<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 4, 1998 (August 28, 1998)
SCB COMPUTER TECHNOLOGY, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Tennessee 0-27694 62-1201561
-------------------------------------------- ---------------------- ------------------
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
</TABLE>
1365 Brierbrook Road, Memphis, Tennessee 38138
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 754-6577
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
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On August 28, 1998, SCB Computer Technology, Inc. (the "Company")
issued a press release regarding, among other things, (i) a tentative agreement
reached by the Company with the United States Attorney for the Western District
of Tennessee and the Tennessee Valley Authority to settle on a civil basis all
claims against the Company relating to the previously disclosed government
investigation into the TVA billing matter and (ii) the resignation of Steve N.
White as an officer and director of the Company and its subsidiaries. In
connection with such resignation, the Company and Mr. White entered into certain
agreements relating to a five-year noncompete, the cancellation of his
in-the-money stock options, restrictions on future sales of SCB Common Stock,
and a mutual release. The press release and the agreements between the Company
and Mr. White are filed as exhibits hereto and are incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Information and Exhibits.
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(c) Exhibits.
<TABLE>
<CAPTION>
Item Description
---- -----------
<S> <C>
10.1 Mutual Release, dated August 27, 1998, by and between Steve N.
White and the Company
10.2 Noncompetition, Confidentiality, and Nondisparagement Agreement,
dated August 27, 1998, by and between Steve N. White and the Company
10.3 Stock Restriction Agreement, dated August 27, 1998, by and between
Steve N. White and the Company
10.4 Cancellation of Option Agreement, dated August 27, 1998, by and between Steve N.
White and the Company
99 Press Release of the Company dated August 28, 1998
</TABLE>
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCB COMPUTER TECHNOLOGY, INC.
Date: September 4, 1998 By: /s/ Gary E. McCarter
----------------------------------
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Item Description
---- -----------
<S> <C>
10.1 Mutual Release, dated August 27, 1998, by and between Steve N.
White and the Company
10.2 Noncompetition, Confidentiality, and Nondisparagement Agreement,
dated August 27, 1998, by and between Steve N. White and the Company
10.3 Stock Restriction Agreement, dated August 27, 1998, by and between
Steve N. White and the Company
10.4 Cancellation of Option Agreement, dated August 27, 1998, by and
between Steve N. White and the Company
99 Press Release of the Company dated August 28, 1998
</TABLE>
<PAGE> 1
EXHIBIT 10.1
MUTUAL RELEASE
This Mutual Release (the "Agreement") is made this 27th day of August,
1998, by and between Steve N. White ("White") and SCB Computer Technology, Inc.,
a Tennessee corporation (the "Company").
WHEREAS, White, employed by the Company in varying capacities including
as an executive officer since 1979, has voluntarily resigned, subject to this
Agreement becoming effective and White receiving payment hereunder in good
funds, from all positions with the Company and its subsidiaries; and
WHEREAS, White and the Company desire to enter into an agreement to
provide for a full mutual release of any and all claims each may have against
the other;
NOW, THEREFORE, in consideration of the mutual promises herein
contained and other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. The Company agrees to pay White $285,000, in the form of a Company
check payable to the order of White, on the Effective Date (as defined in
Section 9 hereof). Such payment will be subject to applicable state and federal
tax withholding.
2. (a) White, on behalf of himself, his heirs, executors, and assigns,
does hereby release and forever discharge the Company, its subsidiaries,
affiliates, divisions, and successors, and all of its officers, directors,
employees, agents, and attorneys, and agrees to hold them, and each of them,
harmless from any and all claims or causes of action, at law or in equity, that
White may now have or know about, or hereafter may learn about, arising from or
during his employment or resulting from the termination of his employment with
the Company. White agrees that he will not seek reinstatement or reemployment,
either directly or indirectly, with the Company, and that he will not file any
claim, charge, or lawsuit for the purpose of obtaining any monetary awards above
and beyond the amount provided for in this Agreement, including without
limitation, any claim for unemployment compensation benefits, or for any
equitable relief.
