<PAGE> 1
EXHIBIT (A)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
CONCENTREX INCORPORATED
at
$7.00 Net Per Share
by
JH ACQUISITION CORP.
a wholly owned subsidiary
of
JOHN H. HARLAND COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, AUGUST 18, 2000,
UNLESS THE OFFER IS EXTENDED.
---------------------
THE OFFER (THE "OFFER") IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND
PLAN OF MERGER (THE "MERGER AGREEMENT"), DATED AS OF JULY 17, 2000, BY AND AMONG
JOHN H. HARLAND COMPANY ("HARLAND"), JH ACQUISITION CORP. (THE "OFFEROR") AND
CONCENTREX INCORPORATED ("CONCENTREX"). THE BOARD OF DIRECTORS OF CONCENTREX HAS
APPROVED AND ADOPTED THE MERGER AGREEMENT REFERRED TO HEREIN AND THE
TRANSACTIONS CONTEMPLATED THEREBY, APPROVED THE OFFER AND THE MERGER (AS DEFINED
HEREIN) AND DETERMINED THAT THE TERMS OF THE OFFER AND MERGER ARE FAIR TO AND IN
THE BEST INTERESTS OF CONCENTREX'S STOCKHOLDERS AND RECOMMENDS THAT ALL
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES (AS DEFINED HEREIN) TO THE
OFFEROR.
IN CONNECTION WITH THE MERGER AGREEMENT, THE OFFEROR AND HARLAND ENTERED
INTO TENDER AGREEMENTS DATED AS OF JULY 17, 2000 (THE "TENDER AGREEMENTS"), WITH
CERTAIN STOCKHOLDERS OF CONCENTREX (THE "TENDERING STOCKHOLDERS") WHO OWN
APPROXIMATELY 8.27% OF THE SHARES THAT ARE OUTSTANDING AND 7.64% ON A FULLY
DILUTED BASIS (ASSUMING THE EXERCISE OF ALL "IN-THE-MONEY" STOCK OPTIONS).
PURSUANT TO THE TENDER AGREEMENTS, SUCH STOCKHOLDERS HAVE AGREED TO TENDER SUCH
SHARES PURSUANT TO THE OFFER.
---------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF
SHARES THAT WOULD CONSTITUTE MORE THAN FIFTY (50%) PERCENT OF THE SHARES THAT
ARE OUTSTANDING DETERMINED ON A FULLY DILUTED BASIS, (II) ANY WAITING PERIOD
UNDER THE HSR ACT (AS DEFINED HEREIN) APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR HAVING BEEN TERMINATED PRIOR TO THE
EXPIRATION OF THE OFFER, AND (III) THE SATISFACTION OR WAIVER OF CERTAIN OTHER
TERMS AND CONDITIONS. SEE SECTION 15.
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IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the accompanying Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and deliver the Letter of Transmittal with the Shares and
all other required documents to the Depositary (as hereinafter defined) or
follow the procedure for book-entry transfer set forth in Section 3 of this
Offer to Purchase or (ii) request such stockholder's broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for such
stockholder. Stockholders having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
broker, dealer, commercial bank, trust company or other nominee if they desire
to tender their Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedure for book-entry transfer on a timely basis or who cannot
deliver all required documents to the Depositary, in each case prior to the
expiration of the Offer, must tender Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of this Offer to Purchase.
Questions and requests for assistance or additional copies of this Offer to
Purchase or the Letter of Transmittal may be directed to the Information Agent
at its address and telephone number set forth on the back cover of this Offer to
Purchase.
---------------------
The Information Agent for the Offer is:
(georgeson shareholder. LOGO)
July 21, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary Term Sheet.......................................... 1
Introduction................................................ 5
The Tender Offer............................................ 7
1. Term of the Offer; Expiration Date................... 7
2. Acceptance for Payment and Payment of Shares......... 8
3. Procedure for Accepting the Offer and Tendering
Shares............................................... 9
4. Withdrawal Rights.................................... 12
5. Certain United States Federal Income Tax
Consequences......................................... 12
6. Price Range of Shares; Dividends..................... 14
7. Certain Information Concerning Concentrex............ 14
8. Certain Information Concerning the Offeror and
Harland.............................................. 16
9. Source and Amount of Funds........................... 18
10. Background of the Offer; Contacts with Concentrex.... 18
11. The Merger Agreement and Tender Agreements .......... 20
12. Purpose of the Offer; the Merger; Plans for
Concentrex........................................... 28
13. Dividends and Distributions.......................... 29
14. Effect of the Offer on the Market for the Shares,
Stock Exchange Listing and Exchange Act
Registration......................................... 30
15. Certain Conditions of the Offer...................... 31
16. Certain Legal Matters and Regulatory Approvals....... 32
17. Fees and Expenses.................................... 34
18. Miscellaneous........................................ 34
ANNEX I -- Certain Information Concerning the Directors and
Executive Officers of the Offeror and Harland............. 35
APPENDIX A -- Agreement and Plan of Merger dated as of July
17, 2000 among Harland, the Offeror and Concentrex........ A-1
APPENDIX B -- Form of Tender Agreement dated as of July 17,
2000...................................................... B-1
</TABLE>
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SUMMARY TERM SHEET
JH Acquisition Corp. is offering to purchase all of the outstanding shares
of common stock of Concentrex Incorporated for $7.00 per share in cash. Through
a question and answer format, this Summary Term Sheet is designed to explain to
you, the stockholders of Concentrex, a number of important terms of the proposed
transaction. This Summary Term Sheet serves only as an introduction, and we urge
you to carefully read the remainder of the Offer to Purchase and the
accompanying Letter of Transmittal in order to fully educate yourself on the
details of the proposed transaction. Cross-referenced text refers to sections
within the Offer to Purchase, unless otherwise noted.
WHO IS OFFERING TO BUY THE COMMON STOCK OF CONCENTREX INCORPORATED?
Our name is JH Acquisition Corp. We are an Oregon corporation formed for
the purpose of making a cash tender offer for all of the outstanding shares of
common stock of Concentrex. We are a wholly owned subsidiary of John H. Harland
Company, a Georgia corporation. See "Introduction."
Harland was founded in 1923 as a general printer and lithographer. Harland
has its principal executive offices at 2939 Miller Road, Decatur, Georgia 30035.
The common stock of Harland is listed on the New York Stock Exchange under the
symbol "JH."
Harland works with banks, credit unions, brokerage houses and financial
software companies, providing these institutions with products and services that
help strengthen relationships with their customers. These offerings range from
financial printing (checks, forms and business products) to database marketing
software, direct marketing, and loan and deposit origination software. Harland's
subsidiary, Scantron Corporation, sells information management products and
services, including optical mark reading equipment, scannable forms, survey
solutions and field maintenance services. Scantron sells these products and
services primarily to the financial, commercial and education markets.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER? HOW MUCH ARE
YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
We are offering to purchase all of the outstanding shares of common stock
of Concentrex for $7.00 per share, net to you, in cash less any required
withholding taxes and without interest. See "Introduction."
If you tender your shares in the offer, you will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction 6
of the Letter of Transmittal, stock transfer taxes with respect to the sale of
your shares. See "Introduction."
WHAT IS THE PURPOSE OF THE TENDER OFFER?
The purpose of the tender offer is to enable Harland to acquire control of,
and the entire equity interest in, Concentrex. Following the offer, we intend to
acquire any remaining equity interest in Concentrex that was not acquired during
the tender offer. See "Introduction" and Section 12 ("Purpose of the Offer; the
Merger; Plans for Concentrex").
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We are not obligated to purchase any shares that you validly tender unless
the number of shares validly tendered and not withdrawn before the expiration
date of the offer represents, in the aggregate, at least a majority of the
shares of Concentrex's common stock.
We are also not obligated to purchase any shares which you validly tender
if, among other things: (i) Concentrex does not continue to operate its business
in the ordinary course in a manner consistent with past practice or (ii) the
applicable waiting period under applicable antitrust laws has not expired or
been terminated. See Section 11 ("The Merger Agreement and Tender Agreements").
We are also not obligated to purchase any shares you validly tender if any
other conditions set forth in Section 15 ("Certain Conditions of the Offer") and
discussed in Section 1 ("Terms of the Offer; Expiration Date") are not satisfied
or waived.
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HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
Our offer to purchase your shares expires at 12:00 midnight, New York City
time, on Friday, August 18, 2000. This is called the initial expiration date.
See Section 1 ("Terms of the Offer; Expiration Date"). If you cannot deliver
everything that is required in order to make a valid tender by that time, you
may be able to use a guaranteed delivery procedure which is described in Section
3 of this Offer to Purchase.
CAN WE EXTEND THE OFFER PAST THE INITIAL EXPIRATION DATE AND UNDER WHAT
CIRCUMSTANCES?
Yes. We can and may be required to extend the offer past the initial
expiration date. If we do so, you will be able to tender your shares until 12:00
midnight, New York City time, on the new expiration date.
Several terms, which were negotiated by the parties, define the
circumstances in which we can extend the offer, including: (i) if any conditions
to the offer have not been satisfied or waived, or (ii) if all of the conditions
to the offer are satisfied and more than a majority of the shares, but less than
90% of the shares, of Concentrex's common stock have been validly tendered
pursuant to the offer and are not withdrawn, in which case we may extend the
offer for one week beyond the satisfaction of all other conditions. See Section
1 ("Terms of the Offer; Expiration Date").
HOW DO I FIND OUT IF THE OFFEROR EXTENDS THE OFFER?
We will announce an extension no later than 9:00 a.m., New York City time,
on the business day after a scheduled expiration date by issuing a press release
to the Dow Jones News Service. See Section 1 ("Terms of the Offer; Expiration
Date").
HOW DO I GET PAID FOR MY TENDERED SHARES?
We will pay for the shares accepted for payment by depositing the purchase
price with ChaseMellon Shareholder Services, L.L.C. (who is the depositary in
the offer). ChaseMellon will transmit to you the payment for all shares accepted
for payment. See Section 2 ("Acceptance for Payment and Payment for Shares").
HOW DO I TENDER MY SHARES?
To tender your shares in the offer, you must:
- complete and sign the accompanying Letter of Transmittal (or a manually
signed facsimile of the Letter of Transmittal) in accordance with the
instructions on the Letter of Transmittal and mail or deliver it together
with your share certificates, and any other required documents to
ChaseMellon;
- tender your shares pursuant to the procedure for book-entry transfer set
forth in Section 3; or
- if your share certificates are not immediately available or if you cannot
deliver your share certificates and any other required documents to
ChaseMellon prior to the expiration of the offer, or you cannot complete
the procedure for delivery by book-entry transfer on a timely basis, you
may still tender your shares if you comply with the guaranteed delivery
procedures described in Section 3.
UNTIL WHAT TIME CAN I WITHDRAW MY PREVIOUSLY TENDERED SHARES?
You can withdraw your tendered shares at any time on or prior to a
scheduled expiration date. After the offer expires, the tender is irrevocable
unless we have not accepted for payment your shares by September 19, 2000. At
and after this date, you can withdraw your tendered shares unless and until we
accept them for payment. See Section 4 ("Withdrawal Rights").
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw your shares, you must deliver to ChaseMellon written,
telegraphic or facsimile transmission notice of withdrawal that specifies your
name, the number of shares being withdrawn and the name of the registered holder
of the shares, if different from the person who tendered the shares. See Section
4 ("Withdrawal Rights").
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WHAT ARE THE TAX CONSEQUENCES OF THE SALE OF SHARES TO THE OFFEROR THROUGH THE
OFFER?
The sale of shares to us through the offer is a taxable transaction for
federal income tax purposes and may also be taxable under applicable state,
local, foreign and other tax laws. In general, you will recognize gain or loss
equal to the difference between the amount of cash that you receive from us for
the shares and the tax basis of your shares.
We encourage you to consult with your own tax advisor about the particular
effect our offer will have on you. See Section 5 ("Certain United States Federal
Income Tax Consequences").
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On July 14, 2000, the last full trading day before we announced the offer,
the closing price per share of Concentrex's common stock on the Nasdaq National
Market System was $4.00. On July 20, 2000, the last full trading day before we
commenced the offer, the closing price per share of Concentrex's common stock on
the Nasdaq National Market System was $6.72.
Between April 1, 1999 and July 14, 2000, the sale price of a share of
Concentrex's common stock ranged between $3.75 and $18.69.
We encourage you to obtain a current market quotation for your shares
before deciding whether to tender your shares. See Section 6 ("Price Range of
Shares; Dividends").
WHAT IS THE TOTAL AMOUNT OF FUNDS THAT WILL BE REQUIRED TO CONSUMMATE THE
PROPOSED TRANSACTION?
We estimate that the total amount of funds required to purchase all
outstanding shares (on a fully diluted basis) pursuant to the offer, to repay
outstanding indebtedness and to pay fees, expenses and other obligations related
to the offer and the merger will be approximately $140 million.
DOES THE OFFEROR HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Yes. We will obtain all necessary funds through capital contributions or
advances by Harland. Harland will have sufficient funds from cash on hand and
funds from Harland's credit facility to fully fund the offer and the subsequent
merger. See Section 9 ("Source and Amount of Funds").
IS THE OFFEROR'S FINANCIAL CONDITION RELEVANT TO MY DECISION ON WHETHER TO
TENDER SHARES IN THE OFFER?
We do not think Harland's or our financial condition is relevant to your
decision whether to tender shares and accept the offer because: (1) the offer
consists solely of cash, (2) the offer is not subject to any financing
condition, (3) Harland will have adequate cash and credit facilities available,
and (4) the offer is for all outstanding shares of Concentrex's common stock.
WHAT DOES CONCENTREX'S BOARD OF DIRECTORS THINK OF THE TENDER OFFER AND MERGER?
On July 14, 2000, the board of directors of Concentrex determined that the
offer and the merger were fair to you and in your best interests.
Concentrex's board of directors recommends that you accept the offer and
tender your shares and/or vote to approve the merger. See "Introduction" and
Section 12 ("Purpose of the Offer; the Merger; Plans for Concentrex").
HAVE ANY STOCKHOLDERS ALREADY AGREED TO TENDER THEIR SHARES?
Yes. Stockholders holding 457,492 shares of common stock of Concentrex have
entered into tender agreements in which they have agreed to tender such shares
in the offer. The Tender Agreements also contain other provisions designed to
encourage those stockholders to tender all of their shares in the offer. See
"Introduction" and Section 10 ("Background of the Offer; Contacts with
Concentrex").
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IF AT LEAST A MAJORITY OF THE SHARES OF COMPANY STOCK ARE TENDERED AND ACCEPTED
FOR PAYMENT, WHAT HAPPENS TO CONCENTREX AFTER THE OFFER?
Harland, Concentrex and we have entered into a merger agreement that
provides for us to merge with and into Concentrex. The merger is dependent on
stockholders owning at least a majority of the shares of Concentrex's common
stock outstanding on the record date (set to determine those persons entitled to
vote on the merger) voting in favor of the merger. If the offer is successful,
we will own at least a majority of the shares of outstanding common stock of
Concentrex. We have agreed to vote these shares in favor of the merger.
Therefore, if we acquire at least a majority of the shares of Concentrex's
common stock pursuant to the offer, we will merge with and into Concentrex. Once
the merger takes place, Concentrex will no longer be publicly owned. Concentrex
will become a wholly owned subsidiary of Harland. In such case, Concentrex's
common stock will no longer be traded through the Nasdaq National Market System
or on any other securities exchange. See "Introduction" and Section 14 ("Effect
of the Offer on the Market for the Shares, Stock Exchange Listing and Exchange
Act Registration").
This Offer to Purchase also constitutes notice to you under Section
60.491(3)(c) of the Oregon Business Corporation Act that if we acquire at least
90% of the outstanding shares of Concentrex, we will cause the merger to become
effective without any further notice to Concentrex's stockholders. See Appendix
A (the Agreement and Plan of Merger).
IF I DECIDE NOT TO TENDER BUT THE TENDER OFFER IS SUCCESSFUL, WHAT WILL HAPPEN
TO MY SHARES?
If the offer is successful and the subsequent merger occurs, stockholders
who do not tender will receive the merger consideration per share of Concentrex
common stock described below. See Section 14 ("Effect of the Offer on the Market
for the Shares, Stock Exchange Listing and Exchange Act Registration") and
Section 16 ("Certain Legal Matters and Regulatory Approvals").
WHAT WILL BE PAID TO STOCKHOLDERS OF CONCENTREX IN THE MERGER AND WHAT IS THE
FORM OF PAYMENT?
Stockholders of Concentrex who exchange their shares of common stock in the
merger will receive the same amount they would have received had they tendered
their shares in the offer -- $7.00 per share, net in cash without interest.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
Stockholders can call Georgeson Shareholder Communications Inc. at (800)
223-2064. Georgeson is acting as the information agent for the offer.
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TO THE STOCKHOLDERS OF CONCENTREX INCORPORATED:
INTRODUCTION
JH Acquisition Corp., an Oregon corporation (the "Offeror") and a wholly
owned subsidiary of John H. Harland Company, a Georgia corporation ("Harland"),
hereby offers to purchase all of the outstanding shares of common stock, no par
value (the "Shares"), of Concentrex Incorporated, an Oregon corporation
("Concentrex"), at a purchase price of $7.00 per Share, net to the seller in
cash, less any required withholding taxes and without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements hereto or thereto, collectively constitute the
"Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in the Letter of Transmittal, stock transfer
taxes on the transfer and sale of Shares pursuant to the Offer. The Offeror will
pay all fees and expenses of ChaseMellon Shareholder Services, L.L.C. which is
acting as the depositary (in such capacity, the "Depositary") and Georgeson
Shareholder Communications Inc., which is acting as the information agent (in
such capacity, the "Information Agent"), incurred in connection with the Offer.
