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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
SCB COMPUTER TECHNOLOGY, INC.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1. Title of each class of securities to which transaction
applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
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[SCB LETTERHEAD, INCLUDING LOGO, ADDRESS, AND TELEPHONE NUMBER]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [JANUARY 24, 2001]
To our Shareholders:
A special meeting of shareholders of SCB Computer Technology, Inc. (the
"Company") will be held at the Company's office located at 3800 Forest
Hill-Irene Road, Suite 100, Memphis, Tennessee, on [January 24, 2001], beginning
at 10:00 a.m. (Memphis time), for the following purposes:
1. to approve an amendment to the Company's charter effecting a
1-for-5 reverse stock split with respect to the Company's common
stock; and
2. to transact any other business that properly comes before the
meeting.
The proposed charter amendment effecting the reverse stock split is
more fully described in the attached Proxy Statement. Please read the Proxy
Statement carefully.
Only shareholders of record at the close of business on December 18,
2000, are entitled to receive notice of, and to vote at, the meeting and any
postponement or adjournment thereof. A list of such shareholders will be
available for inspection by any shareholder at the Company's office located at
3800 Forest Hill-Irene Road, Suite 100, Memphis, Tennessee, during ordinary
business hours beginning [January 2, 2001], and continuing through the meeting.
You are cordially invited to attend the meeting. Regardless of whether
you plan to attend the meeting in person, please complete, date, and sign the
enclosed proxy card and return it promptly in the accompanying postage-paid
envelope.
By Order of the Board of Directors,
[Signature]
Gordon L. Bateman
Secretary
[December 28, 2000]
YOUR VOTE IS IMPORTANT!
TO ENSURE THAT YOU ARE REPRESENTED AT THE MEETING, PLEASE VOTE BY
TELEPHONE OR COMPLETE, SIGN, DATE, AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ACCOMPANYING ENVELOPE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING IN
PERSON. NO ADDITIONAL POSTAGE IS NECESSARY IF THE PROXY IS MAILED IN THE UNITED
STATES. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE MEETING.
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
ABOUT THE MEETING........................................................................................... 1
What is the purpose of the meeting?.................................................................. 1
Who is entitled to vote?............................................................................. 1
Who can attend the meeting?.......................................................................... 1
What constitutes a quorum?........................................................................... 1
How do I vote my shares?............................................................................. 1
How are the shares allocated to my KSOP account voted?............................................... 2
Can I vote by telephone?............................................................................. 2
Can I change my vote after I return my proxy card or KSOP voting instruction form?................... 2
How does the Board of Directors recommend that I vote?............................................... 2
What vote is required to approve the reverse stock split?............................................ 2
CHARTER AMENDMENT EFFECTING 1-FOR-5 REVERSE STOCK SPLIT..................................................... 3
Purpose.............................................................................................. 3
Background........................................................................................... 3
Principal Effects ................................................................................... 3
Risk Factors......................................................................................... 4
Procedures .......................................................................................... 5
Stock Certificates................................................................................... 5
Cash in Lieu of Fractional Post-Split Shares......................................................... 5
Dissenters' Rights .................................................................................. 5
Certain Federal Income Tax Consequences.............................................................. 8
Board of Directors' Recommendation................................................................... 9
STOCK OWNERSHIP............................................................................................. 10
OTHER MATTERS............................................................................................... 12
ADDITIONAL INFORMATION...................................................................................... 12
Solicitation of Proxies.............................................................................. 12
Shareholder Proposals for 2001 Annual Meeting of Shareholders........................................ 12
APPENDIXES:
A. Amendment to Amended and Restated Charter of SCB Computer
Technology, Inc. Effecting 1-for-5 Reverse Stock Split........................................ A-1
B. Chapter 23 of Tennessee Business Corporation Act - Dissenters' Rights......................... B-1
</TABLE>
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[SCB LETTERHEAD, INCLUDING LOGO, ADDRESS, AND TELEPHONE NUMBER]
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [JANUARY 24, 2001]
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of SCB Computer Technology,
Inc. (the "Company") for use at a special meeting of shareholders to be held at
the Company's office located at 3800 Forest Hill-Irene Road, Suite 100, Memphis,
Tennessee, on [January 24, 2001], beginning at 10:00 a.m. (Memphis time), and at
any postponement or adjournment thereof. This Proxy Statement and the enclosed
proxy card are first being sent to the shareholders of the Company entitled to
vote at the meeting on or about [December 28, 2001].
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE MEETING?
At the meeting, the Company's shareholders will act upon a proposal to
approve an amendment to the Company's charter effecting a 1-for-5 reverse stock
split with respect to the Company's common stock. The proposed charter amendment
effecting the reverse stock split is described in more detail in this Proxy
Statement. Shareholders also will transact any other business that properly
comes before the meeting.
WHO IS ENTITLED TO VOTE?
Only shareholders of record at the close of business on the record
date, December 18, 2000, are entitled to receive notice of the meeting and to
vote the shares of common stock that they held on that date at the meeting and
any postponement or adjournment thereof. Each outstanding share of common stock
entitles its holder to cast one vote on each matter to be voted on at the
meeting.
WHO CAN ATTEND THE MEETING?
All shareholders as of the record date or their duly appointed proxies,
together with their guests, may attend the meeting.
WHAT CONSTITUTES A QUORUM?
The presence in person or representation by proxy at the meeting of the
holders of a majority of the shares of the Company's common stock outstanding on
the record date will constitute a quorum, thereby permitting the shareholders to
conduct their business at the meeting. As of the record date, there were
25,045,324 outstanding shares of common stock. Broker non-votes and abstentions
will be included in the calculation of the number of shares considered present
at the meeting for the purpose of determining the existence of a quorum.
HOW DO I VOTE MY SHARES?
If you complete and properly sign the accompanying proxy card and
return it to the Company, it will be voted as you direct. If you are a
registered shareholder (i.e., you hold your shares in your own name) and attend
the meeting, you may deliver your completed proxy card or vote in person at the
meeting. "Street name" shareholders who wish to vote at the meeting will need to
obtain a proxy from the broker or other nominee that holds their shares.
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HOW ARE THE SHARES ALLOCATED TO MY KSOP ACCOUNT VOTED?
If you are a participant in the Company's KSOP, you may instruct
Merrill Lynch Trust Company, the trustee of the KSOP, to vote the shares of
common stock held by the KSOP and allocated to your KSOP account as of the
record date. You may provide your voting instructions to the KSOP trustee
pursuant to the KSOP voting instruction form being mailed with this Proxy
Statement to KSOP participants. The KSOP trustee will vote the shares of common
stock allocated to your KSOP account in accordance with the instructions set
forth in your KSOP voting instruction form if it is completed and properly
signed and is received by ChaseMellon Shareholder Services, LLC, the Company's
voting instruction tabulator, by [January 22, 2001]. If your voting instructions
are not received by such date, the KSOP trustee will vote the shares of common
stock allocated to your KSOP account in the same proportion that it votes the
shares for which timely instructions were received.
CAN I VOTE BY TELEPHONE?
If you are a registered shareholder, you may vote by telephone by
following the instructions included with your proxy card. If your shares are
held in "street name," you will need to contact your broker or other nominee to
determine whether you will be able to vote by telephone. If you are a
participant in the KSOP, you may provide your voting instructions to the KSOP
trustee by telephone by following the instructions included with your KSOP
voting instruction form.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD OR KSOP VOTING INSTRUCTION
FORM?