(b) White acknowledges that the foregoing release includes, but is
not limited to, all claims arising under any federal, state, or local law, or
ordinance, or any administrative regulation prohibiting employment
discrimination and all claims based on any legal restrictions on the Company's
right to terminate its employees at will including, but not limited to, any
claim based on any actual or implied contract of employment or alleged breach of
any covenant of good faith and fair dealing. The foregoing release specifically
encompasses all claims of employment discrimination based on race, color,
religion, sex, and national origin, as provided under Title VII of the Civil
Rights Act of 1964, as amended, or any executive order, all claims of
discrimination
<PAGE> 2
based on age under the Age Discrimination in Employment Act of 1967, as amended,
all claims of discrimination based on handicap or disability under the Americans
with Disabilities Act, and all claims of employment discrimination under any
state or local statute, law, or ordinance.
(c) White also acknowledges that the foregoing release
includes, but is not limited to, all expenses (including reasonable attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(including any action by or in the right of the Company) by reason of the fact
that he is or was serving as a director, officer, or employee of the Company or
any Company subsidiary or is or was serving at the request of the Company as an
officer of another company or any partnership, joint venture, trust, or other
enterprise.
3. The Company, on behalf of itself, its successors, and assigns, does
hereby release White, and agrees to hold him harmless from any and all claims or
causes of action that the Company may now have or know about, or hereafter may
learn about, arising from or during his employment or resulting from the
termination of his employment with the Company, including, without limitation,
any claim for reimbursement of expenses advanced to or on behalf of White in
connection with the TVA billing investigation.
4. Notwithstanding the provisions of Sections 2 and 3 hereof, no party
will be relieved by reason of this Agreement from any of its obligations under
the (a) Noncompetition, Confidentiality, and Nondisparagement Agreement,
(b) Stock Restriction Agreement, or (c) Cancellation of Option Agreement,
between the parties hereto.
5. White agrees that if he breaches this Agreement or if he files any
claim or lawsuit against the Company seeking equitable relief, except any
lawsuit to enforce the terms of this Agreement, White or his estate will be
required to reimburse the Company for the payment referenced in Section 1
hereof.
6. The provisions of this Agreement are severable, and if any part of
it is found to be unenforceable, the other paragraphs will remain fully valid
and enforceable.
7. This Agreement represents the entire agreement between the parties
and supersedes all other prior or contemporaneous agreements or understandings,
written or oral, between the parties. This Agreement may not be changed except
by an instrument in writing signed by the parties.
8. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Tennessee applicable to contracts made
and to be performed therein, without giving effect to the principles thereof
relating to the conflict of laws.
2
<PAGE> 3
9. This Agreement will not become effective until the eighth day
following the date on which White signs this Agreement (the "Effective Date") as
indicated below, and no payments will be due, owing or paid by the Company
unless and until this Agreement becomes effective, it being understood that
White has seven days from the date on which he signs this Agreement to revoke
such Agreement and that the Company has no such right to revoke this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first above written.
SCB COMPUTER TECHNOLOGY, INC.
By: /s/ Ben C. Bryant
-------------------------------------
Title: President
----------------------------------
-----------------------------------------
/s/ Steve N. White
-----------------------------------------
Steve N. White
3
<PAGE> 1
EXHIBIT 10.2
NONCOMPETITION, CONFIDENTIALITY, AND
NONDISPARAGEMENT AGREEMENT
This NONCOMPETITION, CONFIDENTIALITY, AND NONDISPARAGEMENT AGREEMENT
(the "Agreement"), made as of August 27, 1998, is by and between SCB Computer
Technology, Inc., a Tennessee corporation (the "Company"), and Steve N. White
("White").
WHEREAS, White has been employed by the Company in varying capacities,
including as an executive officer, since 1979, has intimate knowledge of the
Company's policies, processes, plans, models, trade secrets, customers, and
employees, and has the potential to compete with the Company, if he chose to do
so, in a manner that could adversely affect the Company's competitive position;
WHEREAS, simultaneously herewith, White has voluntarily resigned,
subject to this Agreement becoming effective and White receiving payment
hereunder in good funds, from all positions with the Company and its
subsidiaries; and
WHEREAS, White and the Company desire to enter into an agreement to
provide for certain payments to White in consideration for the execution of this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. In consideration for White's obligations under this Agreement, the
Company will pay to White, in the form of a Company check payable to the order
of White, the amount of $980,000, subject to applicable state and federal tax
withholding, on the "Effective Date" (if any) as defined in the Mutual Release
between the Company and White dated August 27, 1998.
