter referred to as the "Option
Consideration"). The
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Option Consideration shall be paid as soon as practicable following the
Effective Time, but in any event within five (5) days following the Effective
Time. The cancellation of a Company Option in exchange for the Option
Consideration shall be deemed a release of any and all rights the holder had or
may have had in respect of such Company Option, and any required consents
received from Company Option holders shall so provide.
(iii) In the event that any Company Options are not cancelled in
accordance with the provisions of Section 7.8(a)(ii), such Company Options (the
"Remaining Options") shall be subject to the following provisions of this
Section 7.8(a)(iii). Each Remaining Option, shall, at the Effective Time, in
accordance with the terms of the Stock Plan pursuant to which such Company
Option was issued, be deemed to constitute an option to acquire, on the same
terms and conditions as were applicable under such Remaining Option immediately
prior to the Effective Time, (A) a number of shares of Parent Common Stock equal
to the product (rounded up to the nearest whole number) obtained by multiplying
(x) the number of Shares the holder of such Remaining Option would have been
entitled to receive immediately prior to the Effective Time had such holder
exercised such Remaining Option in full immediately prior to the Effective Time
and (y) the quotient obtained by dividing the Merger Consideration by the
average of the closing prices per share of Parent Common Stock on the NYSE
Composite Transactions tape for the five trading days immediately preceding the
date of the Effective Time as reported in the Wall Street Journal, New York City
edition, (B) at a price per share of Parent Common Stock (rounded down to the
nearest whole cent) equal to (A) the aggregate exercise price for the Shares
otherwise purchasable pursuant to such Remaining Option (assuming for such
purposes that such Remaining Option was fully exercisable at such time) divided
by (B) the number of full shares of Parent Common Stock deemed purchasable
pursuant to such Remaining Option in accordance with the foregoing; provided,
however, that any Remaining Option which is intended to be an "incentive stock
option" (as defined in Section 422 of the Code) shall be adjusted in accordance
with the requirements of Section 424 of the Code.
(iv) At or prior to the Effective Time, the Company shall make all
necessary arrangements with respect to the Stock Plans to permit the assumption
of the Remaining Options by Parent. Effective at the Effective Time, Parent
shall assume each Remaining Option in accordance with the
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terms of the Stock Plan under which it was issued and the stock option agreement
by which it is evidenced. At or prior to the Effective Time, Parent shall take
all corporate action necessary to reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon exercise of Remaining Options.
At the Effective Time, Parent shall file a registration statement on Form S-8,
or, if unavailable, a registration statement on Form S-3 (or any successor
forms), or another appropriate form with respect to the Parent Common Stock
subject to Remaining Options, and shall use its best efforts to cause such
registration statement to become and remain effective (and maintain the current
status of the prospectus or prospectuses contained therein), as well as comply
with any applicable state securities or "blue sky" laws, for so long as any
Remaining Options remain outstanding.
(v) Prior to the Effective Time, the Board of Directors of Parent shall
use reasonable efforts to take all actions necessary to ensure that the options
to purchase Parent Common Stock (resulting from Remaining Options) held by the
officers and directors of the Company in accordance with this Section 7.8(a)
shall be exempt for purposes of Rule 16b-3 under the Exchange Act (including,
with respect to each officer and director of the Company, having the full Board
of Directors of Parent adopt, prior to the Effective Time, resolutions providing
(i) the name of each such officer and director, (ii) the number of shares of
Parent Common Stock to be subject to each Remaining Option held by each such
officer or director, (iii) any other material terms of such options and (iv) the
fact that such approval is for the purpose of obtaining an exemption under Rule
16b-3 under the Exchange Act).
(b) Employee Benefits. Parent agrees that, during the period commencing
at the Effective Time and end ing on the first anniversary thereof, the
employees of the Company and its Subsidiaries will continue to be provided with
benefits under employee benefit plans that are no less favorable in the
aggregate than the Plans (excluding "change of control" or similar Plans with
respect to any change of control occurring after the Effective Time and
excluding benefits provided pursuant to any Plan covering one or a select group
of current or former employees) currently provided by the Company and its
Subsidiaries to such employees as disclosed in the Company Disclosure Letter.
Following the Effective Time, Parent shall cause service by employees
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of the Company and its Subsidiaries (and any predecessor entities) to be taken
into account for all purposes (including, without limitation, eligibility to
participate, eligibility to commence benefits, vesting, benefit accrual and
severance) under any benefit plans of Parent or its Subsidiaries (including the
Surviving Corporation). From and after the Effective Time, Parent shall (i)
cause to be waived any pre-existing condition limitations under benefit plans of
Parent or its Subsidiaries in which employees of the Company or its Subsidiaries
participate and (ii) cause to be credited to any deductible or out of pocket
expense of Parent's plans any deductibles and out-of-pocket expenses incurred by
such employees and their beneficiaries and dependents during the portion of the
calendar year prior to participation in the benefit plans provided by Parent and
its Subsidiaries. Parent shall cause the Surviving Corporation to, honor all
employee benefit obligations to current and former employees under the
Compensation and Benefit Plans and all employee severance plans and all
employment or severance agreements listed on Schedule 7.8(b) of the Company
Disclosure Letter.
7.9. Indemnification; Directors' and Officers' Insurance. (a) The
Articles of Incorporation and By- laws shall contain the provisions with respect
to indemnification set forth in Section 6.1 of the articles of incorporation of
the Company and Section 10.1 of the by-laws of the Company on the date of this
Agreement and shall provide for indemnification to the fullest extent permitted
by and in accordance with the FBCA, which provisions shall not be amended,
repealed or otherwise modified for a period of six years after the Effective
Time (or, in the case of matters known prior to the Effective Time which have
not been resolved prior to the sixth anniversary of the Effec tive Time, until
such matters are finally resolved) in any manner that would adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement).
(b) Following the Effective Time, Parent shall indemnify and hold
harmless, to the fullest extent permitted under applicable law (and Parent shall
also advance expenses as incurred to the fullest extent permitted under
applicable law), each present and former director, officer and employee
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of the Company and its Subsidiaries (collectively, the "Indemnified Parties")
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, including
the transactions contemplated by this Agreement.
(c) Any Indemnified Party wishing to claim indemnification under
paragraph (b) of this Section 7.9, upon receiving written notification of any
such claim, action, suit, proceeding or investigation, shall promptly notify
Parent thereof, but the failure to so notify shall not relieve Parent of any
liability it may have to such Indemnified Party if such failure does not
materially and irreversibly prejudice Parent. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) Parent shall have the right within ten days following the
notification of Parent by the Indemnified Person of such claim, action, suit,
proceeding or investigation to assume the defense thereof and Parent shall not
be liable to such Indemnified Parties for any legal expenses of other counsel
subsequently incurred by such Indemnified Parties in connec tion with the
defense thereof, except that if Parent elects not to assume such defense,
counsel for the Indemnified Parties advises that there are issues which raise
conflicts of interest between Parent and the Indemnified Parties or the
Indemnified Parties have defenses available to them that are not available to
Parent, the Indemnified Parties may retain counsel satisfactory to them, and
Parent shall pay all fees and expenses of such counsel for the Indemnified
Parties. If such indemnity is not available with respect to any Indemnified
Party, then Parent and the Indemnified Party shall contribute to the amount
payable in such proportion as is appropriate to reflect the relative faults and
benefits of the Surviving Corporation (in the case of Parent) and the
Indemnified Parties.
(d) The Surviving Corporation shall maintain the Company's existing
officers' and directors' liability insurance ("D&O Insurance") or coverage on
materially similar terms thereof for a period of six years after the Effective
Time so long as the annual premium therefor is not
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in excess of 250% of the last annual premium paid prior to the date hereof (the
"Current Premium"); provided, however, that if the existing D&O Insurance is
terminated or cancelled during such six-year period, the Surviving Corporation
shall use its best efforts to obtain as much D&O Insurance as can be obtained
for the remainder of such period for a premium not in excess (on an annualized
basis) of 250% of the Current Premium and shall agree to indemnify the directors
and officers for any Costs not covered by such D&O Insurance.
(e) If Parent or the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or entity
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then, and
in each such case, proper provisions shall be made so that the successors and
assigns of Parent or the Surviving Corporation shall assume all of the
obligations set forth in this Section 7.9.
(f) The provisions of this Section are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
7.10. Takeover Statute. If any Takeover Statute is or may become
applicable to the Shares, the Offer, the Merger or the other transactions
contemplated by this Agreement, each of Parent and the Company and their
respective Board of Directors shall grant such approvals and take such actions
as are necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement or by the Merger and
otherwise act to eliminate or minimize the effects of such statute or regulation
on such transactions.
7.11. Expenses. Parent shall pay all charges and expenses, including
those of the Paying Agent, in connection with the transactions contemplated in
Article V. Except as otherwise provided in this Section 7.11, whether or not the
Merger is consummated, all costs and expenses incurred in connection with this
Agreement, the Offer and the Merger and the other transactions contemplated by
this Agreement shall be paid by the party incurring such expense.
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ARTICLE VIII
Conditions
8.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. If required by the FBCA, the Merger this
Agreement and the plan of merger shall have been duly approved by holders of a
majority of the outstanding Shares in accordance with applicable law and the
articles of incorporation and by-laws of the Company.
(b) HSR. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been earlier terminated.
(c) Litigation. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, law, ordinance, rule, regulation, judgment, decree, injunction or
other order that is in effect and permanently enjoins or otherwise prohibits
consummation of the Merger (collectively, an "Order").
(d) Tender Offer. Merger Sub (or one of the Parent Companies) shall
have purchased Shares in the Offer.
ARTICLE IX
Termination
9.1. Termination by Mutual Consent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by stockholders of the Company referred to in
Section 8.1(a), by mutual written consent of the Company, Merger Sub and Parent
by action of their respective Boards of Directors.
9.2. Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be
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abandoned at any time prior to the Effective Time by action of the Board of
Directors of either Parent or the Company if any Order permanently restraining,
enjoining or otherwise prohibiting consummation of the Merger shall become final
and non-appealable after the parties have used their respective best efforts to
have such Order removed, repealed or overturned (whether before or after the
approval by the stockholders of the Company).
9.3. Termination by the Company. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, by action
of the Board of Directors of the Company (a) if the Board of Directors of the
Company withdraws or adversely modifies its adoption of this Agreement, its
recommendation of the Offer or its recommendation that the stockholders of the
Company approve this Agreement (including, without limitation, taking no
position in response to a tender offer by a Person other than Parent), (b) if
there has been a material breach by Parent or Merger Sub of any material
covenant or agreement contained in this Agreement that is not curable or, if
curable, is not cured prior to the earlier of (i) 30 days after written notice
of such breach is given by the Company to the party committing such breach or
(ii) two Business Days prior to any date on which the Offer is scheduled to
expire; provided, however that at such time specified in this clause (ii)
neither the Company nor Parent has indicated that it intends to request (and has
the right under this Agreement to have such request honored) that the Offer be
extended in accordance with the terms hereof (provided that Parent shall have
been given notice of such breach at least two Business Days prior to
termination) or (c) Merger Sub (or any of the Parent Companies) shall have (i)
terminated the Offer or (ii) failed to pay for Shares pursuant to the Offer on a
timely basis following the expiration of the Offer, if the Offer has not been
extended in accordance with the terms hereof.