Yes. Even after you have submitted your proxy card, you may change your
vote at any time before the proxy is exercised by filing with the Secretary of
the Company either a written notice of revocation or a duly executed proxy card
bearing a later date. "Street name" shareholders must contact their broker or
other nominee and follow their instructions if they wish to change their vote.
If you are a participant in the KSOP, you may revoke your previously given
voting instructions by filing with the voting instruction tabulator by [January
22, 2001], either a written notice of revocation or a duly executed KSOP voting
instruction form bearing a later date. The powers of the proxy holders will be
suspended if you attend the meeting in person and so request, although
attendance at the meeting will not by itself revoke a previously granted proxy
or voting instruction.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE?
Unless you give other instructions on your proxy card, the persons
named as proxy holders on the proxy card will vote your shares in accordance
with the recommendations of the Board of Directors. The Board recommends that
the shareholders vote FOR the approval of the amendment to the Company's charter
effecting a 1-for-5 reverse stock split with respect to the Company's common
stock. With respect to any other item of business that properly comes before the
meeting, the proxy holders will vote your shares as recommended by the Board of
Directors or, if no recommendation is given, as they may determine in their own
discretion.
WHAT VOTE IS REQUIRED TO APPROVE THE REVERSE STOCK SPLIT?
The affirmative vote of the holders of a majority of the outstanding
shares of common stock as of the record date is required for approval of the
proposed charter amendment effecting the reverse stock split. Broker non-votes
and abstentions will not be counted as having been voted on the proposal for the
purpose of determining the results of the shareholder voting. A "broker
non-vote" would occur in the event that you hold shares of common stock in
"street name" through a broker or other nominee and you do not instruct or
otherwise empower your broker or other nominee to vote your shares at the
meeting with respect to the proposal.
If there are not sufficient votes to approve the reverse stock split
proposal at the time of the meeting, the meeting may be adjourned or postponed
in order to permit further solicitation of proxies by the Board of Directors.
However, no proxy voted against the proposal will be voted for an adjournment or
postponement of the meeting to solicit additional votes for the proposal.
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CHARTER AMENDMENT EFFECTING
1-FOR-5 REVERSE STOCK SPLIT
The Board of Directors proposes to amend Section 7 of the Company's
charter to effect a 1-for-5 reverse stock split with respect to the Company's
common stock. The proposed charter amendment will reduce the number of
outstanding shares of common stock by approximately four-fifths, with each five
shares of common stock then outstanding being converted into one share of common
stock upon the effective date of the charter amendment. The text of the charter
amendment effecting the reverse stock split is set forth in Appendix A to this
Proxy Statement.
PURPOSE
The Company's common stock currently is traded in the over-the-counter
market. Public trading in the common stock is quoted on the OTC Bulletin Board.
Previously, the Company's common stock was listed on The Nasdaq Stock Market
("Nasdaq"). The Company is undertaking efforts to have its common stock listed
once again on Nasdaq. To facilitate this effort, the Company proposes to effect
a reverse stock split in order to allow its common stock to meet Nasdaq's
minimum bid price requirement of $1.00 per share.
BACKGROUND
On April 14, 2000, Nasdaq suspended trading in the Company's common
stock following the Company's announcement of its intention to restate its
financial statements for certain prior fiscal periods. On May 26, 2000, the
Nasdaq staff notified the Company of its initial determination to delist the
Company's common stock. On June 1, 2000, the Company requested that a Nasdaq
Listing Qualification Panel (the "Nasdaq Panel") review the determination of the
Nasdaq staff, which stayed the delisting pending a decision by the Nasdaq Panel.
On August 17, 2000, the Nasdaq Panel issued its decision to delist the Company's
common stock. The delisting was effective the next day. On August 30, 2000, the
Company requested that the Nasdaq Listing and Hearing Review Council (the
"Nasdaq Council") review the decision of the Nasdaq Panel. Finally, on November
22, 2000, the Nasdaq Council reversed the decision of the Nasdaq Panel and
remanded the matter to the Nasdaq staff to determine whether the Company's
common stock may again be listed on Nasdaq.
In its decision, the Nasdaq Council noted that the Company's common
stock does not meet the minimum bid price of $1.00 per share required by Nasdaq.
The Nasdaq Council granted the Company a 90-day period in which to achieve a
minimum $1.00 bid price and to demonstrate its compliance with all other
continued listing requirements of Nasdaq. The Nasdaq Council instructed the
Nasdaq staff to conduct a full initial inclusion review of the Company and to
include the Company's common stock on Nasdaq if the Company is able to
demonstrate compliance with all applicable listing requirements and if there are
no adverse developments justifying the denial of listing.
PRINCIPAL EFFECTS
The reverse stock split will result in an approximately four-fifths
reduction in the number of outstanding shares of the Company's common stock. The
number of outstanding shares of common stock will decrease from 25,045,324
shares to approximately 5,009,064 shares. In addition, the Board of Directors
will take appropriate action to adjust proportionately the number of shares of
common stock issuable upon the exercise of outstanding options and warrants, and
to adjust the related exercise prices of these derivative securities, to reflect
the reverse stock split. As a result, following the effective date, the total
number of shares of common stock issuable upon the exercise of outstanding
options and warrants will be reduced from approximately 3,268,708 shares to
approximately 653,741 shares.
The Board of Directors believes that the reverse stock split also will
likely result in the bid price of the Company's common stock increasing above
the minimum $1.00 bid price requirement imposed by Nasdaq. The market price of
the common stock depends on several factors, many of which are beyond the
Company's control, and there can be no assurance that the reverse stock split
will have the intended
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effect. However, if the bid price of the common stock were to rise above $1.00
per share, such a result would facilitate the Company's efforts to have the
common stock listed once again on Nasdaq.
The liquidity of the common stock may be adversely affected by the
reduced number of shares outstanding after the reverse stock split. In addition,
the reverse stock split will increase the number of shareholders who own
odd-lots (i.e., fewer than 100 shares). Shareholders who own odd-lots may have
greater difficulty in selling their shares and may experience an increase in
their selling costs.
The amendment to the Company's charter effecting the reverse stock
split will not change the terms of the common stock. The post-split shares of
common stock will have the same voting rights and rights to dividends and
distributions and will be identical in all other respects to the pre-split
shares of common stock now authorized. The post-split shares of common stock
will be fully paid and non-assessable.
The Company will not issue any fractional post-split shares of common
stock on account of the reverse stock split. See "Cash in Lieu of Fractional
Shares." As a result, any shareholder who owns fewer than five pre-split shares
of common stock will cease to be a shareholder of the Company on the effective
date. The Company does not anticipate that the reverse stock split will result
in any material reduction in the number of shareholders. Each shareholder's
percentage ownership of the post-split shares of common stock will not be
altered except for the effect of eliminating fractional shares.
The reverse stock split will have no effect on the number of authorized
shares of common stock. As a result, the overall effect will be an increase in
the authorized but unissued shares of common stock. The Company may issue these
shares at the discretion of the Board of Directors. Any future issuance will
have the effect of diluting the percentage of stock ownership and voting rights
of the present shareholders.
While the Board of Directors believes that it is advisable to authorize
and approve the reverse stock split for the reasons set forth above, the Board
is aware that the increase in the number of authorized but unissued shares of
common stock may have a potential anti-takeover effect. The Company's ability to
issue additional shares of common stock could be used to thwart persons or
otherwise dilute the stock ownership of shareholders seeking to control the
Company. The reverse stock split is not being recommended by the Board as part
of any anti-takeover strategy.