THE BOARD OF DIRECTORS OF CONCENTREX (THE "BOARD OF DIRECTORS") HAS
APPROVED AND ADOPTED THE MERGER AGREEMENT (AS DEFINED HEREIN) AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS
DEFINED HEREIN), AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER, ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF CONCENTREX, AND
RECOMMENDS THAT ALL HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
The Board of Directors of Concentrex has received the written opinion dated
July 14, 2000, of Allen & Company Incorporated, financial advisor to Concentrex,
to the effect that, as of such date and based upon and subject to certain
matters stated in such opinion, the $7.00 per Share cash consideration to be
received in the Offer and the Merger by the holders of Shares (other than
Harland and its affiliates) is fair, from a financial point of view, to such
holders. A copy of such opinion is attached to Concentrex's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which is being distributed to the stockholders of Concentrex concurrently
herewith. Holders of Shares are urged to read the opinion carefully in its
entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) MORE
THAN FIFTY PERCENT (50%) OF THE OUTSTANDING SHARES OF COMMON STOCK (DETERMINED
ON A FULLY DILUTED BASIS) OF CONCENTREX (THE "MINIMUM CONDITION"). FOR PURPOSES
HEREOF, SHARES ON A FULLY DILUTED BASIS MEANS ALL OUTSTANDING SECURITIES
ENTITLED GENERALLY TO VOTE IN THE ELECTION OF DIRECTORS OF CONCENTREX, AFTER
GIVING EFFECT TO THE EXERCISE OF ALL "IN-THE-MONEY" OPTIONS EXERCISABLE INTO
SUCH SHARES WITH AN EXERCISE PRICE LESS THAN $7.00 PER SHARE AND THE VESTING OF
EMPLOYEE OPTIONS. THE OFFER IS ALSO SUBJECT TO THE EXPIRATION OR TERMINATION OF
ALL APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), AND THE SATISFACTION OR
WAIVER OF CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTIONS 1 AND 15. IF THE
OFFEROR PURCHASES AT LEAST THAT NUMBER OF SHARES NEEDED TO SATISFY THE MINIMUM
CONDITION, IT WILL BE ABLE TO EFFECT THE MERGER WITHOUT THE AFFIRMATIVE VOTE OF
ANY OTHER STOCKHOLDER OF CONCENTREX. SEE SECTION 12.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 17, 2000 (the "Merger Agreement"), among Harland, the Offeror and
Concentrex. The Merger Agreement provides, among other things, for the making of
the Offer by the Offeror, and further provides that, following the completion of
the Offer, upon the terms and subject to the conditions of the Merger Agreement
and in accordance with the Oregon Business Corporation Act (the "OBCA"), the
Offeror will be merged with and into Concentrex (the "Merger"). Following the
Merger, Concentrex will continue as the surviving corporation (the "Surviving
Corporation") and become a wholly owned subsidiary of Harland,
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and the separate corporate existence of the Offeror will cease. Pursuant to the
Merger Agreement, Concentrex has also agreed, if the Offeror or any other
subsidiary of Harland acquires at least 90% of the outstanding Shares, the
parties shall, at the request of Harland, take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
expiration of the Offer without a meeting of Concentrex's stockholders in
accordance with Section 60.491 of the OBCA (a "Short-Form Merger"). See Section
11.
THIS OFFER TO PURCHASE ALSO CONSTITUTES NOTICE UNDER SECTION 60.491(3)(C)
OF THE OBCA THAT, IF THE OFFEROR OR ANY OTHER SUBSIDIARY OF HARLAND ACQUIRES AT
LEAST 90% OF THE OUTSTANDING SHARES, HARLAND WILL CAUSE THE SHORT-FORM MERGER TO
BECOME EFFECTIVE WITHOUT ANY FURTHER NOTICE TO STOCKHOLDERS OF CONCENTREX. SEE
APPENDIX A (THE MERGER AGREEMENT).
In connection with the Merger Agreement, the Offeror and Harland entered
into Tender Agreements dated as of July 17, 2000 (the "Tender Agreements"), with
each of the following stockholders: Matthew W. Chapman, Robert P. Chamness and
Robert T. Jett (the "Tendering Stockholders"). Pursuant to the Tender
Agreements, the Tendering Stockholders have agreed to tender an aggregate of
457,952 Shares owned by the Tendering Stockholders (the "Committed Shares") and
have agreed to vote the Committed Shares in favor of the Merger and otherwise in
the manner directed by the Offeror. The Committed Shares represent approximately
7.64% of the Shares that as of July 17, 2000 were issued and outstanding on a
fully diluted basis (assuming the exercise of all "in-the-money" stock options).
The Merger Agreement and the Tender Agreements are more fully described in
Section 11.
The Merger Agreement provides that, promptly after the Offeror acquires
Shares which represent at least the Minimum Condition, the Offeror will be
entitled to designate such number of directors on the Board of Directors of
Concentrex, subject to compliance with Section 14(f) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as will make the percentage of
Concentrex's directors designated by the Offeror equal to the percentage of the
aggregate voting power of the Shares held by Harland or any of its subsidiaries,
and Concentrex shall, at such time, cause the Offeror's designees to be so
elected by its existing Board of Directors. Concentrex has agreed, at the option
of the Offeror, either to increase the size of the Board of Directors of
Concentrex and/or obtain the resignation of such number of directors as is
necessary to enable the Offeror's designees to be elected or appointed to the
Board. In addition, Concentrex shall cause to be delivered to Harland
resignations of all of the directors of Concentrex's subsidiaries to be
effective upon the purchase of Shares that represent the Minimum Condition
pursuant to the Offer and shall appoint new directors nominated by the Offeror
to fill such vacancies. Following the election or appointment of the Offeror's
designees to the Board of Directors of Concentrex and prior to the Effective
Time (as defined herein), the affirmative vote of the directors of Concentrex
who are not designees of the Offeror shall be required by Concentrex to (i)
amend or terminate the Merger Agreement by Concentrex, (ii) exercise or waive
any of Concentrex's rights or remedies under the Merger Agreement or (iii)
extend the time for performance of Harland's and the Offeror's respective
obligations under the Merger Agreement.
Concentrex has represented to Harland that, as of July 17, 2000, there were
(i) 5,538,661 Shares issued and outstanding and (ii) an estimated 456,856 Shares
reserved for issuance upon the exercise of outstanding "in-the-money" stock
options. Based upon the foregoing, the Offeror believes that approximately
2,997,759 Shares constitute a majority of the outstanding Shares on a fully
diluted basis.
If the Minimum Condition and the other conditions to the Offer are
satisfied and the Offer is consummated, Offeror will own a number of Shares to
insure that the Merger will be approved. Under Section 60.491 of the OBCA, if,
after consummation of the Offer, the Offeror owns at least 90% of the Shares
then outstanding, the Offeror will be able to cause the Merger to occur without
a vote of the stockholders of Concentrex. As of the effective time of the Merger
(the "Effective Time"), each Share outstanding immediately prior to the
Effective Time (other than Shares owned by Harland or any other direct or
indirect wholly owned subsidiary of Harland, which shall be canceled) will be
converted into the right to receive from the Surviving Corporation the Offer
Price. If, however, after consummation of the Offer, the Offeror owns less than
90% of the then outstanding Shares, a vote of Concentrex's stockholders will be
required under the OBCA to approve the Merger, and a significantly longer period
of time will be required to effect the Merger.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), the Offeror hereby offers to purchase all of the Shares at a price
of $7.00 per Share, net to the seller in cash, less any required withholding
taxes and without interest thereon, and will accept for payment and pay for all
Shares validly tendered on or prior to the Expiration Date and not properly
withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00
midnight, New York City time, on Friday, August 18, 2000, unless the Offeror
(subject to the terms and conditions of the Merger Agreement) shall have
extended the period during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Offeror, shall expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM CONDITION, THE EXPIRATION OR TERMINATION OF ALL WAITING PERIODS IMPOSED
BY THE HSR ACT AND CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 15. THE
MERGER AGREEMENT AND THE OFFER MAY BE TERMINATED BY THE OFFEROR AND HARLAND IF
CERTAIN EVENTS OCCUR. SUBJECT TO THE PROVISIONS OF THE MERGER AGREEMENT AND THE
APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION"), THE OFFEROR RESERVES THE RIGHT TO MODIFY THE TERMS AND CONDITIONS
OF THE OFFER. SUBJECT TO THE PROVISIONS OF THE MERGER AGREEMENT, INCLUDING THE
PROVISIONS OF THE MERGER AGREEMENT SET FORTH IN THE NEXT PARAGRAPH, AND THE
APPLICABLE RULES AND REGULATIONS OF THE COMMISSION, IF BY THE EXPIRATION DATE
ANY OR ALL OF SUCH CONDITIONS TO THE OFFER HAVE NOT BEEN SATISFIED, THE OFFEROR
RESERVES THE RIGHT (BUT SHALL NOT BE OBLIGATED) TO (I) TERMINATE THE OFFER AND
RETURN ALL TENDERED SHARES TO TENDERING STOCKHOLDERS, (II) WAIVE SUCH
UNSATISFIED CONDITIONS AND PURCHASE ALL SHARES VALIDLY TENDERED OR (III) EXTEND
THE OFFER AND, SUBJECT TO THE TERMS OF THE OFFER (INCLUDING THE RIGHTS OF
STOCKHOLDERS TO WITHDRAW THEIR SHARES), RETAIN THE SHARES WHICH HAVE BEEN
TENDERED, UNTIL THE TERMINATION OF THE OFFER, AS EXTENDED.
Under the terms of the Merger Agreement, the Offeror may not, without the
consent of Concentrex, reduce the Offer Price, extend the Offer (except as
described in the next sentence), change the form of consideration payable in the
Offer or amend any other term of the Offer in any manner adverse to the holders
of Shares in any material respect. Notwithstanding the foregoing, the Offeror
may, without the consent of Concentrex, (i) extend the Offer, if at the
scheduled or extended Expiration Date of the Offer any of the conditions shall
not be satisfied or waived, until such time as such conditions are satisfied or
waived, (ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Commission staff applicable to the Offer and
(iii) if all Offer conditions are satisfied or waived but the number of Shares
tendered is less than 90% of the then outstanding number of Shares on a fully
diluted basis, extend the Offer for up to one week in order to permit the
Offeror to solicit additional Shares to be tendered in the Offer. Any change in
the terms or conditions of the Offer that is adverse to the holders of the
Shares in any material respect (including a decrease in the Offer Price or the
imposition of a new material condition to the Offer) by the Offeror shall
require the prior written consent of Concentrex.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or payment, termination or amendment of the Offer will be
followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. Without limiting the
obligation of the Offeror under such rule or the manner in which the Offeror may
choose to make any public announcement, the Offeror currently intends to make
announcements by issuing a press release to the Dow Jones News Service and
making any appropriate filing with the Commission.
If, subject to the terms of the Merger Agreement, the Offeror makes a
material change in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer, the Offeror will
disseminate additional tender offer materials and extend the Offer if and to the
extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act or
otherwise. The minimum period during which a tender offer must remain open
following material changes in the terms of the Offer or the information
concerning the Offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality of the changes. In the Commission's view, an offer should remain
open for a minimum of five business days from the date
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the material change is first published, sent or given to stockholders, and, if
material changes are made with respect to information that is significant, such
as the Offer Price and the percentage of securities sought, a minimum ten
business day period may be required to allow for adequate dissemination to
stockholders and investor response.
In addition, the Offeror may, at its sole option, after the date the Shares
are purchased pursuant to the Offer commence a subsequent offer pursuant to Rule
14d-11 of the Exchange Act to purchase additional Shares prior to the
consummation of the Merger. If the Offeror commences a subsequent offer, all
Shares tendered in the subsequent offer would be immediately accepted and paid
for as they are tendered at the Offer Price. Any subsequent offer must remain
open for a minimum of three and a maximum of twenty business days.
Concentrex has provided the Offeror with Concentrex's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed by the Offeror to record holders of
Shares whose names appear on Concentrex's shareholder list and will be furnished
for subsequent transmittal to beneficial owners of Shares to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Offeror will accept for payment and will pay for all Shares
validly tendered and not properly withdrawn in accordance with Section 4 prior
to the Expiration Date promptly after the later to occur of (i) the Expiration
Date and (ii) the satisfaction or waiver of the conditions of the Offer set
forth in Section 15, including without limitation, the expiration or termination
of the waiting period applicable to the acquisition of Shares pursuant to the
Offer under the HSR Act. In addition, subject to applicable rules of the
Commission, the Offeror expressly reserves the right, in its sole discretion, to
delay acceptance for payment of or payment for Shares pending receipt of any
other regulatory approvals specified in Section 16 or to comply in whole or in
part with applicable law. Any such delays will be effected in compliance with
Rule 14e-1(c) under the Exchange Act.
For information with respect to approvals required to be obtained prior to
the consummation of the Offer, including under the HSR Act, see Section 16.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates evidencing such Shares ("Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3, (ii) the appropriate Letter of Transmittal, properly completed and duly
executed (or a facsimile thereof), with any required signature guarantees, or an
Agent's Message (as defined below) in connection with a book-entry transfer and
(iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against such participant.
Stockholders who cannot comply on a timely basis with the foregoing
procedures for acceptance of the Offer may deposit share certificates pursuant
to the procedures set forth below for guaranteed delivery.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn if and when the Offeror gives oral or written notice to the Depositary
of the Offeror's acceptance for payment of such Shares pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from the Offeror
and transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. If for any reason whatsoever acceptance for payment of or
payment for any Shares tendered pursuant to the
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<PAGE> 11
Offer is delayed or the Offeror is unable to accept for payment or pay for
Shares tendered pursuant to the Offer, then without prejudice to the Offeror's
rights set forth herein, the Depositary may nevertheless, on behalf of the
Offeror and subject to Rule 14e-1(c) under the Exchange Act, retain tendered
Shares and such Shares may not be withdrawn except to the extent that the
tendering stockholder is entitled to and duly exercises withdrawal rights as
described in Section 4. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE
PRICE FOR SHARES BE PAID BY THE OFFEROR, REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer or if Share Certificates are submitted
for more Shares than are tendered, Share Certificates evidencing unpurchased or
untendered Shares will be returned without expense to the tendering stockholder
(or, in the case of Shares tendered by book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares will be credited to an account maintained at the
Book-Entry Transfer Facility), as promptly as practicable following the
expiration, termination or withdrawal of the Offer.
If, prior to the expiration date, the Offeror increases the price being
paid for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all stockholders whose Shares are purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.
The Offeror reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve the Offeror of its obligations under the Offer
and will in no way prejudice the rights of tendering stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
3. PROCEDURE FOR ACCEPTING THE OFFER AND TENDERING SHARES.
Valid Tenders. Except as set forth below, for Shares to be validly
tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message in connection with a book-entry
delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase on or prior to the Expiration
Date. In addition either (i) Share Certificates evidencing tendered Shares must
be received by the Depositary at such address or such Shares must be tendered
pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary, in each case on or
prior to the Expiration Date or (ii) the guaranteed delivery procedures
described below must be complied with. No alternative, conditional or contingent
tenders will be accepted.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer. Any financial institution that is a participant in the
system of the Book-Entry Transfer Facility may make book-entry delivery of
Shares by causing the Book-Entry Transfer Facility to transfer such Shares into
the Depositary's account at the Book-Entry Transfer Facility in accordance with
the Book-Entry Transfer Facility's procedures for such transfer. However,
although delivery of Shares may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message in connection with a book-entry
transfer, and any other documents required by the Letter of Transmittal, must in
any case be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase on or prior to the Expiration Date, or the
tendering shareholder must comply with the guaranteed delivery procedures
described below.
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DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE DEPOSITARY.
Signature Guarantees. Signatures on Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program or by any other bank, broker, dealer, credit
union, savings organization or other entity which is an "eligible guarantor
institution" as such term defined in Rule 17Ad-15 under the Exchange Act (each
of the foregoing being referred to as an "Eligible Institution"), except in
cases where Shares are tendered (i) by a registered holder of Shares who has not
completed either the box labeled "Special Payment Instructions" or the box
labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for
the account of an Eligible Institution.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or Share
Certificates not tendered or not accepted for payment are to be returned, to a
person other than the registered holder, the tendered Share Certificate must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name of the registered holder appears on such certificates, with
the signatures on such certificates or stock powers guaranteed in the manner
described above. See Instructions 1 and 5 of the Letter of Transmittal.
If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary on or prior to
the Expiration Date, or such stockholder cannot complete the procedure for
delivery by book-entry transfer on a timely basis, such Shares may nevertheless
be tendered, provided that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form made available by the Offeror is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation),
representing all tendered Shares, in proper form for transfer, together
with the Letter of Transmittal (or a facsimile thereof) properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message) and any other documents
required by the Letter of Transmittal are received by the Depositary within
three trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day," for purposes of the preceding sentence, is any
day on which the Nasdaq Stock Market's National Market System (the
"Nasdaq") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution and a representation that the
stockholder owns the Shares tendered within the meaning of, and that the tender
of the Shares effected thereby complies with, Rule 14e-4 under the Exchange Act,
each in the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) Share Certificates for, or of Book-Entry
Confirmation of the delivery of, such Shares, (ii) a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and (iii) any other documents required by the Letter of
Transmittal. Accordingly, payment might not be made to all tendering
stockholders at the same time and will depend upon when Share Certificates or
Book-Entry Confirmations of such Shares are received into the Depositary's
account at the Book-Entry Transfer Facility. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE OFFEROR,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING ANY PAYMENT.
Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
"backup withholding" provisions of federal income tax law, the Depositary may be
required to withhold 31% of the amount of any payments of cash pursuant to the
Offer or the Merger. In order to avoid backup withholding, each stockholder
surrendering Shares in the Offer must,
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unless an exemption applies, provide the payor of such cash with such
stockholder's correct taxpayer identification number ("TIN") on a substitute
Form W-9 and certify, under penalties of perjury, that such TIN is correct and
that such stockholder is not subject to backup withholding. If a stockholder
does not provide its correct TIN or fails to provide the certifications
described above, the Internal Revenue Service ("IRS") may impose a penalty on
such stockholder and payment of cash to such stockholder pursuant to the Offer
may be subject to backup withholding of 31%.