2. White agrees that for a period of five years following the date
hereof, he will not, directly or indirectly, within the territorial limits of
the United States of America, without the prior written consent of the Company,
which consent may be withheld in the Company's sole discretion:
(a) own or have a proprietary or equity interest in, be
employed by, or serve as a consultant or advisor to, or in any other capacity
for, any business or firm, that is engaged in the information technology
services business; provided, however, that beneficial ownership by White of less
than 1% of the outstanding capital stock of a publicly-held corporation will not
violate this provision. For purposes of this Agreement, the "information
technology services business" shall include, without limitation: (i) advising
persons on the acquisition and strategic utilization of information technology
systems, planning and designing new information technology systems, and
<PAGE> 2
redesigning existing information technology systems; (ii) providing network
design and management, systems support and maintenance, programming and
application software development, computer code review, data center management,
and information technology outsourcing services; (iii) recruiting or training
persons with information technology skills; and (iv) leasing information
technology systems and equipment, including computer hardware and software.
(b) recruit or hire or solicit for business any person who,
during the twelve month period preceding the date of recruitment or hiring or
solicitation, was an employee, customer, or client of the Company or any of its
affiliates.
3. White will not, without the prior written consent of the Company,
disclose to any person, directly or indirectly, any confidential information
obtained by him while in the employ of the Company or any of its affiliates with
respect to any of the Company's or any of its affiliates' services, products,
processes, customers, employees, marketing methods, systems, procedures, plans,
proposals, or policies, except as may be required by applicable law or legal
process.
4. Except as may be necessary to comply with the Company's disclosure
obligations, and then only to the extent such information is accurate, each
party agrees that neither party will say, write, or communicate in any manner to
any person or entity any information derogatory, defamatory, or disparaging
about the other party (including, in the case of information regarding the
Company, any of its directors, officers, or other affiliates or its other
employees), regardless of the truth or falsity of such information.
5. White agrees to cooperate with the Company and its affiliates for a
period of two years following the date hereof and to be available during such
period to answer any questions or furnish any information regarding matters that
White handled or of which he has knowledge; provided, that such cooperation does
not unreasonably interfere with White's ability to seek or hold new employment.
6. The Company will continue to indemnify and hold harmless White for
acts or omissions of White prior to the date hereof to the full extent required
or permitted under Tennessee law and the Company's charter and bylaws.
7. The Company and White acknowledge and agree that the restrictions
contained in Sections 2, 3, and 4 of this Agreement are reasonable and necessary
to protect the legitimate interests of the Company, that the violation of these
covenants will result in irreparable injury to the Company, that money damages
for any such violation or threatened violation would be inadequate, and that in
the event of any such breach or violation, the Company, in addition to any other
remedies or damages available to it, will be entitled to temporary injunctive
relief before trial from any court of competent jurisdiction as a matter of
course and to permanent injunctive relief without the necessity of proving
actual damages.
2
<PAGE> 3
8. If any provision of this Agreement is declared or found to be
illegal, unenforceable, or void, in whole or in part, then both parties shall be
relieved of all obligations arising under such provision, but only to the extent
such provision is illegal, unenforceable, or void, it being the intent and
agreement of the parties that this Agreement shall be deemed amended by
modifying such provision to the extent necessary to make it legal and
enforceable while preserving its intent or, if such is not possible, by
substituting therefor another provision that is legal and enforceable and
achieves the same objectives. The foregoing notwithstanding, if the remainder of
this Agreement shall not be affected by such declaration or finding and is
capable of substantial performance, then each provision not so affected shall be
enforced to the extent permitted by law.
9. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, successors, and assigns.
10. This Agreement may be executed in counterparts, all of which taken
together will constitute but a single document.
11. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Tennessee, without giving effect to the choice of
law principles thereof.
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective on the Effective Date referenced in Section 1 hereof.
SCB COMPUTER TECHNOLOGY, INC.