RISK FACTORS
There can be no assurance that the market price of the common stock
will increase in inverse proportion to the decrease in the number of outstanding
shares of common stock resulting from the reverse stock split. Furthermore,
there can be no assurance that the market price of the common stock will
initially rise, or subsequently remain, above $1.00 per share after the reverse
stock split is effected. In recent months, a number of companies have effected
reverse stock splits in order to keep their stock prices above the $1.00
threshold for remaining on Nasdaq. These companies have had mixed results. While
the post-split market prices for some companies' stock have remained above $1.00
per share, those of other companies have subsequently declined below this level
once more.
Even if the Company is successful in achieving a post-split market
price above $1.00, there can be no assurance that Nasdaq will decide to re-list
the common stock. The Nasdaq staff will conduct a full initial inclusion review
of the Company. Aside from the minimum bid price requirement, the Company must
meet all other applicable Nasdaq listing requirements, including the
quantitative criteria relating to its annual pre-tax income, the number of
publicly held shares of common stock, the market value of the publicly held
shares, the Company's net tangible assets, and the number of active market
makers for the common stock. There also must be no adverse development which
would justify Nasdaq's denial of listing. The Company's failure to meet any
applicable listing requirement or the occurrence of an adverse development
affecting the Company thus may prevent the common stock from being re-listed on
Nasdaq.
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PROCEDURES
If the shareholders approve the charter amendment, the reverse stock
split will become effective at the close of business on the date that the
Company files articles of amendment with the Secretary of State of Tennessee. If
the charter amendment is approved, the Company currently intends to file the
articles of amendment the same day. Upon the filing of the articles of
amendment, each five shares of common stock then outstanding will automatically
be converted into one share of common stock. However, even if the reverse stock
split is approved by the shareholders, the Board of Directors has discretion not
to carry out the reverse stock split if the Board determines that it is not
necessary to qualify the common stock for listing on Nasdaq based on the then
current market price of the common stock, or if the Board determines that the
reverse stock split will not be beneficial to the Company's shareholders for any
other reason.
STOCK CERTIFICATES
As soon as practicable after the effective date, the Company will
request all shareholders to return their stock certificates representing
pre-split shares of common stock outstanding on the effective date in exchange
for new stock certificates representing the whole number of post-split shares of
common stock into which the pre-split shares of common stock were converted as a
result of the reverse stock split. Each shareholder will receive a letter of
transmittal from the Company's transfer agent containing instructions on how to
exchange his or her stock certificates. SHAREHOLDERS SHOULD NOT SUBMIT THEIR OLD
STOCK CERTIFICATES TO THE TRANSFER AGENT UNTIL THEY RECEIVE THESE INSTRUCTIONS.
In order to receive new stock certificates, shareholders must surrender their
old stock certificates in accordance with the transfer agent's instructions,
together with the properly completed and executed letter of transmittal.
Beginning with the effective date, each old stock certificate, until
surrendered and exchanged for a new stock certificate as described above, will
be deemed for all purposes to evidence the ownership of the whole number of
post-split shares of common stock into which the pre-split shares of common
stock evidenced by the old stock certificate were converted.
CASH IN LIEU OF FRACTIONAL POST-SPLIT SHARES
The Company will not issue fractional post-split shares of common stock
on account of the reverse stock split. Instead, each shareholder who otherwise
would have been entitled to a fractional post-split share of common stock by
virtue of the reverse stock split will be entitled to receive, in lieu of such
fractional share, an amount in cash equal to the product of (a) the fractional
post-split share of common stock to which the shareholder otherwise would have
been entitled (taking into account all pre-split shares of common stock then
held of record by the shareholder), multiplied by (b) the average of the last
sale price per share of common stock during the 10 consecutive trading days
immediately prior to the effective date or, if no such sale takes place on such
days, the average of the closing bid and asked prices thereof for such days, in
each case as officially reported on the OTC Bulletin Board. The Company will not
pay any interest on the cash paid in lieu of fractional post-split shares of
common stock.
DISSENTERS' RIGHTS
Shareholders who own fewer than five pre-split shares of the Company's
common stock immediately prior to the effective date of the reverse stock split
will receive only cash in exchange for their shares in the reverse stock split.
Under Chapter 23 of the Tennessee Business Corporation Act, as amended (the
"TBCA"), such shareholders are entitled to dissent from the reverse stock split
and to obtain payment of the "fair value" of their pre-split shares from the
Company. No other shareholders are entitled to assert dissenters' rights on
account of the reverse stock split.
A shareholder who wishes to assert dissenters' rights must comply
strictly with the procedural and other requirements set forth in Chapter 23 of
the TBCA. The provisions of Chapter 23, which consist of Sections 48-23-101
through 48-23-302, are reproduced in their entirety in Appendix B to this Proxy
Statement. The following is a summary of the provisions of Chapter 23 and is
qualified in its entirety by
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reference to Appendix B. SHAREHOLDERS SHOULD CAREFULLY READ APPENDIX B AND, IF
THEY WISH TO EXERCISE THEIR DISSENTERS' RIGHTS, FOLLOW CAREFULLY THE PROCEDURES
SET FORTH THEREIN. ANY SHAREHOLDER CONSIDERING ASSERTING DISSENTERS' RIGHTS IS
ADVISED TO CONSULT WITH LEGAL COUNSEL BEFORE ASSERTING OR ATTEMPTING TO ASSERT
SUCH RIGHTS.
NOTICE BY SHAREHOLDER OF INTENT TO DEMAND PAYMENT. A shareholder who
wishes to assert his or her dissenters' rights under Chapter 23 of the TBCA must
deliver to the Company a written notice of the shareholder's intent to demand
payment for his or her shares if the reverse stock split is effectuated. The
notice must reasonably inform the Company of the shareholder's identity as well
as the intention of such shareholder to demand payment for his or her shares.
The notice must be delivered to the Company before the shareholder vote is taken
at the meeting on [January 24, 2001]. A SHAREHOLDER'S FAILURE TO DELIVER SUCH
NOTICE TO THE COMPANY BEFORE THE SHAREHOLDER VOTE IS TAKEN AT THE MEETING ON
[JANUARY 24, 2001], WILL FORECLOSE SUCH SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT
FOR HIS OR HER SHARES UNDER CHAPTER 23.
For the purposes of asserting dissenters' rights under Chapter 23, the
Company's address is as follows:
SCB Computer Technology, Inc.
3800 Forest Hill-Irene Road, Suite 100
Memphis, Tennessee 38125
Attention: Gordon L. Bateman
Executive Vice President and
Chief Administrative Officer
A beneficial owner of shares held in "street name" by a broker or other
nominee must take such actions as may be necessary to ensure that a proper and
timely notice of his or her intent to demand payment is made. The notice can be
given by either the "street name" record holder or the beneficial owner of the
shares, provided that certain procedural requirements are satisfied.
SHAREHOLDER VOTING. A shareholder who wishes to assert his or her
dissenters' rights under Chapter 23 of the TBCA must not vote in favor of the
proposed charter amendment effecting the reverse stock split. The shareholder
either must mark the "AGAINST" or "ABSTAIN" box on the proxy card with respect
to the reverse stock split proposal or must not complete and return the proxy
card. If the shareholder marks the "FOR" box or does not indicate any vote on
the proxy card, his or her shares will be voted in favor of the reverse stock
split proposal. A SHAREHOLDER'S VOTE IN FAVOR OF THE REVERSE STOCK SPLIT
PROPOSAL WILL FORECLOSE SUCH SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR HIS OR
HER SHARES UNDER CHAPTER 23. A FAILURE TO VOTE AGAINST THE PROPOSAL, HOWEVER,
WILL NOT CONSTITUTE A WAIVER OF THE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT.