All stockholders surrendering Shares pursuant to the Offer should complete
and sign the Substitute Form W-9 included in the Letter of Transmittal to
provide the information and certification necessary to avoid backup withholding
(unless an applicable exemption exists and is proved in a manner satisfactory to
the Depositary). Certain stockholders (including among others all corporations
and certain foreign individuals and entities) are not subject to backup
withholding. Noncorporate foreign stockholders should complete and sign a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 of the
Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Offeror in its sole discretion, which
determination shall be final and binding on all parties. The Offeror reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may in the opinion of the
Offeror be unlawful. The Offeror also reserves the absolute right to waive any
of the conditions of the Offer subject to applicable law and the limitations set
forth in the Merger Agreement, or any defect or irregularity in any tender of
Shares of any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders. The Offeror's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the Instructions to the Letter of Transmittal) will be final and
binding on all parties. No tender of Shares will be deemed to have been validly
made until all defects and irregularities have been cured or waived. None of the
Offeror, Harland, any of their affiliates or assigns, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
Other Requirements. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
stockholder irrevocably appoints designees of the Offeror as such stockholder's
agent, attorneys-in-fact and proxies, each with full power of substitution, in
the manner set forth in the Letter of Transmittal, to exercise all voting and
other rights of the stockholder as each such attorney and proxy or his
substitute shall in his sole judgment deem proper, with respect to all of the
Shares tendered by such stockholder and accepted for payment by the Offeror (and
any and all other Shares or other securities issued or issuable in respect of
such Shares on or after the date of this Offer to Purchase). All such powers of
attorney and proxies will be considered irrevocable and coupled with an interest
in the tendered Shares. This appointment is effective when, and only to the
extent that, the Offeror accepts for payment the Shares in accordance with the
terms of the Offer. Upon acceptance for payment, all prior powers of attorney,
proxies and written consents granted by the stockholder at any time with respect
to such Shares or other securities or rights will, without further action, be
revoked and no subsequent powers of attorney or proxies may be given or written
consent executed by such stockholder (and, if given or executed, will not be
deemed effective). The designees of the Offeror will, with respect to the Shares
and other securities or rights, be empowered to exercise all voting and other
rights of such stockholder as they in their sole judgment deem proper in respect
of any annual or special meeting of Concentrex's stockholders, or any
adjournment or postponement thereof, any actions by written consent in lieu of
any such meeting or otherwise. In order for Shares to be deemed validly
tendered, immediately upon the Offeror's payment for such Shares, the Offeror
must be able to exercise full voting and other rights with respect to such
Shares and the other securities or rights issued or issuable in respect of such
Shares, including voting at any meeting of stockholders (whether annual or
special or whether or not adjourned) in respect of such Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's representation
and warranty that (i) such stockholder has the full power and authority to
tender, sell, assign and transfer the tendered Shares (and any and all other
Shares or other securities issued or issuable in respect of such Shares), and
(ii) when the same are accepted for payment by the Offeror, the Offeror will
acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claims. A
tender of Shares pursuant to any of the procedures described above will
constitute the tendering stockholder's acceptance of the terms and conditions of
the Offer, as well as the tendering stockholder's representation and warranty to
the Offeror that (a) such stockholder has a net
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long position in such Shares being tendered within the meaning of Rule 14e-4
under the Exchange Act and (b) the tender of such Shares complies with Rule
14e-4 under the Exchange Act. It is a violation of Rule 14e-4 under the Exchange
Act for a person, directly or indirectly, to tender Shares for such person's own
account unless, at the time of tender, the person so tendering (i) has a net
long position equal to or greater than the amount of (x) Shares tendered or (y)
other securities immediately convertible into or exchangeable or exercisable for
the Shares tendered and such person will acquire such Shares for tender by
conversion, exchange or exercise and (ii) will cause such Shares to be delivered
in accordance with the terms of the Offer. Rule 14e-4 provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. The Offeror's acceptance for payment of Shares tendered pursuant
to the Offer will constitute a binding agreement between the tendering
stockholder and the Offeror upon the terms and subject to the conditions of the
Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment pursuant to the Offer, may also be withdrawn at any time
after September 19, 2000. If acceptance of any Shares tendered is delayed for
any reason or if the Offeror is unable to accept for payment or pay for Shares
tendered pursuant to the Offer, then, without prejudice to the Offeror's rights
under the Offer, the Depositary may, on behalf of the Offeror, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to and duly exercise withdrawal rights as set forth in
this Section 4. Any such delay in acceptance for payment will be accomplished by
extension of the Offer to the extent required by law.
For withdrawal of Shares tendered pursuant to the Offer to be effective, a
written telegraphic or facsimile transmission notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase. Any notice of withdrawal must specify the name
of the person who tendered the Shares to be withdrawn, the number of Shares to
be withdrawn and (if certificates have been tendered) the name in which the
certificates are registered, if different from that of the person who tendered
the Shares. If certificates have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
stockholder must submit the serial numbers shown on the certificates evidencing
the Shares to be withdrawn to the Depositary and, unless such Shares have been
tendered for the account of an Eligible Institution, the signatures on the
notice of withdrawal must be guaranteed by an Eligible Institution. If Shares
have been tendered pursuant to the procedures for book-entry transfer set forth
in Section 3, any notice of withdrawal must also specify the name and number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and must otherwise comply with such Book-Entry Transfer
Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Offeror, in its sole discretion,
and its determination will be final and binding on all parties. None of the
Offeror, Harland, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section 3.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to beneficial owners of Shares whose
Shares are purchased pursuant to the Offer or whose Shares are converted to cash
in the Merger. The discussion is for general information only and does not
purport to consider all aspects of United States federal income taxation that
might be relevant to beneficial owners of Shares. The discussion is based on
current provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), proposed, temporary and final regulations promulgated thereunder and
administrative and judicial interpretations thereof, all of which are subject to
change possibly on a retroactive basis. The discussion applies only to
beneficial owners of Shares in whose hands Shares are capital assets within the
meaning of Section 1221 of the Code, and may not apply to Shares received
pursuant to the exercise of employee stock options or otherwise as compensation,
or to certain types of beneficial owners of Shares (such as insurance companies,
tax-exempt organizations, mutual funds and broker-dealers) who might be subject
to special rules. This discussion does not discuss the United States federal
income tax consequences to a beneficial owner of Shares who, for
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United States federal income tax purposes, is a non-resident alien individual, a
foreign corporation, a foreign partnership or a foreign estate or trust, nor
does it consider the effect of any foreign, state or local tax laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH BENEFICIAL OWNER OF
SHARES SHOULD CONSULT SUCH BENEFICIAL OWNER'S OWN TAX ADVISOR TO DETERMINE THE
APPLICABILITY OF THE RULES DISCUSSED BELOW TO SUCH BENEFICIAL OWNER AND THE
PARTICULAR TAX EFFECTS TO SUCH BENEFICIAL OWNER OF THE OFFER AND THE MERGER,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND OTHER TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes. In general,
for United States federal income tax purposes, a beneficial owner of Shares will
recognize gain or loss equal to the difference (if any) between the beneficial
owner's adjusted tax basis in the Shares sold pursuant to the Offer or converted
to cash in the Merger and the amount of cash received therefor. In general, such
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if the beneficial owner held the Shares for more than one year as of the
date of sale (in the case of the Offer) or the Effective Time (in case of the
Merger). The excess of net long-term capital gains over net short-term capital
losses is currently taxed at a maximum rate of 20% for noncorporate taxpayers.
Payments in connection with the Offer or the Merger might be subject to
"backup withholding" at a rate of 31%, unless a beneficial owner of Shares (a)
is a corporation or comes within certain exempt categories and, when required,
demonstrates this fact or (b) provides a correct TIN to the payor, certifies as
to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A beneficial owner who
does not provide a correct TIN may be subject to penalties imposed by the
Internal Revenue Service. Any amount paid as backup withholding does not
constitute an additional tax and will be creditable against the beneficial
owner's United States federal income tax liability. Each beneficial owner of
Shares should consult with his or her own tax advisor as to his or her
qualification for exemption from backup withholding and the procedure for
obtaining such exemption. Those tendering their Shares in the Offer may prevent
backup withholding by completing the Substitute Form W-9 included in the Letter
of Transmittal. Similarly, those who convert their Shares into cash in the
Merger may prevent backup withholding by completing a Substitute Form W-9 and
submitting it to the paying agent for the Merger.
Harland and the Offeror will be entitled to deduct and withhold from the
consideration otherwise payable pursuant to the Merger Agreement to any holder
of Shares such amounts as Harland or the Offeror is required to deduct and
withhold with respect to the making of such payment. To the extent that amounts
are so withheld by Harland or the Offeror, such withheld amounts shall be
treated for all purposes of the Merger Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was made
by Harland or the Offeror.
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<PAGE> 16
6. PRICE RANGE OF SHARES; DIVIDENDS.
According to Concentrex's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999 (the "Form 10-K"), the Shares have been traded on Nasdaq
under the symbol "CCTX." Nasdaq is the principal market for the Shares. The
following table sets forth, for the periods indicated, the high and low sales
prices per Share on Nasdaq as reported by the Dow Jones News Service.
<TABLE>
<CAPTION>
HIGH LOW
---- ------
<S> <C> <C>
1998:
First Quarter............................................. $17.25 $12.00
Second Quarter............................................ $18.69 $14.50
Third Quarter............................................. $17.75 $ 9.00
Fourth Quarter............................................ $14.25 $ 9.88
1999:
First Quarter............................................. $14.00 $10.50
Second Quarter............................................ $18.00 $ 8.88
Third Quarter............................................. $13.75 $ 9.63
Fourth Quarter............................................ $10.38 $ 5.25
2000:
First Quarter............................................. $ 9.88 $ 6.75
Second Quarter............................................ $ 7.28 $ 3.75
Third Quarter (through July 20, 2000)..................... $ 6.75 $ 3.92
</TABLE>
On July 14, 2000, the last full trading day prior to announcement of the
Offer, the last reported closing sales price of the Shares on Nasdaq was $4.00.
On July 20, 2000, the last full trading day before commencement of the Offer,
the last reported closing sales price of the Shares on Nasdaq was $6.72.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
Concentrex has not declared or paid any dividends on the Shares since its
initial public offering.
7. CERTAIN INFORMATION CONCERNING CONCENTREX.
Concentrex's predecessor, CFI ProServices, Inc., an Oregon corporation, was
incorporated under the laws of the State of Oregon in 1978. Concentrex's
principal executive offices are located at 400 SW Sixth Avenue, Portland, Oregon
97204. Concentrex changed its name to Concentrex Incorporated in 2000.
Concentrex delivers a broad range of traditional software and services
integrated with leading dot.com solutions. Concentrex combines in one company,
real-time information management technology, integrated software solutions for
branch automation, loan origination, new account opening, cross-selling, sales
and service, call centers, and on-line financial services ranging from internet
banking and billing payment to personal financial management and e-commerce.
Concentrex serves over 5,000 financial institutions of all types and sizes in
the United States. Of the nation's twenty largest financial institutions,
thirteen use systems designed by Concentrex. More than half of all U.S. banks
use Concentrex's products as do nearly 1,000 credit unions. In 1993, Concentrex
made its initial public offering of common stock, which currently trades on
Nasdaq under the symbol "CCTX."
Certain Financial Projections for Concentrex. Prior to entering into the
Merger Agreement, Harland conducted a due diligence review of Concentrex and in
connection with such review received certain non-public information provided by
Concentrex, including certain projected financial information (the
"Projections") for the years ending December 31, 2000 through 2002 and
preliminary results for the three and six months ended June 30, 2000, each as
set forth below. Concentrex does not in the ordinary course publicly disclose
projections and the Projections were not prepared with a view to public
disclosure. Accordingly, none of Concentrex, Harland or the Offeror intends to,
and specifically declines any obligation to, update or otherwise revise the
Projections to reflect circumstances existing since their preparation or to
reflect the occurrence of unanticipated events, even if any or all of the
Projections are shown to be in error. Also, none of Concentrex, Harland or the
Offeror intends to, and specifically declines any obligation to, update or
revise the Projections to reflect changes in general economic or industry
conditions. Concentrex has advised Harland and the Offeror that the Projections
represent what Concentrex believes to be a reasonable estimate of Concentrex's
future financial performance
14
<PAGE> 17
and reflect significant assumptions and subjective judgments by Concentrex's
management regarding industry performance and general business and economic
conditions. The Projections do not give effect to the Offer or the potential
combined operations of Harland and Concentrex. The Projections are set forth
below in this Offer to Purchase for the limited purpose of giving the holders of
the Shares access to the material financial projections prepared by Concentrex's
management that were made available to Harland and the Offeror in connection
with the Merger Agreement and the Offer. HARLAND AND THE OFFEROR, AFTER
DISCUSSIONS WITH CONCENTREX, BELIEVE THAT THE PROJECTIONS WOULD NOT BE
ATTAINABLE FOR CONCENTREX ON A STAND-ALONE BASIS.
CONCENTREX INCORPORATED
PROJECTED FINANCIAL PERFORMANCE
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
--------------------------------
2000 2001 2002
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
REVENUE..................................................... $134,009 $172,946 $211,224
COST OF REVENUE............................................. 47,185 46,156 48,445
-------- -------- --------
Gross Profit.............................................. 86,824 126,790 162,779
OPERATING EXPENSES
Sales and marketing....................................... 23,279 24,463 26,768
Product development....................................... 36,514 41,382 43,591
General and administrative................................ 22,276 27,226 32,354
Goodwill amortization..................................... 3,675 3,250 3,250
Software amortization..................................... 3,034 1,403 1,093
Unfunded R&D initiative................................... -- 6,000 20,000
-------- -------- --------
Total Operating Expenses.................................. 88,778 103,724 127,056
Income from Operations.................................... (1,954) 23,066 35,723
</TABLE>
In addition, Concentrex provided to Harland certain preliminary results for
the three and six months ended June 30, 2000. The preliminary results are
unaudited and are subject to change. Preliminary revenue for Concentrex was
$30.1 million and $63.1 million for the three and six months ended June 30,
2000, respectively. Revenue from the Software Products and Services Group was
$27.1 million and $56.7 million for the three and six months ended June 30,
2000, respectively. Revenue from the e-Commerce Group was $3.0 million and $6.4
million for the three and six months ended June 30, 2000, respectively.
Preliminary net loss applicable to common stockholders was $6.3 million and $7.3
million for the three and six months ended June 30, 2000, respectively.
15
<PAGE> 18
CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
Certain matters discussed and statements made herein may constitute
forward-looking statements within the meaning of the Securities Act of 1933 and
the Securities Exchange Act of 1934, each as amended by the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties and actual
results may differ materially from those contemplated by such forward-looking
statements. Forward-looking statements include the information set forth above
in "Certain Financial Projections for Concentrex." Forward-looking statements
also include those preceded by, followed by or that include the words
"believes", "expects", "anticipates" or similar expressions. Such statements
should be viewed with caution.
While presented with numerical specificity, the Projections are based upon
a variety of estimates and hypothetical assumptions which may not be accurate,
may not be realized, and are also inherently subject to significant business,
economic and competitive uncertainties and contingencies, all of which are
difficult to predict, and most of which are beyond the control of Concentrex,
Harland or the Offeror. Accordingly, there can be no assurance that any of the
Projections will be realized and the actual results may vary materially from
those shown above. Harland and the Offeror, after discussions with Concentrex
believe that the Projections would not be attainable for Concentrex on a
stand-alone basis.
In addition, the Projections were not prepared in accordance with generally
accepted accounting principles, and neither Concentrex's nor Harland's
independent accountants have examined or compiled any of the Projections or
expressed any conclusion or provided any other form of assurance with respect to
the Projections and accordingly assume no responsibility for, and disclaims any
association with, the Projections. The Projections were prepared with a limited
degree of precision and were not prepared with a view to public disclosure or
compliance with the published guidelines of the Commission or the guidelines
established by the American Institute of Certified Public Accountants regarding
projections, which could require a more complete presentation of data than as
shown above. The inclusion of the Projections herein should not be regarded as a
representation by Harland and the Offeror or any other person that the projected
results will be achieved or that anyone who received the Projections consider
them a reliable prediction of future operating results, and the Projections
should not be relied upon as such. The Projections should be read in conjunction
with the historical financial information of Concentrex included above and in
the reports and other documents of Concentrex that may be obtained from the
offices of the Commission in the manner set forth below under "Available
Information." None of Harland, the Offeror or any other person assumes any
responsibility for the accuracy, completeness or validity of the foregoing
Projections.
Available Information. Concentrex is subject to the informational filing
requirements of the Exchange Act, and in accordance therewith, is obligated to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning Concentrex's directors and
officers, their remuneration, options granted to them, the principal holders of
Concentrex's securities and any material interest of such persons in
transactions with Concentrex is required to be disclosed in such proxy
statements and distributed to Concentrex's stockholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities of the Commission
located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
may also be available for inspection and copying at prescribed rates at the
regional offices of the Commission located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th
Floor, New York, New York 10048. Such reports, proxy statements and other
information may also be obtained at the Web site that the Commission maintains
at http://www.sec.gov. Copies of this material may also be obtained by mail,
upon payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. Except as otherwise
noted in this Offer to Purchase, all of the information with respect to
Concentrex set forth in this Offer to Purchase has been derived from publicly
available information.
8. CERTAIN INFORMATION CONCERNING THE OFFEROR AND HARLAND.
The Offeror, an Oregon corporation and a wholly owned subsidiary of
Harland, was newly organized in connection with the Offer and has not carried on
any activities to date other than those incident to its formation and
commencement of the Offer. The Offeror has its principal executive offices at
2939 Miller Road, Decatur, Georgia 30035. The telephone
16
<PAGE> 19
number for the Offeror at such offices is (770) 981-9460. Harland owns 100% of
the outstanding voting stock of the Offeror.