9.4. Termination by Parent. This Agreement may be terminated and the
Merger may be abandoned at any time (a) prior to the Effective Time by action of
the Board of Directors of Parent if due to an occurrence or circumstance which
resulted in a failure to satisfy any of the Offer Conditions, and Merger Sub
shall have terminated the Offer in accordance with the terms hereof (including,
without limitation, taking no position in response to a tender offer by a Person
other than any of the Parent Companies),
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(b) prior to the purchase of Shares by Merger Sub pursuant to the Offer
if (i) the Board of Directors of the Company withdraws or adversely modifies its
adoption of this Agreement, its recommendation of the Offer or its
recommendation that the stockholders of the Company approve this Agreement
(including, without limitation, taking no position in response to a tender offer
by a Person other than any of the Parent Companies), (ii) there has been a
material breach by the Company of any material covenant or agreement contained
in this Agreement that is not curable or, if curable, is not cured prior to the
earlier of (A) 30 days after written notice of such breach is given by Parent to
the party committing such breach or (B) two Business Days prior to any date on
which the Offer is scheduled to expire; provided, however, that and at such time
specified in this clause (ii) neither the Company nor Parent has indicated that
it intends to request (and has the right under this Agreement to have such
request honored) that the Offer be extended in accordance with the terms hereof
(provided that the Company shall have been given notice of such breach at least
two Business Days prior to termination) or (iii) the Minimum Condition shall not
have been satisfied by the expiration of the Offer (as it may have been extended
from time to time), and at or prior to such time any Person (other than Parent
or Merger Sub) shall have made a public announcement with respect to a bona fide
Acquisition Proposal that contemplates a per Share consideration in excess of
the Merger Consideration.
9.5. Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article IX, this Agreement (other than as set forth in Section 10.1) shall
become void and of no effect with no liability on the part of any party hereto
(or of any of its directors, officers, employees, agents, legal and financial
advisors or other representatives); provided, however, that except as otherwise
provided herein, no such termination shall relieve any party hereto of any
liability or damages resulting from any wilful breach of this Agreement.
(b) In the event that this Agreement is terminated by Parent pursuant
to Section 9.4(b)(ii), then the Company shall promptly, but in no event later
than two days after the date of such termination, pay Parent a termination fee
(as liquidated damages) of $29,400,000 (the "Termination Fee") by wire transfer
of same day funds to an
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account previously designated in writing by Parent to the Company. In the event
that (i)(A) an Acquisition Proposal (other than pursuant to this Agreement)
shall have been made to the Company or any Person (other than Parent or any of
its Affiliates) shall have publicly announced an intention (whether or not
conditional) to make an Acquisition Proposal with respect to the Company and
thereafter this Agreement is terminated by the Company pursuant to Section
9.3(c)(i) or Parent pursuant to Section 9.4(a) under circumstances which would
have permitted Parent to terminate pursuant to Section 9.4(b)(ii) or (B) this
Agreement is terminated (x) by the Company pursuant to Section 9.3(a) or (y) by
Parent pursuant to Section 9.4(b)(i) or (iii) and (ii)(A) the Person making the
Acquisition Proposal which was outstanding at the time of the termination (the
"Acquiring Party") has acquired, by purchase, merger, consolidation, sale,
assignment, lease, transfer or otherwise, in one transaction or any related
series of transactions within twelve months after a termination of this
Agreement, a majority of the voting power of the outstanding securities of the
Company or all or substantially all of the assets of the Company or (B) there
has been consummated a merger, consolidation or similar business combination
between the Company or one of its Subsidiaries and the Acquiring Party within
twelve months after the relevant termination of this Agreement, then the Company
shall promptly, but in no event later than two days after the consummation of
the transaction or transactions with the Acquiring Party, pay Parent the
Termination Fee in same day funds to an account previously designated by Parent
to the Company in writing. The Company's payment of the Termination Fee shall be
the sole and exclusive remedy of Parent and Merger Sub against the Company and
any of its Subsidiaries and their respective directors, officers, employees,
agents, advisors or other representatives in the event this Agreement is
terminated and the Termination Fee is payable whether or not there has been a
breach of this Agreement (whether or not such breach is wilful).
ARTICLE X
Miscellaneous and General
10.1. Survival. This Article IX and the agreements of the Company,
Parent and Merger Sub contained in Sections 7.6 (De-listing), 7.8 (Benefits),
7.11 (Expenses)
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and 7.9 (Indemnification; Directors' and Officers' Insurance) shall survive the
consummation of the Merger. This Article X, the agreements of the Company,
Parent and Merger Sub contained in Section 7.11 (Expenses), Section 9.5 (Effect
of Termination and Abandonment) and the Confidentiality Agreement shall survive
the termination of this Agreement. All other representations, warranties,
covenants and agreements in this Agreement shall not survive the consummation of
the Merger or the termination of this Agreement.
10.2. Modification or Amendment. Subject to the provisions of the
applicable law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties; provided that, in the case
of the Company any such modification or amendment must be approved by a majority
of the directors who are not Parent Insiders.
10.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law; provided, that, in the case of the Company any such waiver must
be approved by a majority of the directors who are not Parent Insiders.
10.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
10.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. THIS AGREEMENT
SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED,
CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF FLORIDA
WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The parties hereby
irrevocably submit to the jurisdiction of the Federal courts of the United
States of America located in the State of Florida or, if unavailable to the
parties, the courts of the State of Florida solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby, and hereby waive, and agree not to assert, as a defense in
any action, suit or proceeding for the
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<PAGE>
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a State of
Florida or Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or proceeding in such manner as may be permitted by law shall be
valid and sufficient service thereof.
10.6. Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail or nationally recognized
overnight courier service, postage prepaid, or by facsimile:
if to Parent or Merger Sub
Ceridian Corporation
8100 34th Avenue South
Minneapolis, MN 55425-1640
Attention: Ronald L. Turner
Fax: (612) 853-7272
(with a copy to Ceridian Corporation
8100 34th Avenue South
Minneapolis, MN 55425-1640
Attention: Reid Shaw
Fax: (612) 853-3413)
if to the Company
ABR Information Services, Inc.
34125 U.S. Highway 19 North
Palm Harbor, Florida 34684-2141
Attention: James P. O'Drobinak
Fax: (727) 789-3854
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<PAGE>
(with a copy to
Francis J. Aquila
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Fax: (212) 558-3588)
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
10.7. Entire Agreement; NO OTHER REPRESENTATIONS. This Agreement
(including any exhibits hereto), the Company Disclosure Letter, the Parent
Disclosure Letter and the Confidentiality Agreement, dated February 4, 1999,
between Parent and Goldman, Sachs & Co., on behalf of the Company (the
"Confidentiality Agreement") constitute the entire agreement, and supersede all
other prior agreements, understandings, representations and warranties both
written and oral, among the parties, with respect to the subject matter hereof.
EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT, NEITHER PARENT AND MERGER SUB NOR THE COMPANY MAKES
ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH
RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, NOT WITHSTANDING THE DELIVERY OR DISCLOSURE TO THE OTHER OR
THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION WITH
RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
10.8. No Third Party Beneficiaries. Except as provided in Section 7.9
(Indemnification; Directors' and Officers' Insurance), this Agreement is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
10.9. Obligations of Parent and of the Company. Whenever this Agreement
requires a Subsidiary of Parent to take any action, such requirement shall be
deemed to include an undertaking on the part of Parent to cause such Subsidiary
to take such action. Whenever this Agreement requires a Subsidiary of the
Company to take any action, such requirement shall be deemed to include an
undertaking on the part
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<PAGE>
of the Company to cause such Subsidiary to take such action and, after the
Effective Time, on the part of the Surviving Corporation to cause such
Subsidiary to take such action.
10.10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
10.11. Interpretation. The table of contents and headings herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
10.12. Assignment. This Agreement shall not be assignable by operation
of law or otherwise.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto as of the date first
written above.
ABR INFORMATION SERVICES, INC.
By: /s/ James E. MacDougald
--------------------------
Name: James E. MacDougald
Title: Chairman, President and
Chief Executive Officer
CERIDIAN CORPORATION
By: /s/ Ronald L. Turner
--------------------------
Name: Ronald L. Turner
Title: President and Chief
Operating Officer
SPRING ACQUISITION CORP.
By: /s/ Gary M. Nelson
--------------------------
Name: Gary M. Nelson
Title: President and Secretary
<PAGE>
ANNEX A
Certain Conditions of the Offer. Notwithstanding any other provision of
the Offer, but subject to the terms of the Merger Agreement, Merger Sub shall
not be required to accept for payment or, subject to any applicable rules and
regulation of the SEC, pay for any Shares, and may terminate the Offer (i) if by
the expiration of the Offer (or, if extended, by the expiration of the Offer, as
so extended) a number of Shares which together with any Shares owned by Parent,
Merger Sub and the Parent Companies, constitutes more than 50% of the
outstanding Shares (on a fully-diluted basis) at the expiration of Offer (the
"Minimum Conditions") shall not have been validly tendered pursuant to the Offer
and not properly withdrawn, (ii) if all applicable waiting periods under the HSR
Act shall not have expired or been terminated or (iii) if on or after April 30,
1999, and at any time prior to acceptance for payment for any such Shares, any
of the following events shall occur; provided that in each such case Merger Sub
shall not be permitted to terminate the Offer (except pursuant to paragraph (g)
below) if prior to the then scheduled expiration of the Offer the Offer shall
have been extended:
(a) there shall have occurred (i) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (ii) a formal declaration of
war or national or international calamity directly or indirectly
involving the United States (other than any declaration of war
resulting from the current conflict in Yugoslavia), (iii) any
limitation (whether or not mandatory) by any United States governmental
authority on the extension of credit by banks or other financial
institutions that materially affects the extension of credit by banks
or other lending institutions, (iv) any general suspension of, or
limitation on prices for, trading in securities on the Nasdaq National
Market or the over the counter market, or (v) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof;
(b) the Company shall have breached or failed to perform any of
its material obligations, covenants or agreements under the Merger
Agreement in a manner
A-1
<PAGE>
permitting Parent to terminate the Merger Agreement, or any
representation or warranty of the Company set forth in the Merger
Agreement shall not be true and correct, provided that such
representations and warranties shall be deemed to be true and correct
unless the failure of such representations and warranties to be so true
and correct would have a Company Material Adverse Effect or would
prevent the Company from consummating the transactions contemplated by
the Merger Agreement, in each case as if such representations and
warranties were made at the time of such termination.
(c) there shall be instituted or pending any action, litigation,
proceeding, investigation or other application (hereinafter, an
"Action") before any court or other Governmental Entity: (i)
challenging the acquisition by the Purchaser or Merger Sub of Shares,
seeking to restrain or prohibit the consummation of the transactions
contemplated by the Merger Agreement; (ii) seeking to prohibit, or
impose any limitations on, Parent's or Merger Sub's ownership or
operation of all or any portion of their or the Company's business or
assets (including the business or assets of their respective affiliates
and subsidiaries); (iii) seeking to make the acceptance for payment,
purchase of, or payment for, some or all of the Shares illegal; (iv)
seeking to impose limitations on the ability of Purchaser or Merger Sub
effectively to acquire or hold or to exercise full rights of ownership
of the Shares including, without limitation, the right to vote the
Shares purchased by them on an equal basis with all other shares on all
matters properly presented to the stockholders; or (v) that, in any
event, would have a Company Material Adverse Effect;
(d) any statute, rule, regulation, order or injunction shall be
enacted, promulgated, entered, enforced or become applicable to the
Offer or the Merger, or any other action shall have been taken by any
court or other Governmental Entity other than the application to the
Offer or the Merger of the waiting period under the HSR Act, that would
result in any of the effects of, or have any of the consequences sought
to be obtained or achieved in, any Action referred to in clauses (i)
through (v) of paragraph (b) above;
A-2
<PAGE>
(e) any person (as such term is defined in Section 13(d)(3) of
the Exchange Act (other than Parent or any of its affiliates))
commences a tender or exchange offer for a majority or more of the
outstanding Shares at a price per Share greater than the Merger
Consideration or any such person shall have become the beneficial owner
of more than 20% of the outstanding Shares (other than for bona fide
arbitrage purposes), or any such person shall have entered into a
definitive agreement to acquire all or substantially all of the Shares
or to effect a merger, consolidation or other business combination with
or involving the Company;
(f) there shall have occurred an event which has caused a Company
Material Adverse Effect;
(g) the Board of Directors of the Company shall have amended,
modified or withdrawn its recommendation of the Offer or the Merger in
a manner adverse to Parent, or shall have endorsed, approved or
recommended any other Acquisition Proposal, or shall have resolved to
do any of the foregoing; or
(h) the Merger Agreement shall have been terminated by the
Company or Parent in accordance with its terms;
which, in the reasonable judgment of Parent, in any such case, and regardless of
the circumstances giving rise to any such conditions, makes it reasonably
inadvisable to proceed with the Offer and/or with such acceptance for payment
of or payment for Shares.