FURTHER, A VOTE AGAINST THE PROPOSAL WILL NOT BE DEEMED TO CONSTITUTE A NOTICE
OF THE SHAREHOLDER'S INTENT TO DEMAND PAYMENT AS REQUIRED BY CHAPTER 23.
NOTICE BY THE COMPANY TO DISSENTING SHAREHOLDERS. If the shareholders
approve the proposed charter amendment effecting the reverse stock split, the
Company must deliver a written notice to all shareholders who have properly and
timely asserted their dissenters' rights (collectively, "dissenting
shareholders"). The notice must be sent to the dissenting shareholders no later
than 10 days after the meeting. The dissenters' notice must (1) state where the
payment demand must be sent and where and when stock certificates must be
deposited; (2) inform the holders of uncertificated shares of the extent to
which the transfer of their shares will be restricted after the payment demand
is received; (3) supply a form for demanding payment; (4) set a date by which
the Company must receive the payment demand, which may not be fewer than one nor
more than two months after the dissenters' notice is delivered; and (5) be
accompanied by a copy of Chapter 23 of the TBCA, if not previously sent to the
dissenting shareholders.
PAYMENT DEMAND BY DISSENTING SHAREHOLDER. A dissenting shareholder
must, by the date set in the dissenters' notice, make a demand for payment for
his or her shares, certify whether the shareholder acquired beneficial ownership
of the shares before [December 28, 2000], and deposit the shareholder's
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stock certificates in accordance with the terms of the dissenters' notice. The
dissenting shareholder thereupon will retain all other rights of a shareholder
until these rights are canceled or modified by effectuation of the reverse stock
split. A DISSENTING SHAREHOLDER'S FAILURE TO DEMAND PAYMENT OR DEPOSIT HIS OR
HER STOCK CERTIFICATES, EACH BY THE DATE SET IN THE DISSENTERS' NOTICE, WILL
FORECLOSE SUCH DISSENTING SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT FOR HIS OR HER
SHARES UNDER CHAPTER 23. A dissenting shareholder may not withdraw a payment
demand unless the Company consents to such withdrawal.
PAYMENT OF FAIR VALUE. The Company is obligated to pay a dissenting
shareholder who has properly and timely made a payment demand and deposited his
or her stock certificates the amount that the Company estimates to be the "fair
value" of the dissenting shareholder's shares of common stock, plus accrued
interest. As defined in Chapter 23 of the TBCA, the term "fair value" means the
value of the dissenting shareholder's shares of common stock immediately before
the effectuation of the reverse stock split, excluding any appreciation or
depreciation in value in anticipation of the reverse stock split. Chapter 23
also provides that interest is paid from the effective date of the reverse stock
split until the date of payment at the average auction rate paid on United
States treasury bills with a maturity of six months (or the closest maturity
thereto) as of the auction date for such treasury bills closest to such
effective date. The Company's payment for the dissenting shareholder's shares
must be accompanied by (1) certain financial statements of the Company, (2) a
statement of the Company's estimate of the fair value of the shares, (3) an
explanation of how the interest was calculated, (4) a statement of the
dissenting shareholder's right to demand payment for his or her shares based on
the dissenting shareholder's estimate of the fair value of the shares, and (5) a
copy of Chapter 23 if not previously sent to the dissenting shareholder.
PROCEDURE IF DISSENTING SHAREHOLDER IS DISSATISFIED WITH PAYMENT. If a
dissenting shareholder believes that the amount paid by the Company is less than
the fair value of his or her shares or that the interest due is calculated
incorrectly, or if the Company fails to make such payment within two months
after the date set for demanding payment, the dissenting shareholder may notify
the Company in writing of the shareholder's own estimate of the fair value of
his or her shares and the amount of interest due, and may demand payment of the
dissenter's estimate less any payment previously received. A DISSENTING
SHAREHOLDER'S FAILURE TO MAKE SUCH DEMAND FOR PAYMENT WITHIN ONE MONTH AFTER THE
COMPANY MADE OR OFFERED PAYMENT FOR HIS OR HER SHARES WILL FORECLOSE SUCH
DISSENTING SHAREHOLDER'S RIGHT TO DEMAND PAYMENT PURSUANT TO THIS SPECIFIC
PROCEDURE UNDER CHAPTER 23.
COURT ACTION. If the Company and a dissenting shareholder cannot agree
on the fair value of the shareholder's shares within two months after the
Company receives the payment demand described above, the Company must commence a
judicial proceeding and petition the court to determine the fair value of the
shares and the accrued interest. The judicial proceeding must be commenced in a
court of record having equity jurisdiction in Shelby County, Tennessee, the
county where the Company's principal office is located. The Company must make
all dissenting shareholders whose demands remain unsettled parties to the
proceeding. The court may appoint one or more persons as appraisers to receive
evidence and recommend a decision of the question of fair value. Each dissenting
shareholder made a party to the proceeding is entitled to judgment for the
amount, if any, by which the fair value of his or her shares, plus accrued
interest, exceeds the amount paid by the Company. If the Company does not
institute the proceeding within such two-month period, the Company shall pay
each dissenting shareholder whose demand remains unsettled the amount demanded.
DISSENTERS' RIGHTS OF KSOP PARTICIPANTS. Under the terms of the
governing document for the KSOP, the participants in the KSOP are entitled to
direct Merrill Lynch Trust Company, the trustee of the KSOP, concerning the
assertion of dissenters' rights attributable to the shares of common stock held
by the KSOP and allocated to their respective accounts. IN THE ABSENCE OF A
DIRECTION TO ASSERT DISSENTERS' RIGHTS ON BEHALF OF A KSOP PARTICIPANT, THE KSOP
TRUSTEE WILL NOT EXERCISE DISSENTERS' RIGHTS WITH RESPECT TO THE PARTICIPANT'S
SHARES. A KSOP participant desiring to assert dissenters' rights with respect to
the shares of common stock allocated to his or her account in the KSOP should
follow the procedures set forth above for stockholders who own their shares
directly, with the following exceptions: (1) a written demand for dissenters'
rights must be directed to the KSOP trustee at the following address: Merrill
Lynch Trust Company, Trustee for SCB Computer Technology, Inc. KSOP, c/o ADP, 51
Mercedes
7
<PAGE> 11
Way, Edgewood, New York 11717, Attention - Receiving; and (2) the KSOP trustee
must receive written directions from such KSOP participant no later than
[January 22, 2001].
Under Chapter 23 of the TBCA, the participants in the KSOP, in their
capacity as beneficial shareholders of the Company, also are entitled to assert
dissenters' rights with respect to the shares of common stock held by the KSOP
and allocated to their respective accounts. A KSOP participant may assert
dissenters' rights as to the shares of common stock held by the KSOP and
allocated to his or her account only if the participant (1) submits to the
Company the KSOP trustee's written consent to the dissent not later than the
time that the participant asserts his or her dissenters' rights, and (2) asserts
dissenters' rights with respect to all the shares of common stock held by the
KSOP and allocated to the participant's account.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated federal income
tax consequences of the reverse stock split to the Company and its shareholders.
The summary is based on current federal income tax law, which is subject to
change, and does not address foreign, state, or local tax consequences or
considerations. The federal income tax consequences of the reverse stock split
will vary among shareholders depending upon whether they receive only post-split
shares of common stock, only cash, or a combination of stock and cash in
exchange for their pre-split shares of common stock. THIS DISCUSSION IS NOT TAX
ADVICE. EACH SHAREHOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH
RESPECT TO THE CONSEQUENCES OF THE REVERSE STOCK SPLIT.