By: /s/ Ben C. Bryant
-------------------------------------
Title: President
----------------------------------
/s/ Steve N. White
-----------------------------------------
Steve N. White
3
<PAGE> 1
EXHIBIT 10.3
STOCK RESTRICTION AGREEMENT
This STOCK RESTRICTION AGREEMENT (the "Agreement"), is dated as of
August 27, 1998, by and between SCB Computer Technology, Inc., a Tennessee
corporation ("SCB"), and Steve N. White ("White").
WHEREAS, White, previously employed by SCB in varying capacities
including as an executive officer, has voluntarily resigned, subject to this
Agreement becoming effective and White receiving good funds hereunder, from all
positions as an officer or director of SCB and its subsidiaries;
WHEREAS, the Board of Directors of SCB has determined that because
White owns a large number of shares of Common Stock, par value $.01 per share,
of SCB ("SCB Common Stock") and because an immediate and disorderly sale of such
shares could have a material adverse effect on the market for SCB Common Stock,
it desires to enter into this Agreement to restrict White's ability to transfer
shares of SCB Common Stock in exchange for the consideration set forth herein;
and
WHEREAS, SCB and White acknowledge that the restrictions set forth
herein are reasonable;
NOW, THEREFORE, in consideration of the premises hereof and of the
mutual promises and agreements contained herein, the parties hereto, intending
to be legally bound hereby, agree as follows:
1. Except as expressly set forth herein, unless otherwise agreed to in
writing in advance by SCB, neither White, nor any of his "Permitted Transferees"
(as such term is defined below), may sell, pledge, or otherwise transfer any
shares of SCB Common Stock owned by any of them from the date hereof until
August 26, 1999. In addition, during the period beginning August 27, 1999 until
August 26, 2000, except as expressly set forth herein, unless otherwise agreed
to in writing in advance by SCB, neither White nor any of his Permitted
Transferees may, during any 30-day period, sell, pledge, or otherwise transfer
in the aggregate more than 100,000 shares of SCB Common Stock. Anything herein
to the contrary notwithstanding, White may transfer shares of SCB Common Stock
to (i) charitable organizations qualified under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended, (ii) members of White's immediate
family, or (iii) trusts for the benefit of White or members of his immediate
family (collectively, "Permitted Transferees"); provided that the restrictions
of this Section 1 shall apply to such shares in the hands of the Permitted
Transferees; and provided, further that nothing herein shall prohibit White from
pledging any shares owned by him directly or indirectly to secure a bona fide
loan transaction with a financial institution. White understands and agrees that
this Section 1 may be
<PAGE> 2
enforced by the delivery of "stop transfer" instructions by SCB to the transfer
agent for the SCB Common Stock.
2. SCB shall pay to White, on the "Effective Date" as defined in the
Mutual Release between SCB and White, $250,000 in the form of an SCB check
payable to the order of White, provided that prior to that date White has
delivered to SCB or its transfer agent stock certificates representing all
shares of SCB Common Stock owned, of record or beneficially, by White. SCB shall
cause its transfer agent to reissue and deliver the certificates to White or his
Permitted Transferees, as applicable, which certificates will bear the following
restrictive legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCK RESTRICTION AGREEMENT DATED AUGUST 27, 1998. THE COMPANY
WILL FURNISH THE HOLDER HEREOF INFORMATION REGARDING THE
RESTRICTIONS SET FORTH THEREIN UPON REQUEST IN WRITING AND
WITHOUT CHARGE.
3. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, successors, and assigns.
4. SCB may withhold from any amounts payable under this Agreement all
federal, state, city, and other taxes as shall be required pursuant to any law
or government regulation or ruling.
5. If any provision of this Agreement is found to be illegal,
unenforceable, or void, in whole or in part, then the party against whom
enforcement is being sought shall be relieved of all obligations arising under
such provision, but only to the extent such provision is illegal, unenforceable,
or void, it being the intent and agreement of the parties that this Agreement
shall be deemed amended by modifying such provision to the extent necessary to
make it legal and enforceable while preserving its intent or, if such is not
possible, by substituting therefor another provision that is legal and
enforceable and achieves the same objectives.
6. It is understood and agreed that no failure or delay by SCB 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
hereunder. It is further understood and agreed that money damages would not be
sufficient remedy for any breach of this Agreement by White or his Permitted
Transferees, and that SCB shall be entitled to an injunction and/or specific
performance as a remedy for any such breach. Such remedy shall not be deemed to
be the exclusive remedy for a breach of this Agreement, but shall be in addition
to all other remedies available at law or in equity.