The foregoing conditions other than the Minimum Condition are for the
sole benefit of Parent and may be asserted by Parent or Merger Sub regardless of
the circumstances giving rise to such condition or may be waived by Parent other
than the Minimum Condition, by express and specific action to that effect, in
whole or in part at any time and from time to time in its sole discretion.
A-3
<PAGE>
Exhibit (c)(3)
FORM OF KEY EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the
____ day of _________, 1999 by and between ABR INFORMATION SERVICES, INC., a
Florida corporation (the "Company"), and ________________ (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is employed by the Company and/or a subsidiary
of the Company (the "Employer") in a key executive capacity and the Executive's
services are valuable to the conduct of the business of the Company;
WHEREAS, the Executive possesses intimate knowledge of the business and
affairs of the Company and has acquired certain confidential information and
data with respect to the Company;
WHEREAS, the Company desires to ensure, insofar as possible, that it
will continue to have the benefit of the Executive's services and to protect its
confidential information and goodwill;
WHEREAS, the Company recognizes that circumstances may arise in which a
change in control of the Company occurs, through acquisition or otherwise,
thereby causing uncertainty about the Executive's future employment with the
Employer without regard to the Executive's competence or past contributions,
which uncertainty may result in the loss of valuable services of the Executive
to the detriment of the Company and its shareholders, and the Company and the
Executive wish to provide reasonable security to the Executive against changes
in the Executive's relationship with the Company in the event of any such change
in control;
WHEREAS, the Company and the Executive are desirous that any proposal
for a change in control or acquisition of the Company will be considered by the
Executive objectively and with reference only to the best interests of the
Company and its shareholders; and
WHEREAS, the Executive will be in a better position to consider the
Company's best interests if the Executive is afforded reasonable security, as
provided in this Agreement, against altered conditions of employment which could
result from any such change in control or acquisition; and
<PAGE>
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company to enter into this
Agreement and has authorized the Company to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below:
(a) "ACT" means the Securities Exchange Act of 1934, as
amended.
(b) "CAUSE" means (i) the willful engaging by the Executive in
illegal conduct or gross misconduct which has caused demonstrable and material
financial injury to the Company or its affiliates, or (ii) the willful failure
by the Executive to perform the Executive's duties or responsibilities (other
than any such failure resulting from Executive's incapacity due to physical or
mental illness or any such failure subsequent to Executive being delivered a
Notice of Termination without Cause by the Company or delivering a Notice of
Termination for Good Reason to the Company) after a written demand for
substantial performance is delivered to Executive by the Board which
specifically identifies the manner in which the Board believes that Executive
has not substantially performed Executive's duties. For purpose of this Section
1(b), no act or failure to act by Executive shall be considered "willful" unless
done or omitted to be done by Executive in bad faith and without reasonable
belief that Executive's action or omission was in the best interests of the
Company or its affiliates. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board, based upon the advice
of counsel for the Company or upon the instructions of the Company's chief
executive officer or another senior officer of the Company shall be conclusively
presumed to be done, or omitted to be done, by Executive in good faith and in
the best interests of the Company. Cause shall not exist unless and until the
Company has delivered to Executive a copy of a resolution duly adopted by
three-quarters (:) of the entire Board (excluding Executive if Executive is a
Board member) at a meeting of the Board called and held for such purpose (after
reasonable notice to Executive and an opportunity for Executive, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board an event constituting Cause has occurred and specifying the
particulars thereof in detail.
(c) "CHANGE IN CONTROL OF THE COMPANY" means the occurrence of
any one of the following events:
(i) individuals who, on the date hereof, constitute the Board
(the "Incumbent Directors") cease for any reason to constitute at least
a majority of the Board,
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<PAGE>
provided that any person becoming a director subsequent to the date
hereof, whose election or nomination for election was approved by a
vote of at least two-thirds of the Incumbent Directors then on the
Board (either by a specific vote or by approval of the proxy statement
of the Company in which such person is named as a nominee for director,
without written objection to such nomination) shall be an Incumbent
Director; PROVIDED, HOWEVER, that no individual initially elected or
nominated as a director of the Company as a result of an actual or
threatened election contest (as described in Rule 14a-11 under the Act)
("Election Contest") or other actual or threatened solicitation of
proxies or consents by or on behalf of any "person" (as such term is
defined in Section 3(a)(9) of the Act and as used in Sections 13(d)(3)
and 14(d)(2) of the Act) other than the Board ("Proxy Contest"),
including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest, shall be deemed an Incumbent
Director;
(ii) any person is or becomes a "beneficial owner" (as defined
in Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of
the Company's then outstanding securities eligible to vote for the
election of the Board (the "Company Voting Securities"); PROVIDED,
HOWEVER, that the event described in this paragraph (ii) shall not be
deemed to be a Change in Control of the Company by virtue of any of the
following acquisitions: (A) by the Company or any subsidiary, (B) by
any employee benefit plan (or related trust) sponsored or maintained by
the Company or any subsidiary, (C) by any underwriter temporarily
holding securities pursuant to an offering of such securities, (D)
pursuant to a Non-Qualifying Transaction (as defined in paragraph
(iii)), (E) pursuant to any acquisition by the Executive or any group
of persons including the Executive (or any entity controlled by the
Executive or any group of persons including the Executive); or (F) a
transaction (other than one described in (iii) below) in which Company
Voting Securities are acquired from the Company, if a majority of the
Incumbent Directors approve a resolution providing expressly that the
acquisition pursuant to this clause (F) does not constitute a Change in
Control of the Company under this paragraph (ii);
(iii) the consummation of a merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the
Company or any of its subsidiaries that requires the approval of the
Company's stockholders, whether for such transaction or the issuance of
securities in the transaction (a "Reorganization"), or sale or other
disposition of all or substantially all of the Company's assets to an
entity that is not an affiliate of the Company (a "Sale"), unless
immediately following such Reorganization or Sale: (A) more than 50% of
the total voting power of (x) the corporation resulting from such
Reorganization or the corporation which has acquired all or
substantially all of the assets of the Company (in either case, the
"Surviving Corporation"), or (y) if applicable, the ultimate parent
corporation that
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<PAGE>
directly or indirectly has beneficial ownership of 100% of the voting
securities eligible to elect directors of the Surviving Corporation
(the "Parent Corporation"), is represented by Company Voting Securities
that were outstanding immediately prior to such Reorganization or Sale
(or, if applicable, is represented by shares into which such Company
Voting Securities were converted pursuant to such Reorganization or
Sale), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company
Voting Securities among the holders thereof immediately prior to the
Reorganization or Sale, (B) no person (other than any employee benefit
plan (or related trust) sponsored or maintained by the Surviving
Corporation or the Parent Corporation), is or becomes the beneficial
owner, directly or indirectly, of 25% or more of the total voting power
of the outstanding voting securities eligible to elect directors of the
Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the members of
the board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following the
consummation of the Reorganization or Sale were Incumbent Directors at
the time of the Board's approval of the execution of the initial
agreement providing for such Reorganization or Sale (any Reorganization
or Sale which satisfies all of the criteria specified in (A), (B) and
(C) above shall be deemed to be a "Non-Qualifying Transaction"); or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall not be
deemed to occur solely because any person acquires beneficial ownership of more
than 25% of the Company Voting Securities as a result of the acquisition of
Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; PROVIDED, THAT if after such acquisition by the
Company such person becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of the Company
shall then occur.
(d) "CODE" means the Internal Revenue Code of 1986, including
any amendments thereto or successor tax codes thereof.
(e) "COVERED TERMINATION" means, subject to Section 2(b)
hereof, any termination of the Executive's employment during the Employment
Period in respect of which the Termination Date is any date prior to the end of
the Employment Period.
(f) "EMPLOYMENT PERIOD" means a period commencing on the date
of a Change in Control of the Company, and ending at 11:59 p.m. Eastern Time on
the earlier
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<PAGE>
of the third anniversary of such date or the Executive's Normal Retirement Date.
(g) "GOOD REASON" means the occurrence, without the
Executive's express written consent, of any of the following:
(i) any material breach of this Agreement by the Company,
including specifically any breach by the Company of its agreements
contained in Sections 4, 5 or 6 hereof;
(ii) (A) the removal of the Executive from, or any failure to
reelect or reappoint the Executive to, any of the positions held with
the Company or the Employer on the date of the Change in Control of the
Company or any other positions with the Company or the Employer to
which the Executive shall thereafter be elected, appointed or assigned,
except in the event that such removal or failure to reelect or
reappoint relates to the termination by the Company of the Executive's
employment for Cause or by reason of disability pursuant to Section 11
hereof; or (B) any significant change in the duties or responsibilities
of Executive that is inconsistent in any material and adverse respect
with Executive's duties or responsibilities with the Company
immediately prior to such Change in Control (including any material and
adverse diminution of such duties or responsibilities); PROVIDED,
HOWEVER, that Good Reason shall not be deemed to occur under clauses
(A) or (B) of this Section 1(g)(ii) as a result of a removal, failure
to reelect or reappoint, or change in duties or responsibilities
(including reporting responsibilities) that results from the fact that
(1) the Company ceases to be a publicly traded entity or (2) the
Company has become a subsidiary or a division of another entity, and in
either of clauses (1) or (2) does not involve any other event set forth
in this Section 1(g); or
(iii) failure by the Company to enter into the Successor
Agreement referred to in Section 16(a) hereof and as provided therein
(v) any requirement of the Company that Executive (A) be based anywhere
more than fifty (50) miles from the office where Executive is located
at the time of the Change in Control of the Company or (B) travel on
Company business to an extent substantially greater than the travel
obligations of Executive immediately prior to such Change in Control of
the Company; or
(iv) any refusal by the Company to continue to permit
Executive to engage in activities not directly related to the business
of the Company which Executive was permitted to engage in prior to the
Change in Control of the Company; or
(v) any purported termination of Executive's employment which
is not
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<PAGE>
effectuated pursuant to Section 12 (and which will not constitute a
termination hereunder).
(h) "NORMAL RETIREMENT DATE" means the last day in the
Company's fiscal year in which the Executive attains the age of 65.