The Company believes that because the reverse stock split is not part
of a plan to increase, periodically, a shareholder's proportionate interest in
the assets or earnings of the Company, and because the cash payment in lieu of
fractional post-split shares represents a mechanical rounding rather than
separately bargained for consideration, the reverse stock split will have the
federal income tax effects described below.
A shareholder who receives only post-split shares of common stock
pursuant to the reverse stock split will recognize no gain or loss under Section
354 of the Internal Revenue Code. The aggregate basis of the post-split shares
of common stock received pursuant to the reverse stock split will be the same as
the aggregate tax basis of the pre-split shares of common stock surrendered in
exchange. The shareholder's holding period for the post-split shares of common
stock will include the holding period for the pre-split shares of common stock
surrendered in the exchange, provided that the stock was held as a capital asset
at the time of the reverse stock split.
A shareholder who owns fewer than five pre-split shares of common stock
and thus receives only cash in lieu of a fractional post-split share pursuant to
the reverse stock split will be treated as having received a distribution in
redemption of such fractional post-split share. Where, after such distribution,
a former shareholder does not own any shares of common stock directly or
indirectly through the constructive ownership rules of Section 318(a) of the
Internal Revenue Code, the redemption will be treated as a complete termination
of the shareholder's interest. Accordingly, gain or loss will be recognized by
such shareholder in an amount equal to the difference between the amount of cash
received in the redemption and the adjusted basis of the common stock
surrendered. If the shareholder held the common stock as a capital asset at the
time of the reverse stock split, the gain or loss (if any) will constitute
capital gain or loss.
A shareholder who receives a combination of post-split shares of common
stock and cash in lieu of a fractional post-split share pursuant to the reverse
stock split will recognize gain (if any) on the exchange, but not in excess of
the amount of cash received. Although a shareholder may treat the gain as
capital gain in certain limited situations, such as when the shareholder
experiences a meaningful reduction in the shareholder's proportionate interest
in the Company, shareholders who receive cash in addition to post-split shares
of common stock in the reverse stock split generally will be treated as having
received a distribution of cash with respect to the fractional post-split share
that is essentially equivalent to a dividend. Consequently, the cash payment
will be treated for federal income tax purposes as a dividend to the extent of
the Company's earnings and profits.
8
<PAGE> 12
The Company believes that the reverse stock split will qualify as a
recapitalization under Section 368(a)(1)(E) of the Internal Revenue Code. As a
result, the Company will not recognize gain or loss as a result of the reverse
stock split.
BOARD OF DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT ALL SHAREHOLDERS VOTE FOR THE
APPROVAL OF THE AMENDMENT TO THE COMPANY'S CHARTER EFFECTING THE REVERSE STOCK
SPLIT. All proxies solicited by the Board will be voted FOR this proposal unless
the shareholders specify a contrary choice in their proxies.
9
<PAGE> 13
STOCK OWNERSHIP
The following table provides information about the beneficial ownership
of the Company's common stock as of November 30, 2000, by (1) each director of
the Company, (2) each currently serving executive officer of the Company named
in the summary compensation table in the Company's proxy statement for its 2000
annual meeting of shareholders, (3) all directors and executive officers of the
Company as a group, and (4) each person known to management of the Company to be
the beneficial owner of more than 5% of the outstanding shares of common stock.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF SHARES OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1-3) OUTSTANDING (4)
-------------------------------- ----------------------- ---------------
<S> <C> <C>
Directors and Executive Officers:
Jack R. Blair 32,000 *
George E. Cates 63,900 *
T. Scott Cobb 3,731,697 14.9%
James E. Harwood 75,000 *
Robert G. McEniry 30,000 *
Gordon L. Bateman 350,694 1.4
Michael J. Boling 149,000 *
Jeffrey S. Cobb 402,362 1.6
All directors and executive officers
as a group (13 persons) 4,991,638 19.3
SCB Computer Technology, Inc. KSOP (5) 1,256,204 5.0
3800 Forest Hill-Irene Road, Suite 100
Memphis, Tennessee 38125
Other Shareholders:
Ben C. Bryant, Jr 5,044,953 20.1
3440 Pinebrake
Memphis, Tennessee 38125
Wellington Management Company 2,100,000 8.4
75 State Street
Boston, Massachusetts 02109
Royce & Associates, Inc. 1,421,000 5.7
1414 Avenue of the Americas
New York, New York 10019
</TABLE>
---------------
* Less than 1% of the 25,045,324 outstanding shares of common stock.
(1) The numbers of shares of common stock shown in the table include shares
that are individually or jointly owned, as well as shares over which
the individual, directly or indirectly, has either sole or shared
investment or voting authority. Some of the Company's directors and
executive officers disclaim beneficial ownership of certain shares of
common stock included in the table as follows: T. Scott Cobb - 3,869
shares held by Mr. Cobb as custodian for his daughter, 908,668 shares
held by his wife, and 139,347 shares held by his wife as custodian for
their daughter; Mr. Bateman - 20,000 shares held by his wife; Mr.
Boling - 1,000 shares held by his wife; and all directors and executive
officers as a group - 1,073,157 shares.
10
<PAGE> 14
(2) For certain of the Company's executive officers, the numbers of shares
of common stock shown in the table include the following numbers of
shares held in the trust created pursuant to the Company's KSOP that
were allocated to their respective accounts as of November 30, 2000:
Mr. Bateman - 72,238 shares; Jeffrey S. Cobb - 5,034 shares; and all
executive officers as a group - 81,347 shares.
(3) For certain of the Company's directors and executive officers, the
numbers of shares of common stock shown in the table include the
following numbers of shares that are issuable by the Company upon the
exercise of options as of November 30, 2000, or within 60 days
thereafter: Mr. Blair - 20,000 shares; Mr. Cates - 20,000 shares; Mr.
Harwood - 55,000 shares; Mr. McEniry - 20,000 shares; Mr. Bateman -
190,300 shares; Mr. Boling - 100,000 shares; Jeffrey S. Cobb - 290,300
shares; and all directors and executive officers as a group - 834,526
shares.
(4) The percentages of shares outstanding were calculated based on the
25,045,324 shares of common stock that were outstanding as of November
30, 2000. For the purpose of calculating the percentage ownership of
each beneficial owner, the shares outstanding include shares that such
person has the right to acquire as of November 30, 2000, or within 60
days thereafter.
(5) Approximately 1,556 employees of the Company participate in the KSOP.
Pursuant to the terms of the KSOP and the related trust agreement,
Merrill Lynch Trust Company, the trustee of the KSOP, is required to
vote the shares of common stock allocated to participants' accounts in
accordance with their instructions. If the KSOP trustee does not
receive voting instructions from a participant in a timely manner, the
trustee will vote the shares of common stock allocated to the
participant's KSOP account in the same proportion that it votes the
shares for which timely instructions were received.
11
<PAGE> 15
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of no
business that will be presented for consideration at the meeting other than the
reverse stock split proposal. If any other matter is properly brought before the
meeting for action by the shareholders, the proxy holders will vote the shares
of common stock represented by proxies that are returned to the Company as
recommended by the Board of Directors or, if no recommendation is given, as they
may determine in their own discretion.