Harland was founded in 1923 as a general printer and lithographer. Harland
is incorporated under the laws of Georgia and has its principal executive
offices at 2939 Miller Road, Decatur, Georgia 30035. The telephone number for
Harland is (770) 981-9460. The common stock of Harland is listed on the New York
Stock Exchange under the symbol "JH."
Harland works with banks, credit unions, brokerage houses and financial
software companies, providing these institutions with products and services that
help strengthen relationships with their customers. These offerings range from
financial printing (checks, forms and business products) to database marketing
software, direct marketing, and loan and deposit origination software. Harland's
subsidiary, Scantron Corporation ("Scantron"), sells information management
products and services, including optical mark reading equipment, scannable
forms, survey solutions and field maintenance services. Scantron sells these
products and services primarily to the financial, commercial and education
markets.
Harland serves its major markets through two primary business segments:
Financial Services and Scantron.
The Financial Services segment focuses on providing products and services
to financial institutions, including banks, credit unions, brokerage houses and
financial software companies. These offerings range from financial printing
(checks, forms and business documents) to database marketing systems, direct
marketing campaign management, and loan and deposit origination software.
Scantron was founded in 1972 and acquired by Harland in 1988. Scantron
provides products and services utilized primarily in the areas of surveying,
assessment and data collection for financial, commercial and educational
institutions. These primary offerings include scannable forms, financial optical
mark readers, application software and maintenance services.
In June 2000, a wholly owned subsidiary of Harland purchased 100 Shares on
the open market using funds from working capital.
The name, citizenship, business address, principal occupation or
employment, and five-year employment history of each of the directors and
executive officers of the Offeror and Harland and certain other information are
set forth in Annex I hereto. Except as described in this Offer to Purchase and
in Annex I hereto, none of Harland, the Offeror or, to the best knowledge of
such corporations, any of the persons listed on Annex I to the Offer of Purchase
has during the last five years (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party to
any judicial or administrative proceeding (except for matters that were
dismissed without sanction or settlement) that resulted in a judgment, decree or
final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
Except as provided in the Merger Agreement, the Tender Agreements or as
otherwise described in this Offer to Purchase, (i) none of Offeror, Harland or,
to the best knowledge of Offeror and Harland, any of the persons listed in Annex
I to this Offer to Purchase or any associate or majority owned subsidiary of the
Offeror, Harland or any of the persons so listed, beneficially owns or has any
right to acquire any Shares and (ii) none of the Offeror, Harland or, to the
best knowledge of the Offeror and Harland, any of the persons or entities
referred to above nor any director, executive officer or subsidiary of any of
the foregoing has effected any transaction in the Shares during the past 60
days.
Except as provided in the Merger Agreement or the Tender Agreements and as
otherwise described in this Offer to Purchase, none of the Offeror, Harland nor,
to the best knowledge of the Offeror and Harland, any of the persons listed in
Annex I to this Offer to Purchase, has any agreement, arrangement,
understanding, whether or not legally enforceable, with any other person with
respect to any securities of Concentrex, including, but not limited to, the
transfer or voting of such securities, joint venture, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies, consents or authorizations. Except as set
forth in this Offer to Purchase, neither the Offeror nor Harland nor, to the
best knowledge of the Offeror and Harland, any of the persons listed on Annex I
hereto, has had any transaction with Concentrex or any of its executive
officers, directors or affiliates that is required to be reported under the
rules and regulations of the Commission applicable to the Offer. Except as set
forth in this Offer to Purchase, there have been no negotiations, transactions
or material contacts between any of Offeror, Harland, or any of their respective
subsidiaries or, to the best knowledge of the Offeror and Harland, any of the
persons listed in Annex I to
17
<PAGE> 20
this Offer to Purchase, on the one hand, and Concentrex or its affiliates, on
the other hand, concerning a merger, consolidation or acquisition, tender offer
for or other acquisition of any class of Concentrex's securities, an election of
Concentrex's directors or a sale or other transfer of a material amount of
assets of Concentrex.
Available Information. Harland is subject to the informational filing
requirements of the Exchange Act and in accordance therewith is obligated to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning Harland's directors and officers,
their remuneration, options granted to them, the principal holders of Harland's
securities and any material interest of such persons in transactions with
Harland is required to be disclosed in such proxy statements and distributed to
Harland's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission located at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and may also be available for
inspection and copying at prescribed rates at the regional offices of the
Commission located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor, New York, New
York 10048. Such reports, proxy statements and other information may also be
obtained at the Web site that the Commission maintains at http:// www.sec.gov.
Copies of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549.
9. SOURCE AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements. The Offeror
estimates that the total amount of funds required to purchase all outstanding
Shares (on a fully diluted basis) pursuant to the Offer, to repay outstanding
indebtedness and to pay fees, expenses and other obligations related to the
Offer and the Merger will be approximately $140 million. The Offeror plans to
obtain all funds needed for the Offer and the Merger through capital
contributions or advances made by Harland. Harland plans to obtain a portion of
the funds for such capital contributions or advances from its available cash and
from working capital and expects to obtain the balance of such funds required to
purchase the Shares from a new credit facility.
Harland expects to enter into a new credit facility arrangement with
SunTrust Bank. The credit facility is expected to consist of a $225,000,000
senior revolving credit facility. All present and future direct and indirect
wholly owned domestic subsidiaries of Harland (including, after consummation of
the Merger, Concentrex) would become guarantors under the facility. The proceeds
from the facility would be used to refinance existing debt, for the acquisition
of Concentrex, for future permitted acquisitions and for working capital and
general corporate purposes. The facility would terminate five years from the
closing of the facility. The facility would be unsecured (other than a pledge of
65% of the stock of material non-domestic subsidiaries), with a negative pledge
on all present and future assets.
Harland expects to be entitled to select between the following interest
rate options: (i) the base rate or (ii) a rate based on LIBOR. The base rate is
expected to equal the higher of (i) the rate at which SunTrust Bank announces
from time to time as its prime lending rate or (ii) the federal funds rate plus
one-half of one percent per annum.
The definitive documentation is expected to contain conditions precedent,
representations and warranties, covenants, events of default and other
provisions customary for such financings. Harland expects the financing to close
immediately prior to the purchase of Shares pursuant to the Offer.
While the foregoing represents the current intention of Harland and the
Offeror with respect to such funds, such financial arrangements may change
depending on such factors as Harland and the Offeror may deem appropriate.
10. BACKGROUND OF THE OFFER; CONTACTS WITH CONCENTREX.
On December 7 and 8, 1999, representatives of Harland met representatives
of Concentrex at a retail banking conference and discussed Concentrex's recent
acquisitions and upcoming product releases.
On January 20, 2000, at Harland's quarterly board of directors meeting,
members of Harland's management discussed Concentrex as a potential acquisition
candidate. Harland's board agreed that management should initiate contact with
Concentrex and explore a potential transaction between Harland and Concentrex.
18
<PAGE> 21
In late January, 2000, Harland's Chief Executive Officer, Timothy C. Tuff,
had a conversation with Concentrex's Chairman and Chief Executive Officer,
Matthew W. Chapman. They discussed the business direction of the two companies,
potential synergies, and the possibility of a transaction between Harland and
Concentrex. At the conclusion of the conversation, Mr. Chapman stated that
Concentrex was committed to an independent path but that he would consider the
discussion.
In late January, 2000, Mr. Chapman, through his assistant, advised Mr. Tuff
that Concentrex was committed to an independent path, and that no further
discussions would be appropriate.
On April 27, 2000, Mr. Tuff and other members of Harland's management had a
discussion with certain members of Harland's board regarding growth aspirations
and transaction possibilities for Harland, including Concentrex.
On April 28, 2000, at Harland's quarterly board of directors meeting, Mr.
Tuff updated the board on the consideration of a transaction with Concentrex.
On May 15, 2000, Daniel Chu of UBS Warburg LLC, Harland's investment
advisor, contacted Eran Ashany of Allen & Company, Concentrex's investment
advisor, who is also a member of Concentrex's board of directors, and requested
a meeting regarding possible strategic alternatives for Concentrex. At that
time, UBS Warburg LLC was not formally retained by Harland, but was aware of
Harland's interest in Concentrex.
On May 18, 2000, Mr. Tuff and other members of Harland's management again
had a discussion with a member of Harland's board of directors regarding growth
aspirations and transaction possibilities for Harland, including Concentrex.
On May 23, 2000, Mr. Chu met with Mr. Ashany and discussed the potential of
a transaction between Harland and Concentrex. Mr. Ashany stated that Concentrex
was investigating potential alternatives for the business and would get back
with Mr. Chu within two weeks to let him know if further discussions were
appropriate.
On June 1, 2000, Mr. Ashany communicated to Mr. Chu that Concentrex was
still investigating alternatives and that it might take longer than the
originally communicated two weeks.
On June 5, 2000, Mr. Tuff sent Mr. Chapman a letter expressing Harland's
interest in a potential transaction with Concentrex.
On June 9, 2000, Harland retained UBS Warburg LLC as its investment advisor
with respect to the potential acquisition by Harland of Concentrex.
On June 14, 2000, Mr. Ashany called Mr. Chu to communicate that
Concentrex's board of directors was aware of the letter, and that it was well
received.
On June 16, 2000, Mr. Ashany called Mr. Chu and stated that Concentrex was
interested in meeting with Harland to discuss the potential acquisition of
Concentrex by Harland.
On June 21, 2000, management team members from Harland and representatives
from UBS Warburg LLC met with management team members from Concentrex and Mr.
Ashany, who was now representing Concentrex as an investment advisor. The two
groups discussed business direction, potential synergies, and the possible
acquisition of Concentrex by Harland. The two teams agreed to an accelerated
diligence process to begin the following week and to last two to three weeks.
On June 23, 2000, Harland and Concentrex signed a mutual confidentiality
agreement and on June 26, 2000, Harland commenced diligence on Concentrex.
Active diligence continued from that date through July 14, 2000.
On June 30, 2000, Mr. Ashany spoke with Mr. Chu to discuss the progress on
the diligence process. Mr. Ashany expressed an increasing urgency to the timing
of the discussions. After multiple conversations over the weekend, the two
agreed that diligence should continue, but that pricing discussions and
preliminary drafting of the definitive agreement should begin during the
diligence time period.
On July 6, 2000, Harland submitted a non-binding proposal letter to
Concentrex regarding the potential acquisition of Concentrex by Harland at a
tender price of $5.50 per Share. The letter also contained a request for a
21-day exclusivity period in order to complete due diligence and execute a
definitive agreement. On July 7, 2000, Mr. Ashany contacted Mr. Chu and told him
that Concentrex rejected the $5.50 per Share offer. Mr. Ashany also told Mr. Chu
that Concentrex
19
<PAGE> 22
would not agree to a 21-day exclusivity period. Mr. Chu withdrew the request for
exclusivity. Over the next several days, representatives of Concentrex and
Harland clarified various details regarding Concentrex's financial structure.
On July 10, 2000, Harland's board of directors discussed the potential
acquisition of Concentrex with management team members and approved negotiation
of a definitive agreement, subject to certain limits and final board approval.
On July 12 through July 14, representatives of Harland and Concentrex met
to negotiate the definitive terms of the transaction, including the purchase
price. On July 14, 2000, Harland's board of directors formally approved the
proposed acquisition, at a tender offer price of $7.00 per Share, subject to
finalization of the definitive agreement. Also on July 14, 2000, the board of
directors of Concentrex met and (i) determined that the Merger Agreement, the
Tender Agreements and the transactions contemplated thereby, including the Offer
and the Merger, are advisable and are fair to, and in the best interests of, the
stockholders of Concentrex, (ii) approved the Offer and the Merger and (iii)
recommended that stockholders of Concentrex accept the Offer and tender their
Shares to the Offeror. On the evening of July 16, 2000, Harland and Concentrex
signed a definitive agreement for the purchase by Harland of Concentrex at a
tender price of $7.00 per share.
On July 17, 2000, Harland and Concentrex announced the definitive agreement
prior to the opening of trading on the New York Stock Exchange and Nasdaq.
On July 21, 2000, Harland and the Offeror commenced the Offer.
11. THE MERGER AGREEMENT AND TENDER AGREEMENTS.
The following is a summary of the material terms of the Merger Agreement
and Tender Agreements, which summary is qualified in its entirety by reference
to the Merger Agreement and form of Tender Agreement, which are attached hereto
as Appendix A and B, respectively.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable following the date of the execution thereof. The
obligation of the Offeror to accept for payment the Shares tendered pursuant to
the Offer is subject to (i) the Minimum Condition, (ii) any waiting period under
the HSR Act applicable to the purchase of the Shares pursuant to the Offer
having expired or having been terminated prior to the expiration of the Offer
and (iii) the satisfaction or waiver of certain other terms and conditions of
the Offer. See Section 15. The Minimum Condition of the Offer is that at the
expiration of the Offer, a number greater than fifty percent (50%) of the Shares
(determined on a fully diluted basis), together with the Shares owned by the
Offeror and Harland (or any other wholly owned subsidiary of Harland), shall
have been validly tendered and not withdrawn.
The Offeror expressly reserves the right to modify the terms of the Offer,
except that, without the consent of Concentrex, the Offeror shall not, (i) make
any change in the terms or conditions of the Offer that is adverse to the
holders of the shares in any material respect, (ii) decrease the Offer Price per
Share payable in the Offer, or (iii) impose material conditions on the Offer
other than those set forth in Section 15. Notwithstanding the foregoing, the
Offeror may, without the consent of Concentrex, (i) extend the Offer on one or
more occasions, if at the scheduled Expiration Date any of the conditions to the
Offeror's obligation to purchase the Shares are not satisfied, until such time
as such conditions are satisfied or waived, (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer and (iii) extend the Offer on one
or more occasions (but not beyond one week), if at the scheduled Expiration Date
all conditions to the Offer shall have been satisfied but less than a number of
Shares, together with the number of Shares owned by Harland and the Offeror
representing ninety percent (90%) of the outstanding Shares, on a fully-diluted
basis, shall have been tendered into the Offer. The rights reserved by the
Offeror in this paragraph are in addition to the Offeror's rights to terminate
the Offer as described in Section 15.
In addition, the Offeror may, at its sole option, after the date the Shares
are purchased pursuant to the Offer commence a subsequent offer pursuant to Rule
14d-11 of the Exchange Act to purchase additional Shares prior to the
consummation of the Merger. If the Offeror commences a subsequent offer, all
Shares tendered in the subsequent offer would be immediately accepted and paid
for as they are tendered at the Offer Price. Any subsequent offer must remain
open for a minimum of three and a maximum of twenty business days.
The Merger. The Merger Agreement provides that subject to the terms and
conditions thereof (and including those described in Section 15) and in
accordance with the OBCA, the Offeror shall be merged with and into Concentrex
at the
20
<PAGE> 23
Effective Time. Following the Merger, the separate corporate existence of the
Offeror shall cease and Concentrex shall continue as the surviving corporation
(the "Surviving Corporation") and shall succeed to and assume all the rights and
obligations of the Offeror in accordance with the OBCA.
Pursuant to the Merger Agreement, as of the Effective Time, each Share
issued and outstanding immediately prior to the Effective Time (unless otherwise
provided for) shall be converted automatically into the right to receive an
amount in cash equal to $7.00 payable, without interest, less any required
withholding taxes, upon surrender of the certificate formerly representing such
Share in the manner described in the Merger Agreement.
Pursuant to the Merger Agreement, Concentrex shall, by written notice to
each holder of an option to purchase Shares (the "Company Options"), offer to
pay such holder upon consummation of the Merger, in exchange for the
cancellation of all of such holder's Company Options (regardless of exercise
price) upon the consummation of the Merger, an amount in cash determined by
multiplying (A) the excess, if any, of the per share Offer Price over the
applicable exercise price per share of Company Options owned by such holder by
(B) the number of Shares such holder could have purchased had such holder
exercised such Company Options (with an exercise price less than the per share
Offer Price) in full immediately prior to the consummation of the Merger, and
all Company Options of such holder shall thereafter be canceled.
In addition, as promptly as practicable following the execution of the
Merger Agreement, and in any event prior to the Expiration Date, Concentrex
shall amend its stock option plans and any other agreements pursuant to which
Company Options have been granted to provide that (i) all Company Options with
an exercise price less than the per share Offer Price shall vest upon the
consummation of the Merger, (ii) upon the consummation of the Merger, each
Company Option shall represent only the right to receive upon payment of the
applicable exercise price, the per share Offer Price, in lieu of a Share and
(iii) other than with respect to the right to receive the per share Offer Price
described in clause (ii) of this sentence, all Company Options shall be
terminated upon consummation of the Merger.
The Merger Agreement also provides that as promptly as practicable
following the execution of the Merger Agreement, Concentrex shall use its best
efforts to cause each director of Concentrex to agree to terminate and cancel
all Company Options owned by such director with exercise prices equal to or in
excess of the per share Offer Price upon consummation of the Merger.
Promptly following the acceptance for payment of, and payment by Offeror
for, Shares pursuant to the Offer, Concentrex shall, if requested to do so by
Harland, redeem all of the outstanding shares of Series A Preferred Stock of
Concentrex in accordance with its terms and shall irrevocably deposit funds
sufficient to redeem such shares of Series A Preferred Stock in an account to
pay for such redemption. Concurrently with the acceptance for payment of, and
payment by the Offeror for, Shares pursuant to the Offer, if Harland requests
that Concentrex redeem the Series A Preferred Stock, Harland shall by wire
transfer of immediately available funds to an account designated by Concentrex,
advance to Concentrex an amount equal to the amount necessary to redeem all
outstanding shares of Series A Preferred Stock.