(i) "TERMINATION DATE" means, except as otherwise provided in
Section 10(b) and Section 16(a) hereof: (i) if the Executive's employment is
terminated by the Executive's death, the date of death; (ii) if the Executive's
employment is terminated by reason of voluntary early retirement, as agreed in
writing by the Company and the Executive, the date of such early retirement
which is set forth in such written agreement; (iii) if the Executive's
employment is terminated for purposes of this Agreement by reason of disability
pursuant to Section 11 hereof, the earlier of thirty (30) days after the Notice
of Termination (as provided in Section 12 hereof) is given or one day prior to
the end of the Employment Period; (iv) if the Executive's employment is
terminated by the Executive voluntarily (other than for Good Reason), the date
the Notice of Termination is given; and (v) if the Executive's employment is
terminated by the Company (other than by reason of disability pursuant to
Section 11 hereof) or by the Executive for Good Reason, the earlier of thirty
(30) days after the Notice of Termination is given or one day prior to the end
of the Employment Period. Notwithstanding the foregoing:
(1) if the Executive's employment is terminated by the Company
for Cause pursuant to Section 1(b)(ii) of this Agreement, and if the
Executive has cured (to the extent permitted by Section 12(c) hereof)
the conduct constituting such Cause as described by the Company in its
Notice of Termination within thirty (30) days after the Notice of
Termination, then the Executive's employment hereunder shall continue
as if the Company had not delivered its Notice of Termination;
(2) if the Executive shall give the Company a Notice of
Termination for Good Reason and the Company notifies the Executive that
a dispute exists concerning the termination within the fifteen (15) day
period following the date of the Notice of Termination is given, then
the Executive may elect to continue the Executive's employment pending
the resolution of such dispute; provided, that if the Executive so
elects and it is thereafter determined that Good Reason did exist, the
Termination Date shall be the earliest of (A) the date on which the
dispute is finally determined, either (1) by mutual written agreement
of the Executive and the Company or (2) in accordance with Section 21
hereof, (B) the date of the Executive's death, or (C) one day prior to
the end of the Employment Period; provided, further, that if the
Executive so elects and it is thereafter determined that Good Reason
did not exist, then the employment of the Executive hereunder shall
continue after such determination as if the Executive had not delivered
the Notice of Termination asserting Good Reason and there shall be no
Termination Date arising out of such
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<PAGE>
Notice of Termination. In either case, this Agreement shall continue
until the Termination Date, if any, as if the Executive had not
delivered the Notice of Termination except that, if it is finally
determined that Good Reason did exist, the Executive shall in no case
be denied the benefits described in Sections 8(b) and 9 hereof
(including a Termination Payment as defined in Section 9(b)) based on
events occurring after the Executive delivered the Notice of
Termination;
(3) except as provided in clause (2) of this Section 1(i), if
the party receiving the Notice of Termination notifies the other party
that a dispute exists concerning the termination within the appropriate
period following receipt thereof and it is finally determined that the
reason asserted in such Notice of Termination did not exist or did not
support the basis asserted for the giving of such Notice of
Termination, then (A) if such Notice of Termination was delivered by
the Executive, the Executive will be deemed to have voluntarily
terminated the Executive's employment and the Termination Date shall be
the earlier of the date fifteen (15) days after the Notice of
Termination is given one day prior to the end of the Employment Period,
and (B) if such Notice of Termination was delivered by the Company, the
Company will be deemed to have terminated the Executive other than by
reason of death, disability or Cause.
2. TERMINATION OR CANCELLATION PRIOR TO CHANGE IN CONTROL.
(a) Subject to Section 2(b) hereof and the terms of any
written agreement between either the Company or any of its subsidiaries and the
Executive with respect to the employment of the Executive now or hereafter in
effect, the Company (and such subsidiary) and the Executive shall each retain
the right to terminate the employment of the Executive at any time prior to a
Change in Control of the Company. Subject to Section 2(b) hereof, in the event
the Executive's employment is terminated prior to a Change in Control of the
Company, this Agreement shall be terminated and cancelled and of no further
force and effect, and any and all rights and obligations of the parties
hereunder shall cease.
(b) Anything in this Agreement to the contrary
notwithstanding, if a Change in Control of the Company occurs and if the
Executive's employment with the Company is terminated by the Company, other than
a termination due to the Executive's death or as a result of the Executive's
disability, or by the Executive for reasons that would have constituted Good
Reason (had such termination occurred following a Change in Control of the
Company), during the period of 180 days prior to the date on which the Change in
Control of the Company occurs, and if it is reasonably demonstrated by the
Executive that such termination of employment (or event that would have
constituted Good Reason) (i) was at the request of any third party who has taken
steps reasonably calculated to effect a Change in Control of the Company, or
(ii) otherwise arose in connection with or in anticipation of a Change in
Control of the Company, then for all purposes of this Agreement such
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<PAGE>
termination of employment shall be deemed a "COVERED TERMINATION" (and, if
applicable, shall be considered a termination of employment by the Executive for
Good Reason).
3. EMPLOYMENT PERIOD. If a Change in Control of the Company occurs when
the Executive is employed by the Employer, the Company will, or will cause the
Employer to, continue thereafter to employ the Executive during the Employment
Period, and the Executive will remain in the employ of the Employer in
accordance with and subject to the terms and provisions of this Agreement. Any
termination of the Executive's employment during the Employment Period, whether
by the Company or any of its subsidiaries, shall be deemed a termination by the
Company for purposes of this Agreement.
4. DUTIES. During the Employment Period, the Executive shall, in the
same capacities and positions held by the Executive at the time of the Change in
Control of the Company or in such other capacities and positions as may be
agreed to by the Company and the Executive in writing, devote the Executive's
best efforts and all of the Executive's business time, attention and skill to
the business and affairs of the Employer, as such business and affairs now exist
and as they may hereafter be conducted.
5. COMPENSATION. During the Employment Period, the Executive shall be
compensated as follows:
(a) The Executive shall receive, (i) at reasonable intervals
(but not less often than monthly) and in accordance with such standard policies
as may be in effect immediately prior to the Change in Control of the Company,
an annual base salary in cash equivalent to not less than Executive's annual
base salary as in effect immediately prior to the Change in Control of the
Company (which base salary shall, unless otherwise agreed in writing by the
Executive, include the current receipt by the Executive of any amounts which,
prior to the Change in Control of the Company, the Executive had elected to
defer, whether such compensation is deferred under Section 401(k) of the Code or
otherwise), and (ii) an annual cash bonus in an amount not less than the average
cash bonuses earned (whether or not yet paid) by the Executive in respect of the
three fiscal years immediately preceding the Change in Control of the Company
(or, if the Executive has not been employed by the Company for such
three-fiscal-year period, in respect of such fiscal years during which the
Executive has been employed by the Company), subject to adjustment as
hereinafter provided.
(b) The Executive shall receive fringe benefits at least equal
in value to those provided for the Executive immediately prior to the Change in
Control of the Company, and shall be reimbursed, at such intervals and in
accordance with such standard policies as may be in effect immediately prior to
the Change in Control of the Company, for any and all monies advanced in
connection with the Executive's employment for reasonable
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and necessary expenses incurred by the Executive on behalf of the Company,
including travel expenses.
(c) The Executive shall be included, to the extent eligible
thereunder (which eligibility shall not be conditioned on the Executive's salary
grade or on any other requirement which excludes persons of comparable status to
the Executive unless such exclusion was in effect for such plan or an equivalent
plan immediately prior to the Change in Control of the Company), in any and all
plans providing benefits for the Employer's salaried employees in general,
including but not limited to group life insurance, hospitalization, medical,
dental, pension and profit sharing plans; PROVIDED, THAT, in no event shall the
aggregate level of benefits under such plans in which the Executive is included
be less than the aggregate level of benefits under plans of the Company of the
type referred to in this Section 5(c) in which the Executive was participating
immediately prior to the Change in Control of the Company.
(d) The Executive shall annually be entitled to not less than
the amount of paid vacation and not fewer than the number of paid holidays to
which the Executive was entitled annually immediately prior to the Change in
Control of the Company or such greater amount of paid vacation and number of
paid holidays as may be made available annually to other executives of the
Company of comparable status and position to the Executive.
(e) The Executive shall be included in all plans providing
additional benefits to executives of the Company of comparable status and
position to the Executive, including but not limited to deferred compensation,
split-dollar life insurance, supplemental retirement, stock option, stock
appreciation, stock bonus and similar or comparable plans; PROVIDED, THAT, in no
event shall the aggregate level of benefits under such plans be less than the
aggregate level of benefits under plans of the Company of the type referred to
in this Section 5(e) in which the Executive was participating immediately prior
to the Change in Control of the Company; and PROVIDED, FURTHER, that the
Company's obligation to include the Executive in bonus or incentive compensation
plans shall be determined by Section 5(f) hereof.
(f) To assure that the Executive will have an opportunity to
earn incentive compensation after a Change in Control of the Company, the
Executive shall be included in a bonus plan of the Company which shall satisfy
the standards described below (such plan, the "BONUS PLAN"). Bonuses under the
Bonus Plan shall be payable upon the achievement of such financial or other
goals reasonably related to the business of the Company and its subsidiaries as
the Company shall establish (the "GOALS"), all of which Goals shall be
attainable, prior to the end of the Employment Period, with approximately the
same degree of probability as the goals under the Company's bonus plan or plans
as in effect immediately prior to the Change in Control of the Company (whether
one or more, the "COMPANY BONUS PLAN") and in view of the Company's existing and
projected financial and business
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circumstances applicable at the time. The amount of the bonus (the "BONUS
AMOUNT") that the Executive is eligible to earn under the Bonus Plan shall be no
less than the amount of the Executive's maximum award provided in such Bonus
Plan (such bonus amount herein referred to as the "TARGETED BONUS"), which shall
be no less than the maximum award the Executive is eligible to receive under the
Company Bonus Plan, and in the event the Goals are not achieved such that the
entire Targeted Bonus is not payable, the Bonus Plan shall provide for a payment
of a Bonus Amount equal to a portion of the Targeted Bonus reasonably related to
that portion of the Goals which were achieved. Payment of the Bonus Amount shall
not be affected by any circumstance occurring subsequent to the end of the
Employment Period, including termination of the Executive's employment.
6. ANNUAL COMPENSATION ADJUSTMENTS. During the Employment Period, the
Board (or an appropriate committee thereof) will consider and appraise, at least
annually, the contributions of the Executive to the Company, and in accordance
with the Company's practice prior to the Change in Control of the Company, due
consideration shall be given to the upward adjustment of the Executive's base
compensation rate, at least annually, (i) commensurate with increases generally
given to other executives of the Company of comparable status and position to
the Executive, and (ii) as the scope of the Company's operations or the
Executive's duties expand.
7. TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If there is a Covered
Termination for Cause or due to the Executive's termination of the Executive's
employment other than for Good Reason, then the Executive shall be entitled to
receive only Accrued Benefits pursuant to Section 9(a) hereof and the Company
shall have no further obligations to the Executive under this Agreement;
provided, that the benefits described in Sections 9(a)(iv) and 9(a)(v) shall not
be payable.
8. TERMINATION GIVING RISE TO A TERMINATION PAYMENT. If there is a
Covered Termination by the Executive for Good Reason, or by the Company other
than by reason of (i) death, (ii) disability pursuant to Section 11 hereof, or
(iii) Cause, then:
(x) the Executive shall be entitled to receive, and the
Company shall promptly pay, Accrued Benefits pursuant to Section 9(a)
hereof and, in lieu of further base salary for periods following the
Termination Date, as liquidated damages and additional severance pay
and in consideration of the covenant of the Executive set forth in
Section 13(a) hereof, the Termination Payment pursuant to Section 9(b)
hereof;
(y) the Executive shall receive, at the expense of the
Company, outplacement services, on an individualized basis at a level
of service commensurate with the Executive's status with the Company
immediately prior to the Change in Control of the Company (or, if
higher, immediately prior to the termination of the
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Executive's employment), provided by a nationally recognized executive
placement firm selected by the Company; provided that the cost to the
Company of such services shall not exceed 30% of the Executive's annual
base salary in effect immediately prior to the Change in Control of the
Company; and
(z) the Company shall continue to provide, until the
expiration of the Employment Period (assuming that Executive had not
incurred a termination of employment), Executive (and Executive's
dependents, if applicable) with the same level of medical, dental,
accident, disability and life insurance benefits upon substantially the
same terms and conditions (including contributions required by
Executive for such benefits) as existed immediately prior to
Executive's Termination Date (or, if more favorable to Executive, as
such benefits and terms and conditions existed immediately prior to the
Change in Control of the Company); PROVIDED, THAT, if -------- ----
Executive cannot continue to participate in the Company plans providing
such benefits, the Company shall otherwise provide such benefits on the
same after-tax basis as if continued participation had been permitted.