ADDITIONAL INFORMATION
SOLICITATION OF PROXIES
The Company will bear the cost of preparing and mailing this Proxy
Statement and soliciting proxies in the enclosed form. The Company has retained
Corporate Communications, Inc. to assist in the solicitation of proxies and
verify related records for a fee of $3,500 plus reimbursement of normal
expenses. Directors, officers and other employees of the Company also may
solicit proxies without any additional compensation. The solicitations will be
made through the mail and may also be made in person or by telephone, facsimile,
or other electronic means. The Company requests that brokerage firms and other
nominees forward the proxy solicitation materials to the beneficial owners of
the shares of common stock held of record by such nominees and will reimburse
them for their reasonable forwarding expenses.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
Shareholders interested in presenting a proposal for consideration at
the Company's 2001 annual meeting of shareholders must follow the procedures
prescribed in the Company's bylaws and the SEC's proxy rules. The Company's
bylaws and the SEC's Rule 14a-8 under the Securities Exchange Act of 1934
require that shareholder proposals that are intended to be presented at the
Company's 2001 annual meeting of shareholders must be received by the Company
(attention: Corporate Secretary) at its office located at 3800 Forest Hill-Irene
Road, Suite 100, Memphis, Tennessee 38125, not later than May 22, 2001, in order
to be eligible for inclusion in the Company's proxy solicitation materials
relating to the meeting. Nothing in this paragraph shall be deemed to require
the Company to include any shareholder proposal that does not meet all the
requirements for such inclusion established by the Company's bylaws or the SEC's
proxy rules.
By Order of the Board of Directors,
[Signature]
Gordon L. Bateman
Secretary
Memphis, Tennessee
[December 28, 2000]
12
<PAGE> 16
APPENDIX A
AMENDMENT TO AMENDED AND RESTATED CHARTER OF
SCB COMPUTER TECHNOLOGY, INC.
EFFECTING 1-FOR-5 REVERSE STOCK SPLIT
A new second paragraph is hereby added to Section 7 of the Charter as
follows:
"At the close of business on the effective date of the
Articles of Amendment (the "Effective Date"), and without any action by
the holders thereof, each five shares of Common Stock outstanding or
held as treasury shares immediately prior to the Effective Date shall
automatically be reclassified and continued as one share of Common
Stock (the "Reverse Stock Split"). The Company shall not issue
fractional shares of Common Stock on account of the Reverse Stock
Split. Each shareholder who otherwise would have been entitled to a
fractional share of Common Stock by virtue of the Reverse Stock Split
shall be entitled to receive, in lieu of such fractional share, an
amount in cash equal to the product of (a) the fractional share of
Common Stock to which the shareholder otherwise would have been
entitled (taking into account all shares of Common Stock then held of
record by the shareholder), multiplied by (b) the average of the last
sale price per share of the Common Stock during the 10 consecutive
trading days immediately prior to the Effective Date or, if no such
sale takes place on such days, the average of the closing bid and asked
prices thereof for such days, in each case as officially reported on
the OTC Bulletin Board. The Company shall not pay any interest on the
cash paid in lieu of fractional shares of Common Stock."
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<PAGE> 17
APPENDIX B
CHAPTER 23 OF TENNESSEE BUSINESS CORPORATION ACT
DISSENTERS' RIGHTS
PART I -- RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
48-23-101. DEFINITIONS. As used in this chapter, unless the context
otherwise requires:
(1) "Beneficial shareholder" means the person who is a beneficial
owner of shares held by a nominee as the record shareholder;
(2) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or acquiring corporation
by merger or share exchange of that issuer;
(3) "Dissenter" means a shareholder who is entitled to dissent
from corporate action under section 48-23-102 and who exercises that right when
and in the manner required by Part 2 of this chapter;
(4) "Fair value", with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action;
(5) "Interest" means interest from the effective date of the
corporate action that gave rise to the shareholder's right to dissent until the
date of payment, at the average auction rate paid on United States treasury
bills with a maturity of six (6) months (or the closest maturity thereto) as of
the auction date for such treasury bills closest to such effective date;
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation; and
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
48-23-102. RIGHT TO DISSENT.
(a) A shareholder is entitled to dissent from, and obtain payment
of the fair value of the shareholder's shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the
corporation is a party:
(A) If shareholder approval is required for the
merger by section 48-21-104 or the charter and the shareholder is entitled to
vote on the merger; or
(B) If the corporation is a subsidiary that is
merged with its parent under section 48-21-105;
(2) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or
substantially all, of the property of the corporation other than in the usual
and regular course of business, if the shareholder is entitled to vote on the
sale or exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a
B-1
<PAGE> 18
sale for cash pursuant to a plan by which all or substantially all of the net
proceeds of the sale will be distributed to the shareholders within one (1) year
after the date of sale;
(4) An amendment of the charter that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of
the shares;
(B) Creates, alters, or abolishes a right in
respect of redemption, including a provision respecting a sinking fund for the
redemption or repurchase, of the shares;
(C) Alters or abolishes a preemptive right of
the holder of the shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares
to vote on any matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting rights; or
(E) Reduces the number of shares owned by the
shareholder to a fraction of a share, if the fractional share is to be acquired
for cash under section 48-16-104; or
(5) Any corporate action taken pursuant to a shareholder
vote to the extent the charter, bylaws, or a resolution of the board of
directors provides that voting or nonvoting shareholders are entitled to dissent
and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
(c) Notwithstanding the provisions of subsection (a), no
shareholder may dissent as to any shares of a security which, as of the date of
the effectuation of the transaction which would otherwise give rise to
dissenters' rights, is listed on an exchange registered under section 6 of the
Securities Exchange Act of 1934, as amended, or is a "national market system
security," as defined in rules promulgated pursuant to the Securities Exchange
Act of 1934, as amended.
48-23-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenters' rights as to fewer
than all the shares registered in the record shareholder's name only if the
record shareholder dissents with respect to all shares beneficially owned by any
one (1) person and notifies the corporation in writing of the name and address
of each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which the partial dissenter dissents and the partial
dissenter's other shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to
shares of any one (1) or more classes held on the beneficial shareholder's
behalf only if the beneficial shareholder:
(1) Submits to the corporation the record shareholder's
written consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
(2) Does so with respect to all shares of the same class
of which the person is the beneficial shareholder or over which the person has
power to direct the vote.
B-2
<PAGE> 19
PART 2 -- PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
48-23-201. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under
section 48-23-102 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this chapter and be accompanied by a copy of this chapter.
(b) If corporate action creating dissenters' rights under section
48-23-102 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in section
48-23-203.
(c) A corporation's failure to give notice pursuant to this
section will not invalidate the corporate action.
48-23-202. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under
section 48-23-102 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights must:
(1) Deliver to the corporation, before the vote is taken,
written notice of the shareholder's intent to demand payment for the
shareholder's shares if the proposed action is effectuated; and
(2) Not vote the shareholder's shares in favor of the
proposed action. No such written notice of intent to demand payment is required
of any shareholder to whom the corporation failed to provide the notice required
by section 48-23-201.
(b) A shareholder who does not satisfy the requirements of
subsection (a) is not entitled to payment for the shareholder's shares under
this chapter.
48-23-203. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under
section 48-23-102 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of section 48-23-202.
(b) The dissenters' notice must be sent no later than ten (10)
days after the corporate action was authorized by the shareholders or
effectuated, whichever is the first to occur, and must:
(1) State where the payment demand must be sent and where
and when certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what
extent transfer of the shares will be restricted after the payment demand is
received;
(3) Supply a form for demanding payment that includes the
date of the first announcement to news media or to shareholders of the principal
terms of the proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not the person asserting dissenters'
rights acquired beneficial ownership of the shares before that date;
(4) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than one (1) nor more than two (2)
months after the date the subsection (a) notice is delivered; and
B-3
<PAGE> 20
(5) Be accompanied by a copy of this chapter if the
corporation has not previously sent a copy of this chapter to the shareholder
pursuant to section 48-23-201.