The Merger Agreement also provides that, at the Effective Time, the
Articles of Incorporation of the Offeror, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law or such Articles of Incorporation. At the Effective Time, the
Bylaws of Concentrex, as in effect immediately prior to the Effective Time,
shall be the Bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law, the Articles of Incorporation
of the Surviving Corporation or such Bylaws. Stockholders of Concentrex are not
entitled to dissenter's rights under Oregon law.
The Merger Agreement provides that (i) the directors of the Offeror at the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected or appointed and qualified, as the case may be, and (ii) the
officers of the Offeror at the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
Stockholders' Meeting; Proxy Statement. The Merger Agreement provides, if
the approval and adoption of the Merger Agreement by Concentrex's stockholders
are required by law, Concentrex will, as soon as practicable following the
consummation of the Offer (or the subsequent offer, if applicable), duly call,
give notice of, convene and hold a stockholders' meeting for the purpose of
considering the approval of the Merger Agreement and the transactions
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contemplated thereby. The Board of Directors of Concentrex will recommend to the
stockholders the adoption or approval of the Merger Agreement and the Merger,
shall solicit proxies in favor of the Merger Agreement and the Merger and shall
take all other actions necessary or, in the reasonable judgment of Harland,
helpful to secure the vote or consent of such holders required by the OBCA or
the Merger Agreement, to effect the Merger and shall not withdraw such
recommendation. In connection with such meeting, Concentrex will promptly
prepare and file with the Commission and will thereafter mail to its
stockholders as promptly as practicable a proxy statement of Concentrex (the
"Proxy Statement") and all other proxy materials for such meeting.
Notwithstanding the foregoing, if the Offeror acquires at least 90% of the
outstanding Shares, the parties shall, at the request of Harland, take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer without a meeting of
Concentrex's stockholders in accordance with Section 60.491 of the OBCA.
Except as expressly permitted by the Merger Agreement, neither the Board of
Directors of Concentrex nor any committee thereof may (i) withdraw, qualify or
modify, or propose publicly to withdraw, qualify or modify, in a manner adverse
to Harland, the approval or recommendation by such Board of Directors or any
such committee of the Offer, the Merger, or the Merger Agreement, (ii) approve
or recommend, or propose publicly to approve or recommend any Acquisition
Proposal (as hereinafter defined) from a third party (an "Alternative
Transaction"), or (iii) cause Concentrex to enter into any letter of intent,
agreement in principle or acquisition agreement or other similar agreement (an
"Acquisition Agreement") relating to any Alternative Transaction.
Notwithstanding the foregoing, if prior to the termination of the Offer, the
Board of Directors of Concentrex determines in good faith that it has received a
Superior Proposal (as hereinafter defined) in compliance with the solicitation
provisions contained in the Merger Agreement and after taking into consideration
the opinion of outside counsel with respect to its fiduciary duties to
Concentrex's stockholders under applicable law, the Board of Directors of
Concentrex may (subject to this and the following sentences) inform its
stockholders that it no longer believes that the Merger is advisable and no
longer recommends approval (a "Subsequent Determination") and enter into an
Acquisition Agreement with respect to a Superior Proposal, but only at a time
that is more than three (3) business days (or two (2) business days in the case
of a material amendment to a Superior Proposal) following Harland's receipt of
written notice advising Harland that Concentrex's Board of Directors is prepared
to accept such Superior Proposal. Such notice shall specify the material terms
and conditions of such Superior Proposal (and include a copy of such proposal
with all accompanying documentation), identify the person making such Superior
Proposal and state that the Board of Directors intends to make a Subsequent
Determination. During this three business day period (or two business day period
in the case of a material amendment), Concentrex shall provide an opportunity
for Harland to propose adjustments to the terms of the Merger Agreement to
enable Concentrex to proceed with its recommendation to its stockholders without
a Subsequent Determination. An "Acquisition Proposal" means any bona fide
proposal with respect to a merger, consolidation, share exchange, tender offer
or similar transaction involving Concentrex, or any purchase or other
acquisition of all or substantially all or any significant portion of the assets
of Concentrex or any equity interest in Concentrex. A "Superior Proposal" means
any proposal (on its most recently amended or modified terms, if amended or
modified) made by a third party to enter into an Alternative Transaction which
the Board of Directors of Concentrex determines in its good faith judgment
(based on, among other things, the written advice of an independent financial
advisor) to be more favorable to the stockholders than the Merger and the Offer,
from a financial point of view (taking into account whether, in the good faith
judgment of the Board of Directors of Concentrex, after obtaining the advice of
such independent financial advisor, the third party is reasonably able to
finance the transaction, and any proposed changes to the Merger Agreement that
may be proposed by Harland in response to such Alternative Transaction).
Nothing contained in the Merger Agreement shall prohibit Concentrex from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to
Concentrex's stockholders if, in the good faith judgment of the Board of
Directors of Concentrex, after consultation with outside counsel, failure so to
disclose would be inconsistent with its obligations under applicable law;
provided, however, that, except as expressly provided in the Merger Agreement,
neither Concentrex nor its Board of Directors nor any committee thereof shall
withdraw, qualify or modify, or propose to withdraw, qualify or modify, its
position with respect to the Merger Agreement or in connection with the Offer or
the Merger, or approve or recommend, or propose to approve or recommend, an
Acquisition Proposal.
Designation of Directors. The Merger Agreement provides that, promptly
upon the acceptance for payment of, and payment by the Offeror for, any Shares
pursuant to the Offer, the Offeror shall be entitled to designate such number of
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directors on the Board of Directors as will give the Offeror representation on
the Board of Directors equal to at least that number of directors, rounded up to
the next whole number, which is the percentage that (i) such number of Shares so
accepted for payment and paid for by the Offeror plus the number of Shares
otherwise owned by the Offeror or any other subsidiary of Harland bears to (ii)
the number of such Shares outstanding, and Concentrex shall, at such time, cause
the Offeror's designees to be so elected. Subject to applicable law, Concentrex
shall take all action requested by Harland necessary to effect any such
appointment or election. In connection with the foregoing, Concentrex will
promptly, at the option of the Offeror, use its best efforts to either increase
the size of the Board of Directors of Concentrex or obtain the resignation of
such number of its current directors as is necessary to enable the Offeror's
designee to be elected or appointed to the Board of Directors of Concentrex as
provided above.
Access to Information; Confidentiality. Concentrex shall, and shall cause
each of its subsidiaries to, afford to the accountants, counsel, financial
advisors and other representatives of Harland and the Offeror reasonable access
at all reasonable times to officers, employees, agents, properties, offices or
other facilities, books, and records of Concentrex and its subsidiaries, and
shall furnish Harland and the Offeror with all financial, operating and other
data and information as Harland or Offeror may reasonably request. During such
period, Concentrex shall furnish to Harland and the Offeror all monthly
financial and operating data normally prepared by Concentrex as promptly as
practicable following the end of each calendar month.
All information obtained by Harland or the Offeror concerning Concentrex
and its subsidiaries in connection with the transactions contemplated by the
Merger Agreement shall be kept confidential in accordance with the proprietary
nondisclosure agreement, dated June 23, 2000 between Harland and Concentrex.
Other Offers. The Merger Agreement provides that Concentrex will not, nor
shall Concentrex authorize or permit any of its subsidiaries, officers,
directors or employees or any financial advisors, auditors, attorneys, lenders
or other advisors or representatives to directly or indirectly, (i) solicit,
initiate or encourage the submission of, any Acquisition Proposal, or (ii)
participate in or encourage any discussions or negotiations regarding, or
furnish to any person any non-public information with respect to, or take any
other action to facilitate any inquiries or the making of, any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal;
provided, however, that, the Board of Directors of Concentrex shall not be
prohibited from furnishing information, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited Acquisition
Proposal prior to the termination of the Offer if and to the extent that (i) the
Board of Directors of Concentrex, after taking into consideration the advice of
independent outside legal counsel, determines in good faith that such action is
required for the Board to comply with its fiduciary obligations to Concentrex's
stockholders under applicable law, (ii) prior to taking such action, Concentrex
receives from such entity an executed customary confidentiality agreement and
(iii) the Board of Directors of Concentrex concludes in good faith based upon
advice from its independent financial advisor, that the Acquisition Proposal is
a Superior Proposal. Concentrex shall provide immediate oral and written notice
to Harland of (i) any Acquisition Proposal or any inquiry which could reasonably
be expected to lead to any Acquisition Proposal, (ii) the material terms and
conditions of such Acquisition Proposal or inquiry, (iii) the identity of the
person or entity making any such Acquisition Proposal or inquiry and (iv)
Concentrex's intention to furnish information to or enter into discussions or
negotiations with, such person or entity. Concentrex will keep Harland informed
of the status and details of any such Acquisition Proposal or inquiry.
Directors' and Officers' Indemnification and Insurance. The Merger
Agreement provides that, for five (5) years from and after the Effective Time,
Harland will cause the Surviving Corporation to indemnify and hold harmless all
past and present officers and directors of Concentrex and of its subsidiaries
for acts or omissions occurring at or prior to the Effective Time to the same
extent such persons are indemnified by Concentrex pursuant to its Articles of
Incorporation, Bylaws or agreements in effect on July 17, 2000.
Harland has agreed to provide (or to cause the Surviving Corporation to
provide), for an aggregate period of at least five (5) years from the Effective
Time, to Concentrex's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring prior to the
Effective Time that is materially similar (with respect to limits and
deductibles) to Concentrex's existing policy or, if substantially equivalent
insurance coverage is unavailable, the best available coverage; provided,
however, that the Surviving Corporation shall not be required to expend more
than an amount per year equal to one hundred fifty percent (150%) of current
annual premiums paid by Concentrex for such insurance.
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Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
from and after the date thereof until the closing of the Merger:
- Concentrex has agreed that unless Harland shall otherwise agree in
writing, (i) the business of Concentrex and its subsidiaries shall be
conducted only in, and Concentrex and its subsidiaries shall not take any
action except in, the ordinary course of business and in a manner
consistent with prior practice, (ii) Concentrex and its subsidiaries
shall use reasonable best efforts to preserve intact their business
organizations, to keep available the services of their current officers
and employees and to preserve the current relationships of Concentrex and
its subsidiaries with customers, suppliers and other persons with which
Concentrex or its subsidiaries has business relations, and (iii)
Concentrex and its subsidiaries will comply with all applicable laws and
regulations wherever its business is conducted, including, without
limitation, the timely filing of all reports, forms or other documents
with the Commission required pursuant to the Securities Act of 1933 (the
"Securities Act") or the Exchange Act. Without limiting the foregoing,
neither Concentrex nor any of its subsidiaries shall, except in the
ordinary course of business consistent with past practice as of December
31, 1999, (i) materially reduce the expenses of Concentrex or its
subsidiaries relating to sales or customer service or support, (ii)
materially discount the price or materially alter the terms of any of
Concentrex's or its subsidiaries' products or services, (iii) reduce or
discount any accounts receivable of Concentrex or any subsidiary to
accelerate collection of such accounts receivable or sell or factor any
accounts receivable of Concentrex or any subsidiary, or (iv) manage the
accounts payable of Concentrex or any subsidiary in a manner inconsistent
with Concentrex's past practice as of December 31, 1999.
- Concentrex has agreed that Concentrex shall not, nor shall Concentrex
permit any of its subsidiaries to, (i) declare or pay any dividends on or
make other distributions (whether in cash, stock or property) in respect
of any of its capital stock, except for dividends by a wholly owned
subsidiary of Concentrex to Concentrex or another wholly owned subsidiary
of Concentrex, (ii) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital
stock; (iii) repurchase or otherwise acquire any shares of its capital
stock; (iv) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or any securities
convertible into any such shares of its capital stock, or any rights,
warrants or options to acquire any such shares or convertible securities
or any stock appreciation rights, phantom stock plans or stock
equivalents, other than the issuance of shares of common stock upon (A)
the exercise of Company Options outstanding as of the date of the Merger
Agreement, (B) the exercise of warrants outstanding as of the date of the
Merger Agreement or (C) the conversion of convertible notes outstanding
on the date of the Merger Agreement; (v) change the exercise price of any
warrants or options to acquire any Shares; or (vi) take any action that
would, or could reasonably be expected to, result in any of the
conditions to the Offer or the Merger not being satisfied.
- Except as expressly contemplated by the Merger Agreement, Concentrex has
agreed that it shall not, nor shall Concentrex permit any of its
subsidiaries to, without the prior written consent of Harland, (i) amend
its articles of incorporation (including any certificate of designations
attached thereto) or bylaws or other equivalent organizational documents;
(ii) create, assume or incur any indebtedness for borrowed money or
guaranty any such indebtedness of another person, other than (A)
borrowings or payments under existing lines of credit (or under any
refinancing of such existing lines) or (B) indebtedness owing to, or
guaranties of indebtedness owing to, Concentrex; (iii) accelerate the
timing of payment of any outstanding indebtedness for borrowed money;
(iv) make any loans or advances to any other person other than loans or
advances between any subsidiaries of Concentrex or between Concentrex and
any of its subsidiaries (other than normal trade terms and loans or
advances less than $25,000 in any case made in the ordinary course of
business consistent with past practice); (v) mortgage or pledge any of
its assets or properties; (vi) merge or consolidate with any other entity
in any transaction, or sell any business or assets in a single
transaction or series of transactions in which the aggregate
consideration is $25,000 or greater other than with respect to
transactions in the ordinary course of business consistent with past
practice; (vii) change its accounting policies except as required by
generally accepted accounting principles; (viii) make any change in
employment terms for any of its directors or officers; (ix) except as
expressly identified in Concentrex's disclosure letter delivered in
connection with the Merger Agreement and following notice by Concentrex
to Harland, alter, amend or create any obligations with respect to
compensation, severance, benefits, change of control payments or any
other payments to employees, directors or affiliates of Concentrex or its
subsidiaries or enter into any new, or amend any existing, employment
agreements other than in
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the ordinary course of business consistent with past practice; (xi) make
any change to Concentrex's employee benefit plans; (xii) amend or cancel
or agree to the amendment or cancellation of any Material Contract (as
defined in the Merger Agreement) or enter into a contract that would have
been a Material Contract had such contract been in existence as of the
date of the Merger Agreement; (xiii) pay, loan or advance (other than the
payment of compensation, directors' fees or reimbursement of expenses in
the ordinary course of business) any amount to, or sell, transfer or
lease any properties or assets (real, personal or mixed, tangible or
intangible) to, or enter into any agreement with, any of its officers or
directors or any "affiliate" or "associate" of any of its officers or
directors; (xiv) form or commence the operations of any business or any
corporation, partnership, joint venture, business association or other
business organization or division thereof; (xv) make any tax election
(other than in the ordinary course of business consistent with past
practice) or settle or compromise any tax liability involving amounts in
excess of $25,000 in the aggregate; (xvi) enter into any agreements,
arrangements or understandings with respect to the purchase, sale or
lease of any real property or amend, cancel or extend any agreement,
arrangement or understanding with respect to the lease of any real
property; or (xvii) pay, discharge, settle or satisfy any claims,
litigation, liabilities or obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise) outside the ordinary
course of business consistent with past practice involving amounts in
excess of $25,000 in the aggregate.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including, but
not limited to, representations and warranties by Concentrex concerning:
Concentrex's organization, standing and power; capitalization; the Board of
Directors' approval of the Merger Agreement and the Offer and the Tender
Agreements and the transactions contemplated by the Merger Agreement (including
approvals so as to render Sections 60.801 et seq. and 60.825 et seq. of the OBCA
inapplicable to Harland and the Offeror by reason of their entering into the
Merger Agreement and the Tender Agreements or consummating the transactions
contemplated by the Merger Agreement); required filings and consents; Commission
filings and financial statements; information supplied for purposes of filings
with the Commission; absence of certain changes or events; compliance with law;
tax matters; absence of litigation; employee benefit plans; worker safety and
environmental matters; labor matters; required stockholder vote; financial
advisor opinion; and brokers. Some of the representations are qualified by a
material adverse effect clause. For purposes of the Merger Agreement, "Company
Material Adverse Effect" means any change, event or effect which shall have
occurred or been threatened that, when taken together with all other adverse
changes, events or effects that have occurred or been threatened, is or is
reasonably likely to, (i) be materially adverse to the business, operations,
prospects, properties, condition (financial or otherwise), assets, liabilities
(including, without limitation, contingent liabilities), of Concentrex and its
subsidiaries taken as a whole, or (ii) prevent or materially delay the
performance by Concentrex of any of its obligations under the Merger Agreement
or the consummation of the Offer, the Merger or other transactions contemplated
by the Merger Agreement.
Conditions of the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger shall be subject to the following
conditions:
- The respective obligations of Harland, the Offeror and Concentrex to
effect the Merger are subject to the satisfaction of the following
conditions, unless waived in writing by all parties:
(a) Each of the conditions set forth in Section 15 shall have been
satisfied or waived by the Offeror, and the Offeror or its permitted
assignee shall have purchased the Shares validly tendered and not withdrawn
pursuant to the terms of the Offer; provided, however, that this condition
shall not be applicable to the obligations of Harland or the Offeror if, in
breach of the Merger Agreement or the terms of the Offer, the Offeror or
its permitted assignee fails to purchase any Shares validly tendered and
not withdrawn pursuant to the Offer;
(b) The Merger Agreement and the Merger shall have been approved and
adopted by the requisite vote of Concentrex's stockholders, if and to the
extent required by the OBCA, Concentrex's Articles of Incorporation and
Concentrex's Bylaws;
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect; provided, however, that the parties invoking
this condition shall use all commercially reasonable efforts to have any
such order or injunction vacated;
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(d) There shall not be overtly threatened, instituted or pending any
action, proceeding, application or counterclaim by any governmental entity
before any court or governmental entity or governmental regulatory or
administrative agency, authority or tribunal which is reasonably likely to
restrain or prohibit the consummation of the Merger;
(e) All actions by or in respect of or filings with any governmental
entity required to permit the consummation of the Merger shall have been
obtained or made (including the expiration or termination of any applicable
waiting period under the HSR Act); and
(f) The offering period with respect to any subsequent offer, if
applicable, shall have expired.