Notwithstanding the foregoing, in the event Executive becomes
reemployed with another employer and becomes eligible to receive
welfare benefits from such employer, the welfare benefits described
herein shall be secondary to such benefits during the period of
Executive's eligibility, but only to the extent that the Company
reimburses Executive for any increased cost and provides any additional
benefits necessary to give Executive the benefits provided hereunder.
9. PAYMENTS UPON TERMINATION.
(a) ACCRUED BENEFITS. For purposes of this Agreement, the
Executive's "ACCRUED BENEFITS" shall include the following amounts, payable as
described herein: (i) all base salary for the time period ending with the
Termination Date; (ii) reimbursement for any and all reasonable expenses
incurred by the Executive on behalf of the Company for the time period ending
with the Termination Date; (iii) any and all compensation or other cash earned
through the Termination Date and deferred at the election of the Executive or
pursuant to any deferred compensation plan then in effect; (iv) a lump sum
payment of the bonus or incentive compensation otherwise payable to the
Executive with respect to the year in which termination occurs under any bonus
or incentive compensation plan in which the Executive is a participant; and (v)
all other payments and benefits to which the Executive (or in the event of the
Executive's death, the Executive's surviving spouse or other beneficiary) may be
entitled as compensatory fringe benefits or under the terms of any benefit plan
of the Company, excluding severance payments under any Company severance policy,
practice or agreement in effect immediately prior to the Change in Control of
the Company. Payment of Accrued Benefits shall be made promptly in accordance
with the Company's prevailing practice with respect to clauses (i) and (ii) of
this Section 9(a) or, with respect to clauses
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(iii), (iv) and (v) of this Section 9(a), pursuant to the terms of the benefit
plan or practice establishing such benefits.
(b) TERMINATION PAYMENT.
(i) For purposes of this Agreement, the "TERMINATION
PAYMENT" shall be an amount equal to (x) the product of (A) the sum of
(1) the Executive's annual base salary, as in effect immediately prior
to the Change in Control of the Company, as adjusted upward, from time
to time, pursuant to Section 6 hereof, plus (2) the amount of the
average annual bonus award (determined on an annualized basis for any
bonus award paid for a period of less than one year and excluding any
year for which the Executive did not participate in any bonus plan)
paid to the Executive with respect to the three complete fiscal years
(or portion thereof) preceding the Termination Date (the sum of the
amounts set forth in this clause (A) shall hereafter be referred to as
"ANNUAL CASH COMPENSATION"), multiplied by (B) the number of years and
fractional portion thereof remaining in the Employment Period
determined as of the Termination Date; PROVIDED, HOWEVER, THAT such
amount shall not be less than the greater of (i) the amount of the
Executive's Annual Cash Compensation or (ii) the severance benefits to
which the Executive would have been entitled under the Company's
severance policies and practices in effect immediately prior to the
Change in Control of the Company; plus (y) the value of the additional
Company contributions that would have been made during the period
described by (B) above to the Executive's account under the Company's
tax-qualified defined contribution plan (assuming for such purpose that
the Executive had not terminated employment and would have earned
annually during such period the Annual Cash Compensation. The
Termination Payment shall be paid to the Executive in cash equivalent
as soon as practicable but in no event later than ten business days
after the Termination Date. Such lump sum payment shall not be reduced
by any present value or similar factor, and the Executive shall not be
required to mitigate the amount of the Termination Payment by securing
other employment or otherwise, nor will such Termination Payment be
reduced by reason of the Executive securing other equipment or for any
reason. The Termination Payment shall be in lieu of, and acceptance by
the Executive of the Termination Payment shall constitute the
Executive's release of any rights of the Executive to, any other
severance payments under any Company severance policy, practice or
agreement. The Company shall bear the cost of up to $25,000 in the
aggregate of reasonable fees and expenses of consultants and/or legal,
tax or accounting advisors actually incurred by the Executive to advise
the Executive as to matters relating to the compensation of benefits
due and payable under this Section 9(b).
(ii) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment,
award, benefit or distribution
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(or any acceleration of any payment, award, benefit or distribution) by
the Company (or any of its affiliated entities) or any entity which
effectuates a Change in Control of the Company (or any of its
affiliated entities) to or for the benefit of Executive (whether
pursuant to the terms of this Agreement or otherwise, but determined
without regard to any additional payments required under this Section)
(the "Payments") would be subject to the excise tax imposed by Section
4999 of the Code, or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Company shall pay to
Executive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by Executive of all taxes (including any Excise
Tax) imposed upon the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed
upon the Payments and (y) the product of any deductions disallowed
because of the inclusion of the Gross-up Payment in Executive's
adjusted gross income and the highest applicable marginal rate of
federal income taxation for the calendar year in which the Gross-up
Payment is to be made. For purposes of determining the amount of the
Gross-up Payment, the Executive shall be deemed to (i) pay federal
income taxes at the highest marginal rates of federal income taxation
for the calendar year in which the Gross-up Payment is to be made, (ii)
pay applicable state and local income taxes at the highest marginal
rate of taxation for the calendar year in which the Gross-up Payment is
to be made, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes and
(iii) have otherwise allowable deductions for federal income tax
purposes at least equal to those which could be disallowed because of
the inclusion of the Gross-up Payment in the Executive's adjusted gross
income.
(iii) Subject to the provisions of Section 9(b)(ii),
all determinations required to be made under this Section, including
whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determinations, shall be made by the public accounting firm that is
retained by the Company as of the date immediately prior to the Change
in Control of the Company (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and Executive
within fifteen (15) business days of the receipt of notice from the
Company or the Executive that there has been a Payment, or such earlier
time as is requested by the Company (collectively, the
"Determination"). In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the
Change in Control of the Company, Executive may appoint another
nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as
the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company and the
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Company shall enter into any agreement requested by the Accounting Firm
in connection with the performance of the services hereunder. The
Gross-up Payment under this Section with respect to any Payments shall
be made no later than thirty (30) days following such Payment. If the
Accounting Firm determines that no Excise Tax is payable by Executive,
it shall furnish Executive with a written opinion to such effect, and
to the effect that failure to report the Excise Tax, if any, on
Executive's applicable federal income tax return will not result in the
imposition of a negligence or similar penalty. The Determination by the
Accounting Firm shall be binding upon the Company and Executive. As a
result of the uncertainty in the application of Section 4999 of the
Code at the time of the Determination, it is possible that Gross-Up
Payments which will not have been made by the Company should have been
made ("Underpayment") or Gross-up Payments are made by the Company
which should not have been made ("Overpayment"), consistent with the
calculations required to be made hereunder. In the event that the
Executive thereafter is required to make payment of any Excise Tax or
additional Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment
(together with interest at the rate provided in Section 1274(b)(2)(B)
of the Code) shall be promptly paid by the Company to or for the
benefit of Executive. In the event the amount of the Gross-up Payment
exceeds the amount necessary to reimburse the Executive for his Excise
Tax, the Accounting Firm shall determine the amount of the Overpayment
that has been made and any such Overpayment (together with interest at
the rate provided in Section 1274(b)(2) of the Code) shall be promptly
paid by Executive (to the extent he has received a refund if the
applicable Excise Tax has been paid to the Internal Revenue Service) to
or for the benefit of the Company. Executive shall cooperate, to the
extent his expenses are reimbursed by the Company, with any reasonable
requests by the Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax.
10. DEATH.
(a) Except as provided in Section 10(b) hereof, in the event
of a Covered Termination due to the Executive's death, the Executive's estate,
heirs and beneficiaries shall receive all the Executive's Accrued Benefits
through the Termination Date.
(b) In the event the Executive dies after a Notice of
Termination is given (i) by the Company or (ii) by the Executive for Good
Reason, the Executive's estate, heirs and beneficiaries shall be entitled to the
benefits described in Section 10(a) hereof and, subject to the provisions of
this Agreement, to such Termination Payment as the Executive would have been
entitled to had the Executive lived. For purposes of this Section 10(b), the
Termination Date shall be the earlier of thirty (30) days following the giving
of the Notice
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of Termination, subject to extension pursuant to Section 1(i) hereof, or one day
prior to the end of the Employment Period.
11. TERMINATION FOR DISABILITY. If, during the Employment Period, as a
result of the Executive's disability due to physical or mental illness or injury
(regardless of whether such illness or injury is job-related), the Executive
shall have been absent from the Executive's duties hereunder on a full-time
basis for a period of six consecutive months and, within thirty (30) days after
the Company notifies the Executive in writing that it intends to terminate the
Executive's employment (which notice shall not constitute the Notice of
Termination contemplated below), the Executive shall not have returned to the
performance of the Executive's duties hereunder on a full-time basis, the
Company may terminate the Executive's employment for purposes of this Agreement
pursuant to a Notice of Termination given in accordance with Section 12 hereof.
If the Executive's employment is terminated on account of the Executive's
disability in accordance with this Section, the Executive shall receive Accrued
Benefits in accordance with Section 9(a) hereof and shall remain eligible for
all benefits provided by any long term disability programs of the Company in
effect at the time of such termination.
12. TERMINATION NOTICE AND PROCEDURE. Any Covered Termination by the
Company or the Executive (other than a termination of the Executive's employment
that is a Covered Termination by virtue of Section 2(b) hereof) shall be
communicated by written Notice of Termination to the Executive, if such Notice
of Termination is given by the Company, and to the Company, if such Notice of
Termination is given by the Executive, all in accordance with the following
procedures and those set forth in Section 22 hereof:
(a) If such termination is for disability, Cause or Good
Reason, the Notice of Termination shall indicate in reasonable detail the facts
and circumstances alleged to provide a basis for such termination.
(b) If the Notice is given by the Executive for Good Reason,
the Executive may cease performing the Executive's duties hereunder on or after
the date fifteen (15) days after the delivery of Notice of Termination and shall
in any event cease employment on the Termination Date. If the Notice of
Termination is given by the Company, then the Executive may cease performing the
Executive's duties hereunder on the date of receipt of the Notice of
Termination, subject to the Executive's rights hereunder.
(c) The Executive shall have thirty (30) days, or such longer
period as the Company may determine to be appropriate, to cure any conduct or
act, if curable, alleged to provide grounds for termination of the Executive's
employment for Cause under this Agreement pursuant to Subsection 1(b)(ii)
hereof.
13. FURTHER OBLIGATIONS OF THE EXECUTIVE.
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(a) COMPETITION. The Executive agrees that, in the event of
any Covered Termination where the Executive is entitled to the Termination
Payment, the Executive shall not, for a period expiring one year after the
Termination Date, without the prior written approval of the Company's Board of
Directors, participate in the management of, be employed by or own any business
enterprise which the principal office of which is located within the
Southeastern United States that engages in substantial competition with the
Company or any of its subsidiaries, where such enterprise's revenues from such
competitive activities amounted to 50% or more of such enterprise's net revenues
and sales for its most recently completed fiscal year; provided, however, that
nothing in this Section 13(a) shall prohibit the Executive from owning stock or
other securities amounting to less than five (5) percent of the outstanding
capital stock of any entity; and provided, further if for any reason the Company
does not pay the Executive the amounts and make available to the Executive the
benefits provided in and required by this Agreement, then the Executive will
have no further obligation to the Company under this Section 13(a).