7. This Agreement may be executed in multiple counterparts, all of
which taken together shall constitute but a single document.
2
<PAGE> 3
8. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Tennessee, without giving effect to the choice of
law principles thereof.
9. In the event any action shall be instituted to enforce any of the
terms hereof, reasonable attorney's fees, costs and expenses shall be paid to
the prevailing party by the other party.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
SCB COMPUTER TECHNOLOGY, INC.
By: /s/ Ben C. Bryant
-------------------------------------
Title: President
----------------------------------
/s/ Steve N. White
-----------------------------------------
STEVE N. WHITE
3
<PAGE> 1
EXHIBIT 10.4
CANCELLATION OF OPTION AGREEMENT
This Cancellation of Option Agreement (the "Agreement") is made as of
August 27, 1998 by and between SCB Computer Technology, Inc., a Tennessee
corporation (the "Company"), and Steve N. White ("White").
WHEREAS, the Company and White entered into that certain Non-Qualified
Stock Option Agreement, dated April 11, 1997, with respect to up to 60,000
shares of the Company's Common Stock;
WHEREAS, the Board of Directors of the Company has determined, in
connection with White's resignation from all positions with the Company and its
subsidiaries, to accelerate the vesting of all unvested options under the Prior
Agreement;
WHEREAS, simultaneously herewith, White has voluntarily resigned,
subject to this Agreement becoming effective and White receiving payment
hereunder in good funds, from all positions with the Company and its
subsidiaries;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. The Company will pay to White, in the form of a Company check
payable to the order of White, the amount of $270,000 on the "Effective Date"
(if any) as defined in the Mutual Release between the Company and White dated
August 27, 1998, it being understood that the calculation of the amount of such
payment has been derived by multiplying 60,000 by the difference between the
closing sales price of the Common Stock on August 24, 1998, the day the
Agreement in principle was reached ($10.00 per share) and the option exercise
price ($5.50 per share) set forth in the Prior Agreement.
2. Upon the receipt by White of the payment described in Section 1, the
Prior Agreement shall be canceled and of no further force or effect.
3. This Agreement may be executed in counterparts, all of which taken
together will constitute but a single document.
IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective on the Effective Date referenced in Section 1 hereof.
SCB COMPUTER TECHNOLOGY, INC.
By: /s/ Ben C. Bryant
-------------------------------------
Title: President
----------------------------------
/s/ Steve N. White
-----------------------------------------
Steve N. White
<PAGE> 1
EXHIBIT 99
NEWS RELEASE
- --------------------------------------------------------------------------------
Contact: Ben C. Bryant, Jr. Gary E. McCarter
President and Chief Financial Office
Chief Executive Officer 901-754-6577
901-754-6577
MEMPHIS, Tennessee (August 28, 1998) - SCB Computer Technology, Inc.
(Nasdaq/NM:SCBI) today announced record results for its first quarter ended July
31, 1998. Revenues for the first quarter increased 66% to $35.5 million compared
with $21.3 million a year ago. Earnings for the quarter increased 35% to $2.4
million, or $0.10 per share (diluted), before a $0.06 per share non-recurring
charge to settle the Tennessee Valley Authority (TVA) billing matter, compared
with $1.8 million, or $0.08 per share (diluted), for the first quarter ended
July 31, 1997. Net income for the quarter ended July 31, 1998, after the $0.06
per share non-recurring charge to settle the TVA billing matter, was $0.09
million, or $0.04 per share (diluted). All per share amounts reflect the
three-for-two stock split effected in September 1997 and the two-for-one stock
split effected in April 1998.
The Company has booked a reserve of $1,900,000 in the first quarter in
anticipation of the settlement of the TVA billing matter as discussed below. In
addition, in connection with the resignation of an officer of the Company, SCB
will book a one-time expense for payments related thereto of approximately
$800,000 in the second fiscal quarter, with noncompete payments to such former
officer (aggregating approximately $980,000) being amortized ratably over future
periods.