- The obligations of Harland and the Offeror to effect the Merger are
further subject to satisfaction or waiver at or prior to the Effective
Time of the following conditions:
(a) (i) The representations and warranties of Concentrex in the Merger
Agreement that are qualified by materiality shall be true and correct in
all respects as of the date of the Merger Agreement and as of the Effective
Time (unless such representations or warranties refer to a specific date,
in which case such representations or warranties shall be true and correct
in all respects as of such date); (ii) the representations and warranties
of Concentrex in the Merger Agreement that are not qualified by materiality
shall be true and correct in all material respects as of the date of the
Merger Agreement and as of the Effective Time (unless such representations
or warranties refer to a specific date, in which case such representations
or warranties shall be true and correct in all material respects as of such
date); (iii) Concentrex shall have performed in all material respects all
obligations required to be performed by it under the Merger Agreement; and
(iv) Concentrex shall have delivered to Harland and the Offeror a
certificate to the effect that each of the conditions specified in (i),
(ii) and (iii) above is satisfied in all respects; and
(b) Concentrex and its subsidiaries shall have procured all third
party consents legally required for the consummation of the Merger.
- The obligations of Concentrex to effect the Merger are further subject to
satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of Harland and the Offeror in
the Merger Agreement that are qualified by materiality shall be true and
correct in all respects as of the date of the Merger Agreement and as of
the Effective Time;
(b) The representations and warranties of Harland and the Offeror in
the Merger Agreement that are not qualified by materiality shall be true
and correct in all material respects as of the date of the Merger Agreement
and as of the Effective Time;
(c) Harland and the Offeror shall have performed in all material
respects all obligations required to be performed by them under the Merger
Agreement; and
(d) Harland and the Offeror shall have delivered to Concentrex a
certificate to the effect that each of the conditions specified in
paragraphs (a), (b) and (c) above is satisfied in all respects.
Termination Events. The Merger Agreement may be terminated at any time
prior to the Effective Time, whether before or after any approval of the matters
presented in connection with the Merger by the stockholders of Concentrex:
(a) By mutual written consent of Harland and Concentrex;
(b) By any of Harland, Offeror or Concentrex if any court of competent
jurisdiction or other governmental entity shall have issued an order,
decree, ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the Offer or the Merger and such order, decree,
ruling or other action shall have become final and nonappealable; provided
however, that the party terminating the Merger Agreement shall use all
commercially reasonable efforts to have such order, decree, ruling or
action vacated;
(c) By any of Harland, Offeror or Concentrex if the Offer shall have
expired or been terminated and the Offeror shall not have purchased any
Shares pursuant thereto on or before December 31, 2000; provided,
however,that the right to terminate the Merger Agreement shall not be
available to any party whose failure to fulfill any obligation
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under the Merger Agreement has been the primary cause of, or resulted in,
the expiration or termination of the Offer on or before such date;
(d) By Harland or the Offeror if the Board of Directors of Concentrex
(i) shall have withdrawn or shall have modified in a manner adverse to
Harland or the Offeror its approval or recommendation of the Merger or the
Merger Agreement, (ii) caused Concentrex to enter into an agreement with
respect to an Acquisition Proposal, (iii) shall have endorsed, approved or
recommended any Acquisition Proposal or (iv) shall have announced to do any
of the foregoing;
(e) By Harland or the Offeror, if as a result of the failure of any of
the conditions set forth in Section 15, the Offer shall have been
terminated by Harland or the Offeror or expired in accordance with its
terms without the Offeror (or any permitted assignee) having purchased any
Shares pursuant to the Offer;
(f) By Harland or the Offeror, if (i) any of the conditions to
obligations of Harland and the Offeror to effect the Merger shall have
become incapable of fulfillment and shall not have been waived by Harland
and the Offeror, (ii) holders of outstanding debt obligations of Concentrex
or any of its subsidiaries under the Financing Agreement dated as of August
13, 1999 by and among Concentrex, Foothill Capital Corporation and Ableco
Finance LLC (and related agreements) shall have exercised any remedies
which result in the transfer, seizure or blockage of any collateral arising
out of a default under such agreement (or related documents) by Concentrex
or any of its subsidiaries or (iii) Concentrex shall breach in any material
respect any of its representations, warranties, covenants or other
obligations hereunder and, within ten (10) days after written notice of
such breach to Concentrex from Harland, such breach shall not have been
cured in all material respects or waived by Harland or the Offeror;
(g) By Concentrex, if (i) any of the conditions to the obligations of
Concentrex to effect the Merger shall have become incapable of fulfillment
and shall not have been waived by Concentrex or (ii) Harland or the Offeror
shall breach in any material respect any of their respective
representations, warranties or obligations hereunder and, within ten (10)
days after written notice of such breach to Harland from Concentrex, such
breach shall not have been cured in all material respects or waived by
Concentrex; or
(h) By Concentrex if (i) the Board of Directors of Concentrex shall
have withdrawn or shall have modified in a manner adverse to Harland or the
Offeror its approval or recommendation of the Offer, the Merger or the
Merger Agreement, and (ii) Concentrex shall have entered into an agreement
with respect to a Superior Proposal.
Fees and Expenses. Except as specifically provided, all fees and expenses
incurred in connection with the transactions contemplated by the Merger
Agreement shall be paid by the party incurring such fees or expenses.
Concentrex shall pay to Harland a termination fee of $3.0 million plus an
amount equal to the reasonable costs and expenses incurred by Harland and the
Offeror, relating to the Offer, the Merger and the Merger Agreement and the
other transactions contemplated hereby and thereby (the "Termination Fee") if:
(i) Harland or Concentrex terminates the Merger Agreement in accordance with
paragraph (d) above; (ii) (A) after the date of the Merger Agreement any
Acquisition Proposal involving Concentrex, which Concentrex's Board of Directors
has endorsed as a Superior Proposal, shall have been announced, (B) the Offer
shall have remained open until at least the scheduled Expiration Date
immediately following the date such Acquisition Proposal is announced, (C) the
Minimum Condition is not satisfied at the Expiration Date, and (D) the Merger
Agreement or the Offer shall thereafter be terminated; or (iii) Concentrex
terminates the Merger Agreement in accordance with paragraph (h) above.
In addition, if (i) after the date of the Merger Agreement any Acquisition
Proposal involving Concentrex shall have been announced, (ii) the Offer shall
have remained open until at least the scheduled expiration date immediately
following the date such Acquisition Proposal is announced, (iii) the Minimum
Condition shall not have been satisfied at the expiration of the Offer and (iv)
the Merger Agreement or the Offer shall thereafter be terminated, Concentrex
shall pay to Harland upon demand an amount equal to the reasonable costs and
expenses of Harland and the Offeror incurred in connection with the Offer, the
Merger and the Merger Agreement and the transactions contemplated hereby,
payable in same-day funds.
The Merger Agreement also provides that, if within one year after
termination of the Merger Agreement, Concentrex shall enter into any agreement
relating to, or consummate, an Acquisition Proposal (i) at a per share purchase
price greater than or equal to 85% of the Offer Price with a person other than
Harland or the Offeror or (ii) at any price with a
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person other than Harland or the Offeror who made an Acquisition Proposal after
the date hereof and prior to the Expiration Date of the Offer, then immediately
prior to, and as a condition of, consummation of such transaction Concentrex
shall pay to Harland upon demand the Termination Fee, payable in same-day funds;
provided that no such amount shall be payable (A) if the Termination Fee shall
have previously become payable or have been paid, (B) if the Offer was not
consummated because of the failure of a condition contained in clause (a), (b)
or (c) of Section 15 or (C) if this Agreement shall have been terminated by
Concentrex in accordance with clause (ii) of paragraph (g) above.
Any Termination Fee shall be payable in same-day funds on the date of
termination of the Merger Agreement.
Tender Agreements. Concurrently with the execution and delivery of the
Merger Agreement, Harland, the Offeror and each of the Tendering Stockholders
entered into the Tender Agreements. Pursuant to the Tender Agreements, the
Tendering Stockholders agreed to tender into the Offer an aggregate of 457,952
Shares currently owned by the Tendering Stockholders (the "Committed Shares").
The Tender Agreements also provide that the Tendering Stockholders irrevocably
appoint the Offeror as their proxy to vote their portion of such Committed
Shares (i) in favor of the Merger and the transactions contemplated by the
Merger Agreement and (ii) otherwise in the manner directed by Offeror.
12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR CONCENTREX.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, Concentrex. The Offer is being made pursuant to the Merger
Agreement. As promptly as practicable following the purchase of Shares pursuant
to the Offer and after satisfaction or waiver of all conditions to the Merger
set forth in the Merger Agreement, the Offeror intends to acquire the remaining
equity interest in Concentrex not acquired in the Offer by consummating the
Merger.
Vote Required to Approve the Merger. The Board of Directors has approved
and adopted the Merger and the Merger Agreement in accordance with the OBCA. The
Board of Directors will be required to submit the Merger Agreement to
Concentrex's stockholders for approval at a stockholders' meeting convened for
that purpose in accordance with the OBCA. The Merger must be approved by the
affirmative vote of the holders of at least a majority of the outstanding
Shares. The Minimum Condition requires that there shall have been validly
tendered and not properly withdrawn, together with the Shares owned, directly or
indirectly, by Harland, more than fifty percent (50%) of the Shares (determined
on a fully diluted basis). Upon consummation of the Offer and assuming the
Minimum Condition is satisfied, the Offeror will own sufficient Shares to enable
it to effect shareholder approval of the Merger with the affirmative vote of the
Shares owned by it. The Board of Directors has approved the Merger Agreement and
the transactions contemplated thereby, so as to render inapplicable the
limitation on business combinations contained in Sections 60.807 et seq. and
60.825 et seq. of the OBCA.
Pursuant to the Merger Agreement, Concentrex has agreed, if the Offeror or
any other subsidiary of Harland acquires at least 90% of the outstanding Shares,
the parties shall, at the request of Harland, take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
expiration of the Offer without a meeting of Concentrex's stockholders in
accordance with Section 60.491 of the OBCA.
THIS OFFER TO PURCHASE ALSO CONSTITUTES NOTICE UNDER SECTION 60.491(3)(C)
OF THE OBCA THAT IF THE OFFEROR OR ANY OTHER SUBSIDIARY OF HARLAND ACQUIRES AT
LEAST 90% OF THE OUTSTANDING SHARES, HARLAND SHALL CAUSE THE MERGER TO BECOME
EFFECTIVE WITHOUT ANY FURTHER NOTICE TO CONCENTREX'S STOCKHOLDERS. SEE APPENDIX
A (THE MERGER AGREEMENT).
THE OFFER IS CONDITIONED UPON THE MINIMUM CONDITION BEING SATISFIED.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO THE ANNUAL MEETING OR ANY
SPECIAL MEETING OF CONCENTREX'S STOCKHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY
SUCH SOLICITATION WHICH THE OFFEROR MAY MAKE WILL BE MADE ONLY PURSUANT TO
SEPARATE PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF
THE EXCHANGE ACT.
Appraisal Rights in Connection with the Offer. Stockholders do not have
appraisal rights as a result of the Offer. In addition, if the Merger is
consummated, stockholders of Concentrex at the time of the Merger who do not
vote in favor of the Merger will not have the right under the OBCA to dissent
and demand appraisal of, and receive payment in cash of
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the fair value of, their Shares outstanding immediately prior to the Effective
Time. Section 60.554 of the OBCA provides that dissenters rights shall not apply
to the holders of shares of any class of securities that were quoted on the
Nasdaq National Market System on the record date for the meeting of stockholders
at which the Merger was approved.
However, a damages remedy or injunctive relief may be available if a merger
is found to be the product of procedural unfairness, including fraud,
misrepresentation or other misconduct.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger following the purchase of
Shares pursuant to the Offer in which the Offeror seeks to acquire any remaining
Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is
consummated within one year after the expiration or termination of the Offer and
the price paid in the Merger is not less than the per Share price paid pursuant
to the Offer. However, if the Offeror is deemed to have acquired control of
Concentrex pursuant to the Offer and if the Merger is consummated more than one
year after completion of the Offer or an alternative acquisition transaction is
effected whereby stockholders of Concentrex receive consideration less than that
paid pursuant to the Offer, in either case at a time when the Shares are still
registered under the Exchange Act, the Offeror may be required to comply with
Rule 13e-3 under the Exchange Act. If applicable, Rule 13e-3 would require,
among other things, that certain financial information concerning Concentrex and
certain information relating to the fairness of the Merger or such alternative
transaction and the consideration offered to minority stockholders in the Merger
or such alternative transaction, be filed with the Commission and disclosed to
stockholders prior to consummation of the Merger or such alternative
transaction. The purchase of a substantial number of Shares pursuant to the
Offer may result in Concentrex being able to terminate its Exchange Act
registration. See Section 14. If such registration were terminated, Rule 13e-3
would be inapplicable to any such future Merger or such alternative transaction.
Plans for Concentrex. Harland will continue to evaluate the business and
operations of Concentrex during the pendency of the Offer and after the
consummation of the Offer and the Merger. Harland intends to seek additional
information about Concentrex during this period. Thereafter, Harland intends to
review such information as part of a comprehensive review of Concentrex's
business, operations, capitalization and management with a view to optimizing
Concentrex's potential contribution to Harland's business.
Except as indicated in this Offer to Purchase, Harland does not have any
current plans or proposals which relate to or would result in any of the
following: an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving Concentrex or any of its subsidiaries; a
sale or transfer of a material amount of assets of Concentrex or any of its
subsidiaries; any change in the present Board of Directors or management of
Concentrex; any material change in Concentrex's present capitalization or
dividend policy; or any other material change in Concentrex's corporate
structure or business. Notwithstanding the foregoing, promptly after the Offeror
acquires a majority of the Shares, the Offeror will be entitled to designate
such number of directors on the Board of Directors of Concentrex as will make
the percentage of Concentrex's directors designated by the Offeror equal to the
percentage of aggregate voting power of the Shares held by Harland or any of its
subsidiaries. In addition, assuming the Offeror's nominees are appointed as
directors of Concentrex and so long as there are holders of Shares other than
Harland or any of its subsidiaries, Harland expects that the Board of Directors
of Concentrex would not declare dividends on the Shares.
13. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that neither Concentrex nor any of its
subsidiaries will, among other things, from the date of the Merger Agreement
through the time Harland's designees constitute a majority of the members of the
Board of Directors of Concentrex, (i) declare or pay any dividends on or make
other distributions (whether in cash, stock or property) in respect of any of
its Shares, except for dividends by a wholly owned subsidiary of Concentrex to
Concentrex or another wholly owned subsidiary of Concentrex, (ii) split, combine
or reclassify any of its Shares or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution for Shares;
(iii) repurchase or otherwise acquire any Shares; (iv) issue, deliver or sell,
or authorize or propose the issuance, delivery or sale of, any Shares or any
securities convertible into any such Shares, or any rights, warrants or options
to acquire any such Shares or convertible securities or any stock appreciation
rights, phantom stock plans or stock equivalents, other than the issuance of
shares of Concentrex's common stock upon (x) the exercise of Company Options
outstanding as of the date of the Merger Agreement, (y) exercise of warrants
outstanding as of the date of the Merger Agreement and (z) the
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conversion of convertible notes outstanding on the date of the Merger Agreement
or (v) take any action that would, or could reasonably be expected to, result in
any of the conditions to the Offer set forth in Section 15 or any of the
conditions set forth in the "Conditions of the Merger" not being satisfied.
14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE LISTING AND
EXCHANGE ACT REGISTRATION.
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and will reduce the number of holders
of Shares, which could adversely affect the liquidity and market value of the
remaining Shares held by the public. Following the purchase of Shares pursuant
to the Offer, more than fifty percent (50%) of the outstanding Shares (on a
fully diluted basis) will be owned by the Offeror.
Harland currently intends to seek delisting of the Shares from Nasdaq and
the termination of the registration of the Shares under the Exchange Act as soon
after completion of the Offer as the requirements for such delisting and
termination are met. If Nasdaq listing and the Exchange Act registration of the
Shares are not terminated prior to the Merger, then the Shares will be delisted
from Nasdaq and the registration of the Shares under the Exchange Act will be
terminated following the consummation of the Merger.
Notwithstanding the preceeding paragraph, depending on the number of Shares
purchased pursuant to the Offer, the Shares may no longer meet the requirements
of The National Association of Securities Dealers, Inc. Automated Quotation
System for continued designation for Nasdaq. To maintain such designation, a
security must substantially meet one of two maintenance standards. The first
maintenance standard requires that (i) there be at least 750,000 publicly held
shares, (ii) the publicly held shares have a market value of at least $5
million, (iii) the issuer have net tangible assets of at least $4 million, (iv)
there be at least 400 stockholders of round lots, (v) the minimum bid price per
share must be at least $1.00 and (vi) there be at least two registered and
active market makers. The second maintenance standard requires that (i) the
issuer have either (A) a market capitalization of at least $50 million or (B)
total assets and total revenue of at least $50 million each for the most
recently completed fiscal year or two of the last three most recently completed
fiscal years, (ii) there by at least 1,100,000 shares publicly held, (iii) the
publicly held shares have a market value of at least $15 million, (iv) the
minimum bid price per share be at least $5.00, (v) there be at least 400
stockholders of round lots and (vi) there be at least four registered and active
market makers.
If these standards for continued designation for Nasdaq are not met, the
Shares might nevertheless continue to be included in the Nasdaq SmallCap Market.