(b) CONFIDENTIALITY. During and following the Executive's
employment by the Company, the Executive shall hold in confidence and not
directly or indirectly disclose or use or copy or make lists of any confidential
information or proprietary data of the Company (including that of the Employer),
except to the extent authorized in writing by the Board or required by any court
or administrative agency, other than to an employee of the Company or a person
to whom disclosure is reasonably necessary or appropriate in connection with the
performance by the Executive of duties as an executive of the Company.
Confidential information shall not include any information known generally to
the public or any information of a type not otherwise considered confidential by
persons engaged in the same business or a business similar to that of the
Company. All records, files, documents and materials, or copies thereof,
relating to the business of the Company which the Executive shall prepare, or
use, or come into contact with, shall be and remain the sole property of the
Company and shall be promptly returned to the Company upon termination of
employment with the Company.
14. EXPENSES AND INTEREST. If, after a Change in Control of the
Company, (i) a dispute arises with respect to the enforcement of the Executive's
rights under this Agreement, or (ii) any legal or arbitration proceeding shall
be brought to enforce or interpret any provision contained herein or to recover
damages for breach hereof, in either case so long as the Executive is not acting
in bad faith, the Executive shall recover from the Company any reasonable
attorneys' fees and necessary costs and disbursements incurred as a result of
such dispute, legal or arbitration proceeding ("Expenses"), and prejudgment
interest on any money judgment or arbitration award obtained by the Executive
calculated at the prime rate of interest as reported by THE WALL STREET JOURNAL
from the date that payments to the Executive should have been made under this
Agreement. Within ten (10) days after the Executive's written request therefor,
the Company shall pay to the Executive, or such other person or entity as the
Executive may designate in writing to the Company, the Executive's Expenses
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in advance of the final disposition or conclusion of any such dispute, legal or
arbitration proceeding.
15. PAYMENT OBLIGATIONS ABSOLUTE. The Company's obligation during and
after the Employment Period to pay the Executive the amounts and to makes the
benefits and other arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or any other Person. Except as
provided in Section 14 of this Agreement, all amounts payable by the Company
hereunder shall be paid without notice or demand. Except as provided in Section
9 of this Agreement, the Company will not seek to recover all or any part of any
payment made by the Company hereunder from the Executive, or from whomsoever may
be entitled thereto, for any reason whatsoever.
16. SUCCESSORS.
(a) If the Company sells, assigns or transfers all or
substantially all of its business and assets to any person or entity or if the
Company merges into or consolidates or otherwise combines (where the Company is
not the surviving entity in such combination) with any person or entity (any
such event, a "SALE OF BUSINESS"), then the Company shall assign all of its
right, title and interest in this Agreement as of the date of such event to such
person or entity, and the Company shall cause such person or entity, by written
agreement in form and substance reasonably satisfactory to the Executive (the
"Successor Agreement"), to expressly assume and agree to perform from and after
the date of such assignment all of the terms, conditions and provisions imposed
by this Agreement upon the Company. Failure of the Company to enter into the
Successor Agreement at or prior to the effective date of such Sale of Business
shall be a breach of this Agreement constituting "Good Reason" hereunder, except
that for purposes of implementing the foregoing, the date upon which such Sale
of Business becomes effective shall be deemed the Termination Date. In case of
such assignment by the Company and of assumption and agreement by such person or
entity pursuant to the Successor Agreement, as used in this Agreement, "COMPANY"
shall thereafter mean such person or entity which executes and delivers the
Successor Agreement provided for in this Section 16(a) or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law, and this Agreement shall inure to the benefit of, and be enforceable by,
such person or entity. The Executive shall, in the Executive's discretion, be
entitled to proceed against any or all of such successors to the Company (as
defined in the first paragraph of this Agreement) in any action to enforce any
rights of the Executive hereunder. Except as provided in this Section 16(a),
this Agreement shall not be assignable by the Company. This Agreement shall not
be terminated by the voluntary or involuntary dissolution of the Company.
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(b) This Agreement and all rights of the Executive shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, heirs and beneficiaries. Any amount
payable to the Executive under this Agreement if the Executive had lived shall
be paid, in the event of the Executive's death, to the Executive's estate, heirs
and representatives; provided, however, that the foregoing shall not be
construed to modify any terms of any benefit plan of the Company or agreement to
which the Executive is a party, as such terms are in effect on the date of the
Change in Control of the Company, that expressly govern the payment of benefits
under such plan or agreement in the event of the Executive's death.
17. SEVERABILITY. The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part hereof are declared invalid
or unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts hereof and the
applicability thereof shall not be affected thereby.
18. AMENDMENT. This Agreement may not be amended or modified at any
time except by written instrument executed by the Company and the Executive.
19. WITHHOLDING. The Company shall be entitled to withhold from amounts
to be paid to the Executive hereunder any federal, state or local withholding or
other taxes or charges which it is from time to time required to withhold;
PROVIDED, THAT the amount so withheld shall not without the Executive's consent
exceed the minimum amount required to be withheld by law. The Company shall be
entitled to rely on an opinion of nationally recognized tax counsel if any
question as to the amount or requirement of any such withholding shall arise.
20. CERTAIN RULES OF CONSTRUCTION. No party shall be considered as
being responsible for the drafting of this Agreement for the purpose of applying
any rule construing ambiguities against the drafter or otherwise. No draft of
this Agreement shall be taken into account in construing this Agreement. Any
provision of this Agreement which requires an agreement in writing shall be
deemed to require that the writing in question be signed by the Executive and an
authorized representative of the Company.
21. GOVERNING LAW; RESOLUTION OF DISPUTES. This Agreement and the
rights and obligations hereunder shall be governed by and construed in
accordance with the internal laws of the State of Florida, without reference to
conflict or choice of law principles thereunder. Any dispute arising out of this
Agreement shall, at the Executive's election, be determined by arbitration under
the rules of the American Arbitration Association then in effect (in which case
the Executive and the Company shall be bound by the arbitration award) or by
litigation. Whether the dispute is to be settled by arbitration or litigation,
the venue for the arbitration or litigation shall be Pinellas County, Florida
or, at the Executive's election, if the Executive is no longer residing or
working in the Tampa/St. Petersburg,
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Florida metropolitan area, in the judicial district encompassing the city in
which the Executive resides; PROVIDED, THAT, if the Executive is not then
residing in the United States, the election of the Executive with respect to
such venue shall be either Pinellas County, Florida or in the judicial district
encompassing that city in the United States among the thirty cities having the
largest population (as determined by the most recent United States Census data
available at the Termination Date) which is closest to the Executive's
residence. The parties consent to personal jurisdiction in each trial court in
the selected venue having subject matter jurisdiction notwithstanding their
residence or situs, and each party irrevocably consents to service of process in
the manner provided hereunder for the giving of notices.
22. NOTICE. Notices given pursuant to this Agreement shall be in
writing and, except as otherwise provided in this Agreement, shall be deemed
given when actually received by the Executive or actually received by the
Company's Secretary or any officer of the Company other than the Executive. If
mailed, such notices shall be mailed by United States registered or certified
mail, return receipt requested, addressee only, postage prepaid, if to the
Company, to ABR Information Services, Inc., Attention: Secretary (or President,
if the Executive is then Secretary), 34125 U.S. Highway 19 North, Palm Harbor,
Florida 34684, or if to the Executive, at the address set forth below the
Executive's signature to this Agreement, or to such other address as the party
to be notified shall have theretofore given to the other party in writing.
23. NO WAIVER. No waiver by either party at any time of any breach by
the other party of, or compliance with, any condition or provision of this
Agreement to be performed by the other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
24. HEADINGS. The headings herein contained are for reference only and
shall not affect the meaning or interpretation of any provision of this
Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ABR INFORMATION SERVICES, INC.
By:
------------------------------------------
James E. MacDougald
Chairman of the Board, President and Chief
Executive Officer
THE EXECUTIVE
------------------------------------------
Name:
----------------------------------------
<PAGE>
Exhibit (c)(4)
AMENDMENT, dated as of April 30, 1999 (this "Amendment"),
to that certain employment agreement, dated as of March 11, 1994 (the
"Employment Agreement"), by and between ABR Information Services, Inc., (the
"Company") and James E. MacDougald (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive desire to amend the
Employment Agreement as provided herein.
NOW, THEREFORE, in consideration of the premises and the
respective covenants and agreements contained herein, and intending to be
legally bound hereby, the Company and Executive agree as follows:
ARTICLE I
AMENDMENT
1.1 A new Section 5(d) of the Employment Agreement is hereby added to
read as follows:
"(d) CONTINUATION OF MEDICAL COVERAGE. In recognition of Executive's
prior contributions and service to the Company, and notwithstanding any
provision to the contrary in any agreement between the Executive and
the Company, the Company shall continue, following the Executive's
termination of employment, to keep in full force and effect (or
otherwise provide) for the remainder of the Executive's lifetime, all
policies of medical insurance with respect to the Executive and his
dependents, with the same level of coverage, upon the same terms and
otherwise to the same extent as such policies shall have been in effect
immediately prior to Executive's date of termination, and the Company
and the Executive shall share the costs of the continuation of such
insurance coverage in the same proportion as such costs were shared
immediately prior to the Executive's date of termination."
ARTICLE II
MISCELLANEOUS
2.1 DEFINITIONS. Capitalized terms used in this Amendment and not
defined herein shall have the meanings ascribed to such terms in the Employment
Agreement.
<PAGE>
2.2 ENTIRE AGREEMENT; RESTATEMENT. Other than as amended by Article I
above, the Employment Agreement shall remain in full force and effect unaffected
hereby.
2.3 GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
FLORIDA.
2.4 COUNTERPARTS. For the convenience of the parties hereto, this
Amendment may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument and all such counterparts shall
together constitute one and the same instrument.
2.5 EFFECTIVE DATE. This Amendment shall be
effective as of the date first above written.
IN WITNESS WHEREOF, the parties hereto have executed or
caused this Amendment to be executed as of the date first written above.
ABR INFORMATION SERVICES, INC.
By: /s/ James P. O'Drobinak
----------------------------
Name: James P. O'Drobinak
Title: Senior Vice President and
Chief Financial Officer
/s/ James E. MacDougald
----------------------------
James E. MacDougald
-2-
<PAGE>
Exhibit (c)(5)
Text of Amendment to Incentive Bonus Plan
The Company has amended its annual incentive bonus plan to
provide that upon an occurrence of a Change in Control (as defined in the
Company's 1997 Stock Option Plan), each participant in the bonus plan shall be
entitled to receive a payment in respect of the calendar year in which the
Change in Control occurs in an amount equal to the product of (1) such
participant's target bonus for such calendar year under the bonus plan and (2)
the fraction resulting from dividing (x) the number of days in the calendar year
that have elapsed through the date on which the Change in Control occurs by (y)
365. Such amount shall be payable to the participants as soon as practicable,
but in no event later than 3 days following the date on which the Change in
Control occurs.
<PAGE>
Exhibit (c)(6)
ABR INFORMATION SERVICES, INC.