48-23-204. DUTY TO DEMAND PAYMENT.
(a) A shareholder sent a dissenters' notice described in section
48-23-203 must demand payment, certify whether the shareholder acquired
beneficial ownership of the shares before the date required to be set forth in
the dissenters' notice pursuant to section 48-23-203(b)(3), and deposit the
shareholder's certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits the
shareholder's share certificates under subsection (a) retains all other rights
of a shareholder until these rights are cancelled or modified by the
effectuation of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit the
shareholder's share certificates where required, each by the date set in the
dissenters' notice, is not entitled to payment for the shareholder's shares
under this chapter.
(d) A demand for payment filed by a shareholder may not be
withdrawn unless the corporation with which it was filed, or the surviving
corporation, consents thereto.
48-23-205. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated
shares from the date the demand for their payment is received until the proposed
corporate action is effectuated or the restrictions released under section
48-23-207.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the effectuation of the proposed corporate
action.
48-23-206. PAYMENT.
(a) Except as provided in section 48-23-208, as soon as the
proposed corporate action is effectuated, or upon receipt of a payment demand,
whichever is later, the corporation shall pay each dissenter who complied with
section 48-23-204 the amount the corporation estimates to be the fair value of
each dissenter's shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a
fiscal year ending not more than sixteen (16) months before the date of payment,
an income statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim financial statements, if
any;
(2) A statement of the corporation's estimate of the fair
value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand
payment under section 48-23-209; and
(5) A copy of this chapter if the corporation has not
previously sent a copy of this chapter to the shareholder pursuant to section
48-23-201 or section 48-23-203.
B-4
<PAGE> 21
48-23-207. FAILURE TO TAKE ACTION.
(a) If the corporation does not effectuate the proposed action
that gave rise to the dissenters' rights within two (2) months after the date
set for demanding payment and depositing share certificates, the corporation
shall return the deposited certificates and release the transfer restrictions
imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing
transfer restrictions, the corporation effectuates the proposed action, it must
send a new dissenters' notice under section 48-23-203 and repeat the payment
demand procedure.
48-23-208. AFTER-ACQUIRED SHARES.
(a) A corporation may elect to withhold payment required by
section 48-23-206 from a dissenter unless the dissenter was the beneficial owner
of the shares before the date set forth in the dissenters' notice as the date of
the first announcement to news media or to shareholders of the principal terms
of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after effectuating the proposed corporate action, it shall
estimate the fair value of the shares, plus accrued interest, and shall pay this
amount to each dissenter who agrees to accept it in full satisfaction of the
dissenter's demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenter's right to demand payment under
section 48-23-209.
48-23-209. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of the
dissenter's own estimate of the fair value of the dissenter's shares and amount
of interest due, and demand payment of the dissenter's estimate (less any
payment under section 48-23-206), or reject the corporation's offer under
section 48-23-208 and demand payment of the fair value of the dissenter's shares
and interest due, if:
(1) The dissenter believes that the amount paid under
section 48-23-206 or offered under section 48-23-208 is less than the fair value
of the dissenter's shares or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under section
48-23-206 within two (2) months after the date set for demanding payment; or
(3) The corporation, having failed to effectuate the
proposed action, does not return the deposited certificates or release the
transfer restrictions imposed on uncertificated shares within two (2) months
after the date set for demanding payment.
(b) A dissenter waives the dissenter's right to demand payment
under this section unless the dissenter notifies the corporation of the
dissenter's demand in writing under subsection (a) within one (1) month after
the corporation made or offered payment for the dissenter's shares.
PART 3 -- JUDICIAL APPRAISAL OF SHARES
48-23-301. COURT ACTION.
(a) If a demand for payment under section 48-23-209 remains
unsettled, the corporation shall commence a proceeding within two (2) months
after receiving the payment demand and petition the court to determine the fair
value of the shares and accrued interest. If the corporation does not commence
the proceeding within the two-month period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
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<PAGE> 22
(b) The corporation shall commence the proceeding in a court of
record having equity jurisdiction in the county where the corporation's
principal office (or, if none in this state, its registered office) is located.
If the corporation is a foreign corporation without a registered office in this
state, it shall commence the proceeding in the county in this state where the
registered office of the domestic corporation merged with or whose shares were
acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters (whether or not
residents of this state) whose demands remain unsettled, parties to the
proceeding as in an action against their shares and all parties must be served
with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is
commenced under subsection (b) is plenary and exclusive. The court may appoint
one (1) or more persons as appraisers to receive evidence and recommend decision
on the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The dissenters are entitled to
the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to
judgment:
(1) For the amount, if any, by which the court finds the
fair value of the dissenter's shares, plus accrued interest, exceeds the amount
paid by the corporation; or
(2) For the fair value, plus accrued interest, of the
dissenter's after-acquired shares for which the corporation elected to withhold
payment under section 48-23-208.
48-23-302. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under section
48-23-301 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under section 48-23-209.
(b) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable
against:
(1) The corporation and in favor of any or all dissenters
if the court finds the corporation did not substantially comply with the
requirements of Part 2 of this chapter; or
(2) Either the corporation or a dissenter, in favor of
any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this chapter.
(c) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly situated,
and that the fees for those services should not be assessed against the
corporation, the court may award to these counsel reasonable fees to be paid out
of the amounts awarded to the dissenters who were benefited.
B-6
<PAGE> 23
[SCB LOGO]
[Printed on recycled paper logo]
<PAGE> 24
PROXY PRELIMINARY COPY PROXY
SCB COMPUTER TECHNOLOGY, INC.
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [JANUARY 24, 2001]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
A special meeting of shareholders of SCB Computer Technology, Inc. (the
"Company") will be held at the Company's office located at 3800 Forest
Hill-Irene Road, Suite 100, Memphis, Tennessee, on [January 24, 2001], beginning
at 10:00 a.m. (Memphis time). The undersigned hereby acknowledges receipt of the
Notice of Special Meeting and Proxy Statement dated [December 28, 2000],
accompanying this proxy, to which reference is hereby made for further
information regarding the meeting and the matters to be considered and voted on
by the shareholders at the meeting.
The undersigned hereby appoints T. Scott Cobb, Michael J. Boling, and
Gordon L. Bateman, and each of them, attorneys and agents, with full power of
substitution, to vote as proxy all shares of common stock of the Company owned
of record by the undersigned as of the record date and otherwise to act on
behalf of the undersigned at the meeting and any postponement or adjournment
thereof, in accordance with the directions set forth herein and with
discretionary authority with respect to any other business, not known or
determined at the time of the solicitation of this proxy, that properly comes
before such meeting or any postponement or adjournment thereof.
The undersigned hereby revokes any proxy heretofore given and directs
said attorneys and agents to vote or act as indicated on the reverse side
hereof.
(Continued on reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
[SCB LOGO, INCLUDING NAME AND ADDRESS]
[December 28, 2000]
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders
of SCB Computer Technology, Inc. (the "Company"), which will be held at the
Company's office located at 3800 Forest Hill-Irene Road, Suite 100, Memphis,
Tennessee, on [January 24, 2001], beginning at 10:00 a.m. (Memphis time).