Continued inclusion in the Nasdaq SmallCap Market, however, would require that
(i) there be at least 300 round lot holders, (ii) there be at least 500,000
publicly held shares, (iii) the publicly held shares have a market value of at
least $1 million, (iv) there be at least two registered and active market
makers, of which one may be entering stabilizing bids and (v) the issuer have
either (A) net tangible assets of at least $2 million, (B) market capitalization
of at least $35 million or (C) net income of at least $500,000 in the most
recently completed fiscal year or in two of the last three most recently
completed fiscal years. Shares held directly or indirectly by directors,
officers or beneficial owners of more than 10% of the Shares are not considered
as being publicly held for the purpose of determining whether either of the
Nasdaq listing criteria are met.
If the purchase of Shares pursuant to the Offer causes the Shares to no
longer meet the requirements for continued inclusion in Nasdaq or the Nasdaq
SmallCap Market as a result of a reduction in the number or market value of
publicly held Shares or the number of round lot holders or otherwise, as the
case may be, the market for Shares could be adversely affected. It is possible
that the Shares would continue to trade in the over-the-counter market and that
price quotations would be reported by other sources. The extent of the public
market therefor and the availability of such quotations would depend, however,
upon such factors as the number of stockholders and/or the aggregate market
value of such securities remaining at such time, the interest in maintaining a
market in the Shares on the part of the securities firms, the possible
termination of registration under the Exchange Act as described below and other
factors. The Offeror cannot predict whether the reduction in the number of
Shares that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for or marketability of the Shares or whether it
would cause future market prices to be greater or less than the Offer price.
The Shares are currently registered under the Exchange Act. The purchase of
Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of Concentrex to the Commission if the Shares are
not listed on a national securities exchange and there are fewer than 300 record
holders. The termination of the registration of the Shares under the
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Exchange Act would substantially reduce the information required to be furnished
by Concentrex to holders of the Shares and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
stockholders' meetings and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer applicable to the
Shares. Furthermore, "affiliates" of Concentrex and persons holding "restricted
securities" of Concentrex may be deprived of the ability to dispose of the
securities pursuant to Rule 144 under the Securities Act of 1933, as amended.
The Shares are currently "margin securities" under the rules of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), which
has the effect, among other things, of allowing brokers to extend credit on the
collateral of such Shares for the purpose of buying, carrying, or trading in
securities. Depending upon factors similar to those described above with respect
to listing and market quotations, it is possible that, following the Offer, the
Shares might no longer constitute "margin securities" for the purposes of the
Federal Reserve Board's margin regulations and therefore could no longer be used
as collateral for purpose credits made by brokers. In any event, the Shares will
cease to be "margin securities" if registration of the Shares under the Exchange
Act is terminated.
15. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other term of the Offer or the Merger Agreement, the
Offeror shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Offeror's obligation to pay for or return
tendered Shares promptly after the termination or withdrawal of the Offer), to
pay for any Shares tendered pursuant to the Offer, and may terminate the Offer,
if (i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of Shares which would represent a number
greater than fifty percent (50%) of the fully diluted Shares (the "Minimum
Condition"), (ii) any waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer shall have expired or been terminated,
(iii) Tonkon Torp LLP, legal counsel for Concentrex, does not deliver an opinion
substantially in the form of Exhibit A to the Merger Agreement or (iv) at any
time after the date of the Merger Agreement and prior to the acceptance for
payment of the Shares, any of the following conditions exists:
(a) there shall be instituted or pending any suit, action or
proceeding by any governmental entity (as defined below) or by any other
person which is reasonably likely to be determined adversely to the
Offeror, (i) challenging the acquisition by Harland or the Offeror of any
Shares, seeking to restrain or prohibit the making or consummation of the
Offer or the Merger or any other transaction contemplated by the Merger
Agreement or seeking to obtain from Concentrex, Harland or the Offeror any
damages in connection with the Offer, the Merger or any other transaction
contemplated by the Merger Agreement or the Offer, directly or indirectly,
relating to the transactions contemplated by the Offer or the Merger
Agreement, (ii) seeking to restrain, prohibit or delay the exercise of full
rights of ownership or operation by the Offeror or its affiliates of all or
any portion of the business or assets of Concentrex and its subsidiaries,
taken as a whole, or of the Offeror or any of its affiliates, or to compel
the Offeror or any of its affiliates to dispose of or hold separate all or
any material portion of the business or assets of Concentrex and its
subsidiaries, taken as a whole, or of the Offeror or any of its affiliates,
(iii) seeking to impose or confirm limitations on the ability of the
Offeror or any of its affiliates effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
the Shares acquired or owned by the Offeror or any of its affiliates on all
matters properly presented to the stockholders of Concentrex, (iv) seeking
to require divestiture by the Offeror or any of its affiliates of the
Shares, or (v) that otherwise would reasonably be expected to have a
Company Material Adverse Effect;
(b) any statute, rule, regulation, legislation, interpretation,
judgment, order or injunction shall be enacted, entered, enforced,
promulgated, amended or become applicable to or any consent or approval
shall be withheld with respect to the Offer or the Merger or any other
action shall have been taken by any court or other governmental entity,
that, in the reasonable judgment of the Offeror, would result in any of the
effects of or have any of the consequences sought to be achieved in the
actions referred to in paragraph (a) above;
(c) there shall have occurred: (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market; (ii) any decline in either the
Dow Jones Industrial Average or the Standard and Poor's Index of 500
Industrial Companies by an amount in excess of twenty percent (20%),
measured from the date of the Merger Agreement, (iii) the declaration of a
banking moratorium or
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any suspension of payments in respect of banks or any material limitation
(whether or not mandatory) on the extension of credit by lending
institutions in the United States; (iv) the commencement of war, material
armed hostilities or other material national or international crisis
directly or indirectly involving the United States that has a significant
adverse effect on the functioning of the financial markets in the United
States; or (v) in the case of any of the foregoing existing on the date of
the Merger Agreement, a material acceleration or worsening thereof;
(d) (i) any representation and warranty of Concentrex in the Merger
Agreement shall not be true and correct as of the date of the Merger
Agreement and as of the Effective Time; (ii) Concentrex shall not have
performed in all material respects all obligations required to be performed
by it under the Merger Agreement; (iii) the directors of Concentrex's
subsidiaries shall not have resigned and appointed nominees to fill their
vacancies as provided in the Merger Agreement; (iv) Concentrex's
representations and warranties contained in the Merger Agreement relating
to the assumption of liabilities are not true and correct; (v) certain
representations and warranties of Concentrex with respect to certain assets
and liabilities of Concentrex as of June 30, 2000 are not true and correct
in all respects; and (v) an officer of Concentrex shall not have delivered
to Harland and the Offeror a certificate to the effect that each of the
foregoing conditions is satisfied in all respects;
(e) Concentrex and its subsidiaries shall not have procured all
necessary third party consents (other than from governmental entities) with
respect to matters material to the conduct of business by Concentrex
required in connection with the execution and delivery of the Merger
Agreement and the consummation of the Merger and the transactions
contemplated thereby; or
(f) the Merger Agreement shall have been terminated in accordance with
its terms,
which in the reasonable judgment of the Offeror in any such case, and
regardless of the circumstances giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Offeror and may be
asserted by the Offeror regardless of the circumstances giving rise to any such
condition (including any action or omission by the Offeror) or may be waived by
the Offeror in whole or in part at any time and from time to time, in its sole
discretion. The failure by the Offeror at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right; the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Except as set forth below, based upon its examination of publicly
available filings by Concentrex with the Commission and other publicly available
information concerning Concentrex, neither the Offeror nor Harland is aware of
any licenses or other regulatory permits that appear to be material to the
business of Concentrex and its subsidiaries, taken as a whole, that might be
adversely affected by the Offeror's acquisition of Shares (and the indirect
acquisition of the stock of Concentrex's subsidiaries) as contemplated herein,
or of any filings, approvals or other actions by or with any domestic (Federal
or state), foreign or supranational governmental authority or administrative or
regulatory agency that would be required prior to the acquisition of Shares (or
the indirect acquisition of the stock of Concentrex's subsidiaries) by the
Offeror pursuant to the Offer as contemplated herein. Should any such approval
or other action be required, it is the Offeror's present intention to seek such
approval or action. However, the Offeror does not presently intend to delay the
purchase of Shares tendered pursuant to the Offer pending the receipt of any
such approval or the taking of any such action (subject to the Offeror's right
to delay or decline to purchase Shares if any of the conditions in Section 15
shall have occurred). There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the business of Concentrex, Harland or
the Offeror or that certain parts of the businesses of Concentrex, Harland or
the Offeror might not have to be disposed of or held separate or other
substantial conditions complied with in order to obtain such approval or other
action or in the event that such approval was not obtained or such other action
was not taken, any of which could cause the Offeror to elect to terminate the
Offer without purchasing the Shares thereunder. The Offeror's obligation under
the Offer to accept for payment and pay for Shares is subject to certain
conditions, including conditions relating to the legal matters discussed in this
Section 16.
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Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a 15-day waiting period following the filing by Harland of a
Premerger Notification and Report Form with respect to the Offer, unless Harland
receives a request for additional information or documentary material from the
Department of Justice, Antitrust Division (the "Antitrust Division") or the
Federal Trade Commission ("FTC") or unless early termination of the waiting
period is granted. Harland expects to make such a filing on or about July 21,
2000. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or documentary material
concerning the Offer, the waiting period will be extended through the tenth day
after the date of substantial compliance by all parties receiving such requests.
Complying with a request for additional information or documentary material can
take a significant amount of time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition of
Concentrex. At any time before or after the Offeror's acquisition of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger, or seeking the divestiture of Shares
acquired by the Offeror or the divestiture of substantial assets of Concentrex
or its subsidiaries or Harland or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer, the consummation of the
Merger or the tender of the Shares pursuant to the Tender Agreements on
antitrust grounds will not be made, or, if such a challenge is made, of the
result thereof.
If any waiting period under the HSR Act applicable to the Offer has not
expired or been terminated prior to the Expiration Date, the Offeror will not be
obligated to proceed with the Offer or the purchase of any Shares not
theretofore purchased pursuant to the Offer. See Section 15.
State Takeover Laws. Concentrex is incorporated under the laws of the
State of Oregon. In general, Sections 60.825 et seq. of the OBCA prevents an
"interested stockholder" (generally a person who owns or has the right to
acquire 15% or more of a corporation's outstanding voting stock, or an affiliate
or associate thereof) from engaging in a "business combination" (defined to
include mergers and certain other transactions) with an Oregon corporation for a
period of three years following the date such person became an interested
stockholder unless, among other things, prior to such date the board of
directors of the corporation approved either the business combination or the
transaction in which the interested stockholder became an interested
stockholder. On July 14, 2000, prior to the execution of the Merger Agreement,
the Board of Directors of Concentrex, approved the Merger Agreement and
determined that each of the Offer and the Merger is advisable and fair to, and
in the best interest of, the stockholders of Concentrex. Accordingly, Sections
60.825 et seq. are inapplicable to the Offer and the Merger.
In addition on July 14, 2000 the Board of Directors of Concentrex amended
the Bylaws of Concentrex to provide that Sections 60.801 et seq. of the OBCA
(relating to control share acquisitions) are not applicable to Concentrex.
A number of states have adopted takeover laws and regulations which purport
to varying degrees to be applicable to attempts to acquire securities of
corporations which are incorporated in such states or which have or whose
business operations have substantial economic effects in such states, or which
have substantial assets, security holders, principal executive offices or
principal places of business therein. In 1982, the Supreme Court of the United
States, in Edgar v. Mite Corp., invalidated on constitutional grounds the
Illinois Business Takeovers Act, which as a matter of state securities law made
takeovers of corporations meeting certain requirements more difficult, and the
reasoning in such decision is likely to apply to certain other state takeover
statutes. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court of the United States held that the State of Indiana could, as a
matter of corporate law and in particular those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, in TLX Acquisition Corp. v. Telex
Corp., a federal district court in Oklahoma ruled that the Oklahoma statutes
were unconstitutional insofar as they applied to corporations incorporated
outside Oklahoma in that they would subject such corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit.
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Except as described herein, the Offeror has not attempted to comply with
any state takeover statutes in connection with the Offer. The Offeror reserves
the right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in connection herewith is intended as a waiver of that right. In the event
that any state takeover statute is found applicable to the Offer, the Offeror
might be unable to accept for payment or purchase Shares tendered pursuant to
the Offer or be delayed in continuing or consummating the Offer. In such case,
the Offeror may not be obligated to accept for purchase or pay for any Shares
tendered. See Section 15.
Margin Regulations. The Shares are currently "margin securities," as such
term is defined under the rules of the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), which has the effect, among other things,
of allowing brokers to extend credit on the collateral of such securities.
Depending upon factors similar to those described above regarding listing and
market quotations, following the Offer, it is possible that the Shares might no
longer constitute "margin securities" for purposes of the margin regulations of
the Federal Reserve Board, in which event such Shares could no longer be used as
collateral for loans made by brokers. In addition, if registration of the Shares
under the Exchange Act were terminated, the Shares would no longer constitute
"margin securities."
17. FEES AND EXPENSES.
Except as set forth below, neither the Offeror nor Harland, nor any
officer, director, stockholder, agent or other representative of the Offeror or
Harland will pay any fees or commissions to any broker, dealer or other person
for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers,
commercial banks and trust companies and other nominees will, upon request, be
reimbursed by the Offeror for customary mailing and handling expenses incurred
by them in forwarding materials to their customers.
The Offeror has retained Georgeson Shareholder Communications Inc. as
Information Agent and ChaseMellon Shareholder Services, L.L.C. as Depositary in
connection with the Offer. The Information Agent and the Depositary will receive
reasonable and customary compensation for their services hereunder and
reimbursement for their reasonable out-of-pocket expenses. The Depositary will
also be indemnified by the Offeror against certain liabilities in connection
with the Offer. The Information Agent may contact holders of Shares by mail,
telephone, facsimile or personal interviews and may request brokers, dealers and
other nominee stockholders to forward materials relating to the Offer to
beneficial owners of Shares.
18. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to holders of Shares. The Offeror is not
aware of any jurisdiction where the making of the Offer is prohibited by any
administrative or judicial action pursuant to any valid state statute. If the
Offeror becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, the Offeror will make a good
faith effort to comply with any such state statute. If, after such good faith
effort, the Offeror cannot comply with any such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) the holders
of Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Offeror by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Harland and Offeror have filed with the Commission the Schedule
TO, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule TO and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 (except that they will not be
available at the regional offices of the Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE OFFEROR OR HARLAND NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
34
<PAGE> 37
ANNEX I
CERTAIN INFORMATION CONCERNING THE
DIRECTORS AND EXECUTIVE OFFICERS OF THE OFFEROR AND HARLAND
1. DIRECTORS AND EXECUTIVE OFFICERS OF THE OFFEROR. Set forth below are the
name, current business address, citizenship, present principal occupation or
employment history (covering a period of not less than five years) of each
executive officer and director of the Offeror. The business address of each such
director and executive officer is: c/o John H. Harland Company, 2939 Miller
Road, Decatur, Georgia 30035. All directors and executive officers listed below
are citizens of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND MATERIAL
NAME POSITIONS HELD DURING PAST FIVE YEARS
---- -------------------------------------
<S> <C>
Charles B. Carden................................. Vice President and Director of the Offeror; Vice
President and Chief Financial Officer of Harland;
Prior to June 1999, he served as Executive Vice
President and Chief Financial Officer of Mariner
Post-Acute Network, a health care provider, and
prior to 1996 he was employed by Leaseway
Transportation Corp., last serving as Senior Vice
President and Chief Financial and Administrative
Officer.
Timothy C. Tuff................................... President and Director of the Offeror; Chairman,
President and Chief Executive Officer of Harland;
Director of Printpak, Inc.; Prior to October 1998
he served as President and Chief Executive Officer
of Boral Industries, Inc., a world leader in
building and construction materials.
John C. Walters................................... Vice President, Secretary and Director of the
Offeror; Vice President, Secretary and General
Counsel of Harland; Prior to 1996 he served as
Executive Vice President of First Financial
Management Corporation, a diversified information
and financial services company.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF HARLAND. Set forth below are the
name, current business address, citizenship, present principal occupation or
employment history (covering a period of not less than five years) of each
executive officer and director of Harland. Unless otherwise indicated, the
business address of each such director and executive officer is: c/o John H.
Harland Company, 2939 Miller Road, Decatur, Georgia 30035. All directors and
executive officers listed below are citizens of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND MATERIAL
NAME OF DIRECTOR POSITIONS HELD DURING THE LAST FIVE YEARS
---------------- -----------------------------------------
<S> <C>
William S. Antle III.............................. Consultant to and former Chairman, President and
Chief Executive Officer of Oak Industries Inc.
(engineered components for telecommunications
industry); Director, Nvest, L.P., Genrad, Inc. and
Esco Electronics Corporation.
Juanita P. Baranco................................ Executive Vice President, Baranco Automotive Group
(automobile dealership); Director, Federal Reserve
Bank of Atlanta and Georgia Power Company.
</TABLE>
35
<PAGE> 38
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND MATERIAL
NAME OF DIRECTOR POSITIONS HELD DURING THE LAST FIVE YEARS
---------------- -----------------------------------------
<S> <C>
John D. Johns..................................... President and Chief Operating Officer of
Protective Life Corporation (insurance and
investment products); Director, Alabama National
Bancorporation, National Bank of Commerce,
Protective Life Corporation, Protective Life
Insurance Company and Protective Life and Annuity
Insurance Company.
Richard K. Lochridge.............................. President, Lochridge & Company, Inc. (management
consulting); Director, Dover Corporation,
Hannaford Bros. Co., Lowe's Companies, Inc. and
PETsMART, Inc.
John J. McMahon Jr................................ Chairman of the Executive Committee, McWane, Inc.
(pipe and valve manufacturing) and Chairman, Ligon
Industries, LLC (leveraged buyouts); Director,
Alabama National Bancorporation and Protective
Life Corporation.