RETENTION BONUS PLAN
The Board of Directors of ABR Information Services, Inc. (the
"Company") has determined that it is in the best interests of the Company and
its stockholders to secure the continued services, dedication and objectivity of
the employees of the Company and its Subsidiaries (as defined below) in
expectation of, and following a Change in Control (as defined below). To
encourage the full attention and dedication to the Company and its Subsidiaries
by their employees, and to provide an incentive for such employees to make a
commitment to continued employment with the Company, the Board of Directors of
the Company has authorized the Company to adopt the ABR Information Services,
Inc. Retention Bonus Plan (the "Plan").
1. DEFINITIONS. As used in this Plan, the following terms
shall have the respective meanings set forth below:
(a) "Administrator" means the Vice-President of Human
Resources, or any other person designated by the Board as the
administrator of this Plan.
(b) "Base Salary" means a Participant's annual rate of salary
or wages (excluding all bonus, overtime and incentive compensation) in
effect as of the relevant date (or, in the event that the relevant date
occurs after a Change in Control, the greater of such rate in effect as
of the relevant date or the rate in effect immediately preceding such
Participant's Date of Termination).
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means (1) the willful and deliberate failure by a
Participant to perform such Participant's duties and responsibilities
(other than as a result of incapacity due to physical or mental
illness) which is not remedied in a reasonable period of time after
receipt of written notice from the Company specifying such failure, (2)
willful misconduct by a Participant which is demonstrably injurious to
the business or reputation of the Company or its Subsidiaries, or (3) a
Participant's conviction of, or plea of guilty or NOLO CONTENDERE to, a
felony. The Company must notify such Participant that it believes
"Cause" has occurred within ninety (90) days of its knowledge of the
event or
<PAGE>
condition constituting Cause or such event or condition shall not
constitute Cause hereunder.
(e) "Change in Control" means the occurrence of any one of the
following events:
(i) individuals who, on April 30, 1999, constitute
the Board (the "Incumbent Directors") cease for any reason to
constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof,
whose election or nomination for election was approved by a
vote of at least two-thirds of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named
as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; PROVIDED, HOWEVER,
that no individual initially elected or nominated as a
director of the Company as a result of an actual or threatened
election contest (as described in Rule 14a-11 under the
Securities Exchange Act of 1934 (the "Act")) ("Election
Contest") or other actual or threatened solicitation of
proxies or consents by or on behalf of any "person" (as such
term is defined in Section 3(a)(9) of the Act and as used in
Sections 13(d)(3) and 14(d)(2) of the Act) other than the
Board ("Proxy Contest"), including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy
Contest, shall be deemed an Incumbent Director;
(ii) any person is or becomes a "beneficial owner"
(as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company's then
outstanding securities eligible to vote for the election of
the Board (the "Company Voting Securities"); PROVIDED,
HOWEVER, that the event described in this paragraph (ii) which
occurs by virtue of any of the following acquisitions shall be
deemed not to be a Change in Control of the Company: (A) by
the Company or any Subsidiary, (B) by any employee benefit
plan (or related trust) sponsored or maintained by the Company
or any Subsidiary, (C) by any underwriter temporarily holding
securities pursuant to an offering of such securities, (D)
pursuant to a Non-Qualifying Transaction (as defined in
-2-
<PAGE>
paragraph (iii) below), (E) pursuant to any acquisition by a
Participant (an "Acquiring Participant") or any group of
persons including an Acquiring Participant (or any entity
controlled by an Acquiring Participant or any group of persons
including an Acquiring Participant), provided, that an event
that is deemed not to be a Change in Control under this clause
(E) shall nevertheless be a Change in Control for all
Participants other than any Acquiring Participant; or (F) a
transaction (other than one described in paragraph (iii)
below) in which Company Voting Securities are acquired from
the Company, if a majority of the Incumbent Directors approve
a resolution providing expressly that the acquisition pursuant
to this clause (F) does not constitute a Change in Control of
the Company under this paragraph (ii);
(iii) the consummation of a merger, consolidation,
statutory share exchange or similar form of corporate
transaction involving the Company or any of its subsidiaries
that requires the approval of the Company's stockholders,
whether for such transaction or the issuance of securities in
the transaction (a "Reorganization"), or sale or other
disposition of all or substantially all of the Company's
assets to an entity that is not an affiliate of the Company (a
"Sale"), unless immediately following such Reorganization or
Sale: (A) more than 50% of the total voting power of (x) the
corporation resulting from such Reorganization or the
corporation which has acquired all or substantially all of the
assets of the Company (in either case, the "Surviving
Corporation"), or (y) if applicable, the ultimate parent
corporation that directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect
directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Company Voting Securities
that were outstanding immediately prior to such Reorganization
or Sale (or, if applicable, is represented by shares into
which such Company Voting Securities were converted pursuant
to such Reorganization or Sale), and such voting power among
the holders thereof is in substantially the same proportion as
the voting power of such Company Voting Securities among the
holders thereof immediately prior to the Reorganization or
Sale, (B) no person (other than any employee benefit plan (or
related trust)
-3-
<PAGE>
sponsored or maintained by the Surviving Corporation or the
Parent Corporation), is or becomes the beneficial owner,
directly or indirectly, of 25% or more of the total voting
power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a
majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) following the consummation of the
Reorganization or Sale were Incumbent Directors at the time of
the Board's approval of the execution of the initial agreement
providing for such Reorganization or Sale (any Reorganization
or Sale which satisfies all of the criteria specified in (A),
(B) and (C) above shall be deemed to be a "Non-Qualifying
Transaction"); or
(iv) the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial
ownership of more than 25% of the Company Voting Securities as a result
of the acquisition of Company Voting Securities by the Company which
reduces the number of Company Voting Securities outstanding; PROVIDED,
THAT if after such acquisition by the Company such person becomes the
beneficial owner of additional Company Voting Securities that increases
the percentage of outstanding Company Voting Securities beneficially
owned by such person, a Change in Control of the Company shall then
occur.
(f) "Company" means ABR Information Services, Inc. and any
successor thereto.
(g) "Date of Termination" means the date on which a
Participant's employment with the Company and its Subsidiaries
terminates.
(h) "Effective Date" means the date on which the Company
enters into the agreement described in Section 3(a).
(i) "Employee" means any regular, full-time employee of an
Employer.
(j) "Employer" means the Company or any Subsidiary.
-4-
<PAGE>
(k) "Participant" means any Employee, other than an Employee
who is covered by a collective bargaining agreement to which the
Company or any Subsidiary is a party, who is selected to participate in
the Plan in accordance with Section 2.
(l) "Plan" means this ABR Information Services, Inc. Retention
Bonus Plan as set forth herein and as amended from time to time.
(m) "Retention Benefits" means the benefits payable in
accordance with Section 3 of this Plan.
(n) "Subsidiary" means any entity, whether incorporated or
unincorporated, of which at least a majority of the securities or
ownership interests having by their terms ordinary voting power to
elect a majority of the board of directors or other persons performing
similar functions is directly or indirectly owned or controlled by the
Company, by one or more of the Company's Subsidiaries or by the Company
and any one or more of its Subsidiaries.
2. PARTICIPATION. The Administrator shall in its sole
discretion designate those Employees who shall participate in the Plan. The
initial Participants as of the Effective Date are listed on Schedules A and B.
The Administrator shall have the authority to add additional Participants or
remove Participants from the Plan, and shall inform an individual as soon as
practicable following his or her addition or removal from participation in the
Plan; PROVIDED, that no Participant may be removed from participation in the
Plan following a Change in Control until April 1, 2000. A Participant shall
cease to be a Participant in the Plan when he or she ceases to be an Employee,
unless such Participant is entitled to payment of Retention Benefits as provided
in the Plan. A Participant entitled to payment of Retention Benefits shall
remain a Participant in the Plan until the full amount of the Retention
Benefits, and any other obligation under this Plan, has been paid to such
Participant.
3. RETENTION BENEFITS
(a) In the event the Company enters into an agreement, the
consummation of the transactions contemplated by which would result in a Change
in Control, a Participant listed on Schedule A who is continuously employed as
an Employee during the period ("Tier I Benefit Period") commencing on the
Effective Date and ending on the date set forth on Schedule A shall be entitled
to receive the amount set forth on Schedule A.
-5-
<PAGE>
(b) Notwithstanding anything in this Plan to the contrary, if
a Participant's employment is terminated during the Tier I Benefit Period by an
Employer other than for Cause, such Participant shall be deemed to satisfy the
requirements of, and shall be entitled to receive the amounts that would have
been payable to such Participant under, Section 3(a).
(c) Any amounts payable under this Section 3 shall be paid in
a single lump sum cash payment. The amount payable under Section 3(a) shall be
paid no later than 10 days following the expiration of the Tier I Benefit
Period, as the case may be. The amounts payable under Section 3(b) shall be paid
no later than 10 days following a Participant's Date of Termination.
(d) The Retention Benefits shall be payable in addition to,
and not in lieu of, all other accrued, vested or deferred compensation, rights,
options or other benefits which may be owed to a Participant following
termination of employment, including but not limited to accrued sick pay,
amounts or benefits payable under any bonus or other compensation plan, stock
option plan, stock ownership plan, stock purchase plan, life insurance plan,
health plan, disability plan or similar or successor plan.
4. WITHHOLDING TAXES. The Company may withhold from all
payments due hereunder all taxes which, by applicable federal, state, local or
other law, any Employer is required to withhold therefrom.
5. REIMBURSEMENT OF EXPENSES AND SETTLEMENT OF DISPUTES. If
any contest or dispute shall arise under this Plan involving termination of a
Participant's employment with an Employer or involving the failure or refusal of
the Company to perform fully in accordance with the terms hereof, the Company
shall reimburse such Participant, on a current basis, for all reasonable legal
fees and expenses, if any, reasonably incurred by such Participant in connection
with such contest or dispute (regardless of the result thereof), provided, that,
if it is determined by a court or by arbitration that such Participant did not
enter into the contest or dispute in good faith, such Participant shall be
obligated to return to the Company such reimbursed fees and expenses. All
disputes hereunder shall be settled exclusively by arbitration in Florida in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitration award in any court having
jurisdiction. The Company shall bear all costs and expenses in connection with
the retention of the arbitration panel for any proceeding.
-6-
<PAGE>
6. PARTICIPATING EMPLOYERS. Each Subsidiary shall,
automatically and without any action on the part of such Subsidiary, be deemed
an Employer and the provisions of this Plan shall be fully applicable to the
Employees of such Subsidiary.
7. TERMINATION OR AMENDMENT OF PLAN.
(a) Subject to paragraph (b) below, this Plan shall be in
effect as of April 30, 1999, and shall terminate on June 30, 2000, unless
terminated at an earlier date by the Company.
(b) The Company shall have the right prior to a Change in
Control, in its sole discretion pursuant to action by the Board, to terminate or
amend the Plan. Notwithstanding anything in paragraph (a) of this Section 7 to
the contrary, in no event shall this Plan be terminated or amended during the
period following a Change in Control and prior to June 30, 2000 in any manner
which would adversely affect the rights or potential rights of Participants
under this Plan with respect to such Change in Control.
8. SUCCESSORS.
(a) This Plan shall not be terminated by any merger,
consolidation, share exchange or similar event involving the Company whereby the
Company is or is not the surviving or resulting entity. In the event of any
merger, consolidation, share exchange or similar event, the provisions of this
Plan shall be binding upon the surviving or resulting corporation or the person
or entity to which the Company's assets are transferred.
(b) Concurrently with any merger, consolidation, share
exchange or sale, lease or transfer of all or substantially all of its assets,
the Company will cause any successor or transferee unconditionally to assume all
of the obligations of the Company and the Employers hereunder.