Commenting on the results, Ben C. Bryant, Jr., president and chief
executive officer, said, "SCB continues to focus on its higher margin
information technology (IT) consulting, outsourcing services and enterprise
resource planning (ERP) business. During our first quarter, SCB received several
important contracts in these areas as well as contracts that support our
strategy of expanding our long-term relationships with existing clients.
Contracts awarded in the first quarter included those with the Commonwealth of
Kentucky, and the States of Alabama, Georgia and Arkansas. We also expanded our
Consulting Partnership with BaaN Software in the first quarter by becoming one
of their select customization specialists. We continue to enhance our
relationships with other Tier 1 ERP vendors to take maximum advantage of the
opportunities within our expanding client base."
Bryant went on to say, "In addition, we strengthened our organizational
and regional structure in the first quarter by appointing two members of our
senior management team to positions which have specific responsibilities in the
areas of our higher margin business and regional infrastructure. We also opened
our sixth regional office located in Phoenix, Arizona, and established our
fourth Emerging Technology Center (ETC) in Dallas, Texas. The ETCs have exceeded
our expectations and are being used primarily to provide clients with offsite
<PAGE> 2
development and outsourcing services as well as being used for ongoing training
of our professionals. Our current plan calls for opening additional ETCs in
Atlanta and New York."
The Company also announced that it has reached a tentative agreement
with the United States Attorney for the Western District of Tennessee and the
TVA to settle on a civil basis all claims against the Company relating to the
TVA billing matter. The Company is in the process of negotiating with the
government regarding the amount of the civil settlement, which it anticipates
will occur before 1998 calendar year end. Pending completion of such
negotiations with the government, the government has indicated that its
investigation into the TVA matter is over and that the Company will have no
liability, criminal or civil, beyond the amount of the civil settlement with the
TVA. The Company also understands that Steve N. White, formerly an officer and
director of the Company, will plead guilty to a single charge of submitting
false claims aggregating less than $10,000 relating to TVA expense billings.
Bryant commented, "Although we regret the problems on this engagement,
we are pleased to be able to put the investigation behind us, subject to
finalizing the agreement. It is important to understand that the TVA engagement
was completed over two-and-a-half years ago when we were still a private,
closely held company. SCB has since undergone a thorough review of its contract
procedures and implemented new controls designed to improve the administration
of our contracts and compliance with their terms. These measures include
instituting a formal code of conduct and compliance program and designating a
corporate compliance officer, strengthening our employee training, and
establishing a quality assurance program. Thankfully, we have closed this
chapter in our company's history and believe we have emerged from the process as
a stronger company.
Mr. White has resigned from his positions with the Company. In
conjunction with his resignation, the Company has entered into certain
agreements with Mr. White relating to a five-year noncompete, the cancellation
of his in-the-money SCB stock options, restrictions on future sales of SCB
common stock, and a full release of SCB.
The Company also announced that it has rescheduled its 1998 Annual
Meeting of Shareholders to November 3, 1998, for shareholders of record as of
September 15, 1998.
Certain statements contained in this press release and related
statements by management may be deemed to be forward-looking statements. These
forward-looking statements involve a number of risks and uncertainties including
the Company's ability to negotiate a definitive settlement with the government
on terms described herein, the tax and accounting treatment for the related
payments, and other risks described in the Company's filing with the Securities
and Exchange Commission. The Company undertakes no obligation to update this
forward-looking information, except as required by law.
SCB Computer Technology is a leading provider of information technology
(IT) management and technical services through six U.S. regional operations,
four subsidiaries and its corporate services groups to Fortune 500 companies,
state and local governments and other large organizations. The Company's
services primarily consist of (1) IT CONSULTING, including evaluation, design
and re-engineering of computer systems, management, quality assurance and
technical direction for IT projects, network planning and implementation as well
as functional
2
<PAGE> 3
expertise and training; (2) OUTSOURCING, including system development and
integration, maintenance, data center management, help desk and technical
services, remote processing, computer hardware sales and leasing, and Y2K
compliance services; (3) ENTERPRISE RESOURCE PLANNING (ERP) services, which
include planning and evaluation, systems analysis and administration,
implementation and functional support; and (4) PROFESSIONAL STAFFING, which
involves providing skilled IT staff on an as needed-basis.
3