The purpose of the meeting is to approve an amendment to the Company's
charter effecting a 1-for-5 reverse stock split with respect to the Company's
common stock. The proposed charter amendment effecting the reverse stock split
is more fully described in the accompanying Notice of Special Meeting and Proxy
Statement dated [December 28, 2000].
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF TWO WAYS:
1. Call TOLL-FREE 1-800-840-1208 on a touch-tone telephone at any time and
follow the instructions on the reverse side. There is NO CHARGE to you
for this call.
OR
2. Complete, sign, date, and return your proxy card in the accompanying
envelope.
<PAGE> 25
Thank you for your continued interest in, and ownership of, SCB
Computer Technology, Inc.
Sincerely,
[Signature]
T. Scott Cobb
President and Chief Executive Officer
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Please mark
your vote as
indicated in
this example [X]
This proxy will be voted in accordance with the undersigned's
directions set forth herein. If no such directions are provided, this proxy will
be voted FOR the proposal described below. THE BOARD OF DIRECTORS RECOMMENDS
THAT ALL SHAREHOLDERS VOTE FOR THE PROPOSAL.
To approve an amendment to the Company's charter effecting a 1-for-5
reverse stock split with respect to the Company's common stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
With respect to any other item of business that properly comes before
the meeting, the proxy holders are authorized to vote the undersigned's shares
as recommended by the Board of Directors or, if no recommendation is given, as
they may determine in their own discretion.
Date:
--------------------------------------
-------------------------------------------
Signature of shareholder
-------------------------------------------
Signature of shareholder, if held jointly
Please sign your name as it appears on this
proxy. Joint owners each should sign. When
signing as trustee, administrator, executor,
attorney, etc., please indicate your full
title as such. Corporations should sign in
full corporate name by President or other
authorized officer. Partnerships should sign
in full partnership name by authorized
partner.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<PAGE> 26
FOLD AND DETACH HERE
VOTE BY TELEPHONE
QUICK - - - EASY - - - IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you completed, signed, dated, and returned your proxy card.
CALL TOLL-FREE 1-800-840-1208 ON A TOUCH-TONE TELEPHONE ANYTIME.
THERE IS NO CHARGE TO YOU FOR THIS CALL.
You will be asked to enter the CONTROL NUMBER located in the lower right corner
of this form. You then will hear these instructions:
To vote FOR, press 1. To vote AGAINST, press 9. To ABSTAIN, press 0.
WHEN ASKED, YOU MUST CONFIRM YOUR VOTE BY PRESSING 1.
THANK YOU FOR VOTING.
CALL - - TOLL-FREE - - ON A TOUCH-TONE TELEPHONE
1-800-840-1208 AT ANYTIME
There is NO CHARGE to you for this call.
<PAGE> 27
KSOP PRELIMINARY COPY KSOP
SCB COMPUTER TECHNOLOGY, INC.
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [JANUARY 24, 2001]
THIS VOTING INSTRUCTION FORM FOR PARTICIPANTS IN
THE SCB COMPUTER TECHNOLOGY, INC. KSOP
IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
A special meeting of shareholders of SCB Computer Technology, Inc. (the
"Company") will be held at the Company's office located at 3800 Forest
Hill-Irene Road, Suite 100, Memphis, Tennessee, on [January 24, 2001], beginning
at 10:00 a.m. (Memphis time). The undersigned hereby acknowledges receipt of the
Notice of Special Meeting and Proxy Statement dated [December 28, 2000],
accompanying this voting instruction form, to which reference is hereby made for
further information regarding the meeting and the matters to be considered and
voted on by the shareholders at the meeting.
The undersigned is a participant in the Company's KSOP. In such
capacity, the undersigned hereby instructs Merrill Lynch Trust Company, as
trustee of the KSOP, to vote all shares of the Company's common stock allocated
to the undersigned's KSOP account as of the record date and otherwise to act on
behalf of the undersigned at the meeting and any postponement or adjournment
thereof, in accordance with the instructions set forth herein.
The undersigned hereby revokes any instruction heretofore given and
instructs the Trustee to vote or act as indicated on the reverse side hereof.
(Continued on reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
[SCB LOGO, INCLUDING NAME AND ADDRESS]
[December 28, 2000]
Dear KSOP Participant:
You are cordially invited to attend a special meeting of shareholders
of SCB Computer Technology, Inc. (the "Company"), which will be held at the
Company's office located at 3800 Forest Hill-Irene Road, Suite 100, Memphis,
Tennessee, on [January 24, 2001], beginning at 10:00 a.m. (Memphis time).
The purpose of the meeting is to approve an amendment to the Company's
charter effecting a 1-for-5 reverse stock split with respect to the Company's
common stock. The proposed charter amendment effecting the reverse stock split
is more fully described in the accompanying Notice of Special Meeting and Proxy
Statement dated [December 28, 2000].
YOUR VOTING INSTRUCTION IS IMPORTANT!
YOU CAN PROVIDE VOTING INSTRUCTIONS TO THE KSOP TRUSTEE IN
ONE OF TWO WAYS:
1. Call TOLL-FREE 1-800-840-1208 on a touch-tone telephone at any time and
follow the instructions on the reverse side. There is NO CHARGE to you
for this call.
OR
2. Complete, sign, date, and return your KSOP voting instruction form in
the accompanying envelope.
<PAGE> 28
Thank you for your continued interest in, and ownership of, SCB
Computer Technology, Inc.
Sincerely,
[Signature]
T. Scott Cobb
President and Chief Executive Officer
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Please mark
your vote as
indicated in
this example [X]
The KSOP trustee will vote the shares of common stock allocated to the
undersigned's KSOP account in accordance with the instructions set forth herein
if this voting instruction form is completed and properly signed and is received
by ChaseMellon Shareholder Services, LLC, the Company's voting instruction
tabulator, by [January 22, 2001]. If this voting instruction form is not
received by such date, the KSOP trustee will vote the shares of common stock
allocated to the undersigned's KSOP account in the same proportion that it votes
the shares for which timely instructions were received. THE BOARD OF DIRECTORS
RECOMMENDS THAT ALL SHAREHOLDERS VOTE FOR THE PROPOSAL.
To approve an amendment to the Company's charter effecting a 1-for-5
reverse stock split with respect to the Company's common stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
With respect to any other item of business that properly comes before
the meeting, the proxy holders are authorized to vote the undersigned's shares
as recommended by the Board of Directors or, if no recommendation is given, as
they may determine in their own discretion.
Date:
--------------------------------------
-------------------------------------------
Signature of KSOP participant
Please sign your name as it appears on this
voting instruction.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<PAGE> 29
FOLD AND DETACH HERE
VOTING INSTRUCTIONS BY TELEPHONE
QUICK - - - EASY - - - IMMEDIATE
Your telephone voting instructions authorize the KSOP trustee to vote the shares
allocated to your KSOP account in the same manner as if you completed, signed,
dated, and returned your voting instruction form.
CALL TOLL-FREE 1-800-840-1208 ON A TOUCH-TONE TELEPHONE ANYTIME.
THERE IS NO CHARGE TO YOU FOR THIS CALL.
You will be asked to enter the CONTROL NUMBER located in the lower right corner
of this form. You then will hear these instructions:
To vote FOR, press 1. To vote AGAINST, press 9. To ABSTAIN, press 0.
WHEN ASKED, YOU MUST CONFIRM YOUR VOTE BY PRESSING 1.
THANK YOU FOR VOTING.
CALL - - TOLL-FREE - - ON A TOUCH-TONE TELEPHONE
1-800-840-1208 AT ANYTIME
There is NO CHARGE to you for this call.