(c) This Plan shall inure to the benefit of and be enforceable
by each Participant's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If a
Participant shall die while any amounts are payable to such Participant
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Plan to such Participant's surviving spouse
or, if none, to such Participant's estate.
-7-
<PAGE>
9. NO MITIGATION. The obligation of the Company to provide a
Participant with the benefits specified in Section 3 and otherwise to perform
its obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company or any
Employer may have against such Participant or others. In no event shall a
Participant be obligated to seek other employment or take other action by way of
mitigation of the amounts payable to such Participant under any of the
provisions of this Plan and such amounts shall not be reduced whether or not
such Participant obtains other employment.
10. GOVERNING LAW; VALIDITY. The interpretation, construction
and performance of this Plan shall be governed by and construed and enforced in
accordance with the laws of the State of Florida without regard to the principle
of conflicts of laws. The invalidity or unenforceability of any provision of
this Plan shall not affect the validity or enforceability of any other provision
of this Plan, which other provisions shall remain in full force and effect.
11. ADMINISTRATION. The Plan shall be administered by the
Administrator. The Administrator shall provide adequate written notice to any
Participant whose claim for Retention Benefits has been denied, setting forth
specific reasons for such denial, written in a manner calculated to be
understood by such Participant, and affording such Participant a full and fair
review of the decision denying the claim.
12. MISCELLANEOUS.
(a) Neither the Company nor any Employer shall be required to
fund or otherwise segregate assets to be used for the payment of any benefits
under the Plan. The Company shall make such payments only out of its general
corporate funds, and therefore its obligation to make such payments shall be
subject to any claims of its other creditors having priority as to its assets.
(b) This Plan does not constitute a contract of employment or
impose on the Company or a Participant's Employer any obligation to retain such
Participant as an Employee, to change the status of such Participant's
employment, or to change the policies of the Company or its Subsidiaries
regarding termination of employment.
-8-
<PAGE>
(c) No rights of any Participant (or beneficiary) to payments
of any amounts under the Plan shall be sold, exchanged, transferred, assigned,
pledged, hypothecated or otherwise disposed of other than by will or by the laws
of descent and distribution.
(d) Unless the Company specifically provides otherwise, any
Retention Benefits payable under this Plan shall not be taken into account for
purposes of determining benefits payable to a Participant under any other
benefit plan or program of an Employer.
(e) The Company's obligations hereunder shall be subject to
all applicable laws, and Retention Benefits payable hereunder may be adjusted to
comply with any such laws.
-9-
<PAGE>
Exhibit (c)(7)
PERSONAL AND CONFIDENTIAL
February 4, 1999
Ceridian Corporation
8100 34th Avenue South
Minneapolis, MN 55425
Attention: Lawrence Perlman
Chairman, President and CEO
Gentlemen:
In connection with your consideration of a possible negotiated transaction (a
"Transaction") between you and ABR Information Services, Inc. (the "Company"),
you have requested information concerning the Company. As a condition to your
being furnished such information, you agree for a period of five years from the
date hereof to treat any information concerning the Company (whether prepared by
the Company, its advisors or otherwise) which is furnished to you by or on
behalf of the Company, including any technical, trade secret or other
proprietary information of the Company with which you or your Representatives
(as hereinafter defined) may come into contact in the course of your
investigation, whether before or after the date of this Agreement, together with
any reports, analyses, compilations, records, notes and any other writings
prepared by you or your Representatives which contain, reflect or are based upon
such information (herein collectively referred to as the "Evaluation Material")
in accordance with the provisions of this letter and to take or abstain from
taking certain other actions herein set forth. The term "Evaluation Material"
does not include information which (i) is already in your possession, provided
that such information is not known by you to be subject to another
confidentiality agreement with or other obligation of secrecy to the Company or
another person, or (ii) becomes generally available to the public other than as
a result of a disclosure by you or your Representatives, or (iii) becomes
available to you on a non-confidential basis from a source other than the
Company or its Representatives, provided that such source is not bound by a
confidentiality agreement with or other obligation of secrecy to the Company or
another person.
You hereby agree that the Evaluation Material will be used solely for the
purpose of evaluating a possible Transaction between the Company and you and not
for any other purpose including but not limited to solicitation of the Company's
customers, and that such information will be kept confidential by you and your
Representatives; provided, however, that (i) any of such information may be
disclosed to your directors, officers, employees, counsel, investment bankers
and other representatives of you or your advisors, such persons being generally
referred to herein as "Representatives", who need to know such information for
the purpose of evaluating any possible
<PAGE>
Ceridian Corporation
Page Two
Transaction between the Company and you (it being understood that such
Representatives shall be informed by you of the confidential nature of such
information and any Evaluation Material prepared by them, and shall be directed
by you to treat such information confidentially and in accordance with the terms
hereof), and (ii) any disclosure of such information may be made to which the
Company consents in writing.
You hereby acknowledge that you are aware, and that you will advise your
Representatives who are informed as to the matters which are the subject of this
letter, that the United States securities laws prohibit any person who has
received from an issuer material, non-public information from purchasing or
selling securities of such issuer.
In addition, without the prior written consent of the Company, you will not, and
will direct your Representatives, not to, disclose to any person either the fact
that discussions or negotiations are taking place concerning a possible
Transaction or any of the terms, conditions or other facts with respect to any
such possible Transaction, including the status thereof (collectively,
"Transaction Information"). If you or your Representatives are contacted within
three years by any other person regarding a possible transaction involving the
Company, you agree immediately to notify us of the details of any such contact.
In the event that you or any of your Representatives are required to disclose
any Evaluation Material or Transaction Information (i) in connection with any
judicial or administrative proceedings (by oral questions, interrogatories,
requests for information or documents, subpoena, Civil Investigation Demand or
similar process) or (ii) in order, in the opinion of your outside counsel, to
avoid violating the United States federal securities laws, you will in advance
of such disclosure provide the Company with prompt notice of such
requirement(s). You also agree, to the extent legally permissible, to provide
the Company, in advance of any such disclosure, with copies of any Evaluation
Material and descriptions (written or oral) of the Transaction Information you
intend to disclose (and, if applicable, the text of the disclosure language
itself) and to cooperate with the Company to the extent it may seek to limit
such disclosure. If, in the absence of a protective order or the receipt of a
waiver from the Company after a request in writing therefor is made by you (such
request to be made as soon as practicable to allow the Company a reasonable
amount of time to respond thereto), you or your Representatives are legally
required to disclose Evaluation Material or Transaction Information to any
tribunal or in order to comply with the United States federal securities laws,
you may disclose such information without liability hereunder.
Further, without your prior written consent, we will not, and will direct our
Representatives, not to, disclose to any person the fact that discussions or
negotiations are taking place with you concerning a possible Transaction
("Bidder Information"). In the event that we or our Representatives are required
to disclose any Bidder Information (i) in connection with any judicial or
administrative
<PAGE>
Ceridian Corporation
Page Three
proceedings (by oral questions, interrogatories, requests for information or
documents, subpoena, Civil Investigation Demand or similar process) or (ii) in
order, in the opinion of our outside counsel, to avoid violating the United
States federal securities laws, we will in advance of such disclosure provide
you with prompt notice of such requirement(s).
You hereby acknowledge that the Evaluation Material is being furnished to you in
consideration of your agreement that you will not and shall cause your
Representatives not to propose to the Company or any other person any
transaction between you and the Company and/or its security holders or involving
any of its securities or security holders unless the Company shall have
requested in writing that you make such a proposal, and that you will not (i)
acquire, or assist, advise or encourage any other persons in acquiring, directly
or indirectly, any of the Company's securities, businesses or assets (including
rights or options to acquire such ownership) for a period of three years from
the date of this letter unless the Company shall have consented in advance in
writing to such acquisition, (ii) seek or propose to influence, advise, change
or control the management, Board of Directors, governing instruments or policies
or affairs of the Company during such three year period or (iii) make any public
disclosure, or take any action which could require the Company to make any
public disclosure (under any law, rule or regulation or rule or regulation of a
national securities exchange), with respect to any of the matters set forth in
this Agreement, or enter into any agreement related to any of the foregoing.
Although the Company has endeavored to include in the Evaluation Material
information known to it which it believes to be relevant for the purpose of your
investigation, you understand that neither the Company nor any of its
Representatives or advisors have made or make any representation or warranty as
to the accuracy or completeness of the Evaluation Material. You agree that
neither the Company nor its Representatives or advisors shall have any liability
to you or any of your affiliates or Representatives resulting from the use of
the Evaluation Material.
At any time, upon written request by the Company, you shall promptly redeliver
to the Company all written Evaluation Material and any other written material
containing or reflecting any information in the Evaluation Material (whether
prepared by the Company, its advisors or otherwise) and will not retain any
copies, extracts or other reproductions in whole or in part of such written
material. All documents, memoranda, notes and other writings whatsoever prepared
by you or your advisors based on the information in the Evaluation Material
prepared by you shall be destroyed, and such destruction shall be certified in
writing to the Company by an authorized officer supervising such destruction.
For a period of two years from the date hereof, you agree that you and your
affiliates will not, directly or indirectly, hire or seek to hire any employees
of the Company. whose identity becomes known to you or your Representatives in
connection with evaluating a possible Transaction, provided that
<PAGE>
Ceridian Corporation
Page Four
nothing herein shall prevent you from hiring any person who responds to a
general media advertisement or a non-directed search inquiry, or who makes an
unsolicited contact for employment.
It is agreed that no failure or delay by the Company in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege.
The Company, without prejudice to any rights to judicial relief it may otherwise
have, shall be entitled to seek equitable relief, including injunction, in the
event of any breach or potential breach of the provisions of this Agreement. You
agree that you will not oppose the granting of such relief on the basis that the
Company has an adequate remedy at law. You also agree that you will not seek and
agree to waive any requirement for the securing or posting of a bond in
connection with the Company's seeking or obtaining such relief.
You agree that unless and until a definitive agreement between the Company and
you with respect to any Transaction has been executed and delivered, neither the
Company nor you will be under any legal obligation of any kind whatsoever with
respect to such a Transaction by virtue of this or any written or oral
expression with respect to such a Transaction by any of our respective
Representatives thereof except for the matters specifically agreed to herein.
The agreement set forth in this paragraph may be modified or waived only by a
separate writing by the Company and you expressly so modifying or waiving such
agreement.
It is understood and agreed that if any provision contained in this Agreement or
the application thereof to you, the Company, or any other person or circumstance
shall be invalid, illegal or unenforceable in any respect under any applicable
law as determined by a court of competent jurisdiction, the validity, legality
and enforceability of the remaining provisions contained in this Agreement, or
the application of such provisions to such persons or circumstances other than
those as to which it has been held invalid or unenforceable, shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
thereby. In the case of any such invalidity, illegality or unenforceability, the
parties hereto shall negotiate in good faith in an effort to agree upon a
suitable and equitable substitute provision to effect the original intent of the
parties.
This Agreement shall benefit and bind your successors and assigns and the
successors and assigns of the Company. Any assignment of this Agreement by you
without prior written consent of the Company shall be void.
This letter shall be governed by, and construed in accordance with, the laws of
the State of New York.
<PAGE>
Ceridian Corporation
Page Five
Very truly yours,
ABR INFORMATION SERVICES, INC.
By /s/ Goldman, Sachs & Co.
--------------------------------------
Goldman, Sachs & Co.
on behalf of ABR Information Services, Inc.
Confirmed and Agreed to:
CERIDIAN CORPORATION
By: /s/ A. Reid Shaw
--------------------------
Date: February 4, 1999
------------------------