G. Harold Northrop................................ Vice Chairman of the Board, retired President and
Chief Executive Officer, Callaway Gardens (a
horticultural, environmental and recreational
facility); Director, SunTrust Bank, West Georgia
NA.
Larry L. Prince................................... Chairman and Chief Executive Officer, Genuine
Parts Company (distributor of automobile
replacement parts); Director, Crawford & Company,
Equifax, Inc., Southern Mills and SunTrust Banks,
Inc.
Eileen M. Rudden.................................. Advisor to early stage technology companies.
Timothy C. Tuff................................... Chairman, President and Chief Executive Officer of
the Company; Director, Printpack, Inc.
</TABLE>
Each of these Directors has been principally employed in his or her present
capacity for at least five years, except Ms. Rudden and Mr. Tuff. Ms. Rudden was
employed by Lotus Development Corporation (software development), a subsidiary
of IBM Corporation, from 1986 through March 2000, last serving as Senior Vice
President. Mr. Tuff was elected President and Chief Executive Officer of Harland
in October 1998 and was elected Chairman in April 2000. For the prior five years
he served as President and Chief Executive Officer of Boral Industries, Inc.,
managing the North American and European operations of Australian-based Boral,
Ltd., a world leader in building and construction materials. In addition, Mr.
McMahon, who has been employed by McWane, Inc. for more than the past five
years, assumed his position with Ligon Industries in 1999.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND MATERIAL
NAME OF EXECUTIVE OFFICER POSITIONS HELD DURING THE LAST FIVE YEARS
------------------------- -----------------------------------------
<S> <C>
Charles B. Carden................................. Vice President and Chief Financial Officer.
S. David Passman III.............................. Vice President and General Manager --
South/International Region.
Earl W. Rogers Jr................................. Vice President, Manufacturing Services and
Technology.
Timothy C. Tuff................................... Chairman, President and Chief Executive Officer.
John C. Walters................................... Vice President, Secretary and General Counsel.
</TABLE>
Mr. Carden joined Harland in June 1999. He previously served as Executive
Vice President and Chief Financial Officer of Mariner Post-Acute Network, a
health care provider, since 1996, prior to which he was employed by Leaseway
Transportation Corp. for 14 years, last serving as Senior Vice President and
Chief Financial and Administrative Officer.
36
<PAGE> 39
Mr. Passman joined Harland in 1996 as Senior Vice President and Chief
Financial Officer and assumed his present position in 1999. He was previously
employed by Deloitte & Touche LLP for 20 years, last serving as Managing Partner
of its Atlanta office.
Mr. Rogers has been employed as an executive officer of Harland for more
than the past five years.
Mr. Tuff was elected President and Chief Executive Officer of Harland in
1998 and was elected Chairman in April 2000. For the prior five years he served
as President and Chief Executive Officer of Boral Industries, Inc., managing the
North American and European operations of Australian-based Boral, Ltd., a world
leader in building and construction materials.
Mr. Walters joined Harland in 1996. He previously served as Executive Vice
President of First Financial Management Corporation, a diversified information
and financial services company.
37
<PAGE> 40
APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
JOHN H. HARLAND COMPANY,
JH ACQUISITION CORP.
AND
CONCENTREX INCORPORATED
DATED AS OF JULY 17, 2000
38
<PAGE> 41
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
THE OFFER AND MERGER........................................................... A-1
Section 1.1. The Offer................................................... A-1
Section 1.2. Consent to Offer; Schedule 14D-9............................ A-3
Section 1.3. The Merger.................................................. A-3
Section 1.4. Effective Time; Closing..................................... A-3
Section 1.5. Effect of the Merger........................................ A-3
Section 1.6. Conversion of Company Common Stock.......................... A-4
Section 1.7. [Intentionally left blank].................................. A-4
Section 1.8. Stock Options............................................... A-4
Section 1.9. Surrender of Shares of Company Common Stock; Stock Transfer
Books..................................................... A-4
THE SURVIVING CORPORATION...................................................... A-6
Section 2.1. Articles of Incorporation................................... A-6
Section 2.2. Bylaws...................................................... A-6
Section 2.3. Directors and Officers...................................... A-6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................... A-6
Section 3.1. Organization and Standing................................... A-6
Section 3.2. Capitalization.............................................. A-6
Section 3.3. Authority for Agreement..................................... A-7
Section 3.4. No Conflict................................................. A-8
Section 3.5. Required Filings and Consents............................... A-8
Section 3.6. Compliance.................................................. A-8
Section 3.7. SEC Filings, Financial Statements........................... A-8
Section 3.8. Absence of Certain Changes or Events........................ A-9
Section 3.9. Taxes....................................................... A-9
Section 3.10. Assets...................................................... A-10
Section 3.11. Change of Control Agreements................................ A-10
Section 3.12. Litigation.................................................. A-11
Section 3.13. Contracts and Commitments................................... A-11
Section 3.14. Information Supplied........................................ A-11
Section 3.15. Employee Benefit Plans...................................... A-12
Section 3.16. Labor and Employment Matters................................ A-13
Section 3.17. Environmental Compliance and Disclosure..................... A-14
Section 3.18. Intellectual Property....................................... A-15
Section 3.19. Brokers..................................................... A-16
Section 3.20. Insurance Policies.......................................... A-16
Section 3.21. Notes and Accounts Receivable............................... A-16
Section 3.22. Transactions with Affiliates................................ A-16
Section 3.23. No Existing Discussions..................................... A-17
Section 3.24. Stockholders' Rights Agreement.............................. A-17
Section 3.25. Major Suppliers and Customers............................... A-17
Section 3.26. Liability Assumptions....................................... A-17
Section 3.27. Disclosure.................................................. A-17
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.................... A-18
Section 4.1. Organization and Standing................................... A-18
Section 4.2. Authority for Agreement..................................... A-18
Section 4.3. No Conflict................................................. A-18
Section 4.4. Required Filings and Consents............................... A-18
Section 4.5. Information Supplied........................................ A-18
Section 4.6. Brokers..................................................... A-19
</TABLE>
A-i
<PAGE> 42
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE V COVENANTS............................................................ A-19
Section 5.1. Conduct of the Business Pending the Merger.................. A-19
Section 5.2. Access to Information; Confidentiality...................... A-20
Section 5.3. Notification of Certain Matters............................. A-20
Section 5.4. Reasonable Best Efforts; Further Assurances................. A-21
Section 5.5. Board Recommendations....................................... A-22
Section 5.6. Stockholder Litigation...................................... A-23
Section 5.7. Indemnification............................................. A-23
Section 5.8. Public Announcements........................................ A-24
Section 5.9. Acquisition Proposals....................................... A-24
Section 5.10. Company Stockholders' Meeting............................... A-24
Section 5.11. Proxy Statement............................................. A-24
Section 5.12. Stockholder Lists........................................... A-25
Section 5.13. Shares Held by Company Subsidiaries......................... A-25
Section 5.14. Directors................................................... A-25
Section 5.15. Undertakings of Parent...................................... A-26
Section 5.16. Director Resignations....................................... A-26
Section 5.17. Company Options............................................. A-26
Section 5.18. Series A Preferred Stock.................................... A-26
ARTICLE VI CONDITIONS.......................................................... A-26
Section 6.1. Conditions to the Obligation of Each Party.................. A-26
Section 6.2. Conditions to Obligations of Parent and Sub to Effect the
Merger.................................................. A-27
Section 6.3. Conditions to Obligations of the Company to Effect the
Merger.................................................... A-27
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.................................. A-28
Section 7.1. Termination................................................. A-28
Section 7.2. Effect of Termination....................................... A-28
Section 7.3. Amendments.................................................. A-29
Section 7.4. Waiver...................................................... A-29
ARTICLE VIII GENERAL PROVISIONS................................................ A-30
Section 8.1. No Third Party Beneficiaries................................ A-30
Section 8.2. Entire Agreement............................................ A-30
Section 8.3. Succession and Assignment................................... A-30
Section 8.4. Counterparts................................................ A-30
Section 8.5. Headings.................................................... A-30
Section 8.6. Governing Law............................................... A-30
Section 8.7. Severability................................................ A-30
Section 8.8. Specific Performance........................................ A-30
Section 8.9. Construction................................................ A-30
Section 8.10. Non-Survival of Representations and Warranties and
Agreements................................................ A-30
Section 8.11. Certain Definitions......................................... A-31
Section 8.12. Fees and Expenses........................................... A-31
Section 8.13. Notices..................................................... A-31
</TABLE>
A-ii
<PAGE> 43
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 17,
2000 by and among John H. Harland Company, a Georgia corporation ("Parent"), JH
Acquisition Corp., an Oregon corporation ("Sub") and wholly owned subsidiary of
Parent, and Concentrex Incorporated, an Oregon corporation (the "Company").
WITNESSETH:
WHEREAS, the parties to this Agreement desire to effect the acquisition of
the Company by Sub;
WHEREAS, in furtherance of the foregoing, upon the terms and subject to the
conditions of this Agreement and in accordance with the Oregon Business
Corporation Act of the State of Oregon (the "OBCA"), Sub will make a cash tender
offer described in Section 1.1 and thereafter Sub will merge with and into the
Company (the "Merger") in accordance with the provisions of the OBCA, with the
Company as the surviving corporation;
WHEREAS, as of the date hereof, Matthew W. Chapman, Robert P. Chamness and
Robert T. Jett (collectively, the "Tendering Stockholders") are the record
owners and beneficially own or have the power to vote shares of Company Common
Stock (as hereinafter defined), representing approximately 8.47% of the
outstanding Company Common Stock;
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to Parent entering into this Agreement, the
Tendering Stockholders have entered into a stockholder's agreement, dated as of
the date hereof (the "Stockholder's Agreement"), pursuant to which, among other
things, the Tendering Stockholders have agreed to tender their shares of Company
Common Stock in the Initial Offer (as hereinafter defined);
WHEREAS, the Board of Directors of the Company has determined that the
Initial Offer, the Subsequent Offer (as hereinafter defined), the Merger and
this Agreement are fair to, and in the best interests of, the Company and the
holders of Company Common Stock;
WHEREAS, the Board of Directors of Parent and Sub have each approved this
Agreement, the Initial Offer, the Subsequent Offer and the Merger, upon the
terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has approved this Agreement,
the Initial Offer, the Subsequent Offer and the Merger, and the transactions
contemplated hereby, which approval was based in part on the opinion of Allen &
Company (the "Independent Advisor"), independent financial advisor to the Board
of Directors of the Company, that, as of the date of such opinion and based on
the assumptions, qualifications and limitations contained therein, the
consideration to be received by the Company's stockholders for their shares of
Company Common Stock in the Initial Offer, the Subsequent Offer and in the
Merger is fair, from a financial point of view, to these stockholders;
WHEREAS, the Board of Directors of the Company has resolved to recommend
that the holders of the Company Common Stock accept the Initial Offer and the
Subsequent Offer, as applicable, and approve the Merger, this Agreement and the
transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1. The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 7.1 hereof and nothing shall have occurred that
would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, as promptly as practicable after the date hereof, Parent
shall cause Sub to commence and Sub shall commence (within the meaning of
Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) an offer to purchase all of the issued and outstanding
shares of the Company Common Stock at a price of $7.00 per share (the
"Offer Price") net to the seller in cash, but subject to any withholding
required by law (the "Initial Offer").
A-1
<PAGE> 44
(b) The Initial Offer shall be subject to the conditions set forth in
Annex I hereto. Sub shall not except as expressly contemplated hereby,
without the prior written consent of the Company, make any change in the
terms or conditions of the Initial Offer that is adverse to the holders of
the Company Common Stock in any material respect, decrease the Offer Price
or impose material conditions to the Initial Offer other than those set
forth in Annex I hereto (it being agreed that a waiver by Sub of any
condition, in its sole discretion, shall not be deemed to be adverse to the
holders of the Company Common Stock); provided that:
(i) if on any scheduled expiration date of the Initial Offer all
conditions to the Initial Offer shall not have been satisfied or waived,
the Initial Offer may, but need not, be extended from time to time
without the consent of the Company for such period of time as is
reasonably expected by Sub to be necessary to satisfy the unsatisfied
conditions;
(ii) the Initial Offer may be extended by Sub without the consent
of the Company for any period required by any rule, regulation,
interpretation or position of the United States Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Initial
Offer; and
(iii) if at any scheduled expiration date of the Initial Offer all
conditions to the Initial Offer shall have been satisfied but less than
a number of shares of Company Common Stock that, together with the
number of shares of Company Common Stock owned by Parent and Sub,
represents ninety percent (90%) of the outstanding shares of Company
Common Stock, on a fully-diluted basis, shall have been tendered into
the Initial Offer, Sub shall be entitled to (but not required to) extend
the Initial Offer from time to time without the consent of the Company
(but in no event beyond one week after the date on which all of the
conditions set forth in Annex I have been satisfied) in order to permit
Sub to solicit additional shares to be tendered into the Initial Offer.
Notwithstanding the foregoing, Sub may not, without the consent of
the Company, extend the scheduled expiration date of the Initial Offer
beyond September 28, 2000; provided, however, Sub may extend the
scheduled expiration date of the Initial Offer beyond such date for such
period of time as is reasonably expected by Sub to be necessary to
satisfy the unsatisfied conditions if Sub has not purchased shares of
Company Common Stock pursuant to the Initial Offer due to a delay in the
consummation of the Initial Offer resulting from (i) review of the Offer
Documents (as hereinafter defined) by the SEC, (ii) receipt of
regulatory approvals required under applicable Law (as hereinafter
defined), including, but not limited to approvals under the HSR Act (as
hereinafter defined) or (iii) the existence of any of the conditions
contained in Sections (i) or (ii) of Annex I hereto. Sub shall, unless
Sub shall have in its sole discretion exercised its right to extend the
termination date of the Initial Offer pursuant to this Section 1.1(b),
on the terms and subject to the prior satisfaction or waiver of the
conditions of the Initial Offer, accept for payment and purchase, as
soon as permitted under the terms of the Initial Offer, all shares of
the Company Common Stock validly tendered and not withdrawn prior to the
expiration date of the Initial Offer. It is agreed that the conditions
to the Initial Offer are solely for the benefit of Sub and may be
asserted by Sub regardless of the circumstances giving rise to any such
condition (including any action or inaction by Sub) or may, but need
not, be waived by Sub, in whole or in part at any time and from time to
time, in its sole discretion.
(c) The Initial Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") that is subject to the conditions set forth in
Annex I hereto. As soon as practicable on the date of commencement of the
Initial Offer, Sub (and, to the extent required by law, Parent) shall file
with the SEC a Tender Offer Statement on Schedule TO (together with all
supplements and amendments thereto, the "Schedule TO" or the "Offer
Documents"). The Offer to Purchase shall provide for an initial expiration
date of twenty (20) business days (as defined in Rule 14d-1 under the
Exchange Act) from the date of commencement, subject to Sub's right to
extend the expiration date of the Initial Offer pursuant to Section 1.1(b).
(d) Notwithstanding anything herein to the contrary, Sub may, at its
sole option, after the date the Shares of Company Common Stock are
purchased by Sub pursuant to the Initial Offer (the "Purchase Date"),
commence a subsequent offer for shares of Company Common Stock pursuant to
Rule 14d-11 under the Exchange Act on economic terms identical to the
Initial Offer for such period as Sub may determine (the "Subsequent Offer")
which Subsequent Offer shall comply in all material respects with the
provisions of all applicable United States securities laws.
A-2
<PAGE> 45
(e) The Offer Documents (and any documents filed with the SEC pursuant
to a Subsequent Offer) shall comply in all material respects with the
provisions of all applicable United States federal securities laws. Each
party hereto shall promptly supplement, update and correct any information
provided by it for use in the Offer Documents (and any documents filed with
the SEC pursuant to a Subsequent Offer) if, and to the extent that, it is
or shall have become incomplete, false or misleading. In any such event,
Sub shall take all steps necessary to cause the Offer Documents (and any
documents filed with the SEC pursuant to a Subsequent Offer) as so
supplemented, updated or corrected to be filed with the SEC and to be
disseminated to the Company Stockholders as and to the extent required by
applicable United States federal securities laws. The Company and its
counsel, with respect to the Schedule TO (or any documents to be filed with
the SEC pursuant to a Subsequent Offer), shall be given an opportunity to
review and comment on such filing and each supplement, amendment or
response to comments with respect thereto prior to being filed with or
delivered to the SEC.
Section 1.2. Consent to Offer; Schedule 14D-9. The Company hereby
approves of and consents to the Initial Offer and the Subsequent Offer and to
the inclusion in the Initial Offer and Subsequent Offer and the related
documents thereto the recommendations of the Board of Directors of the Company
set forth in Section 3.3(b) hereof. Simultaneously with or as soon as
practicable on the day of filing of the Schedule TO by Sub, the Company shall
file with the SEC a Tender Offer Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all supplements and amendments thereto, the
"Schedule 14D-9") that will comply in all material respects with the provisions
of all applicable United States federal securities laws which shall reflect the
recommendations of the Board of Directors of the Company set forth in Section
3.3(b) hereof. Each party shall promptly supplement, update and correct any
information provided by it for use in the Schedule 14D-9 if, and to the extent
that, it is or shall have become incomplete, false or misleading. In any such
event, the Company shall take all steps necessary to cause the Schedule 14D-9 as
so supplemented, updated or corrected to be filed with the SEC and to be
disseminated to the Company Stockholders, in each case, as and to the extent
required by applicable United States federal securities laws. Each other party
hereto and its respective counsel shall be given an opportunity to review and
comment on the Schedule 14D-9 and each supplement, amendment or response to
comments with respect thereto prior to being filed with or delivered to the SEC.
The Company shall cooperate with Sub with respect to the Subsequent Offer, if
applicable, and shall provide to Sub all documentation that Sub may reasonably
request in connection with respect to such Subsequent Offer.
Section 1.3. The Merger. Upon the terms and subject to the conditions of
this Agreement, and in accordance with the OBCA, at the Effective Time (as
hereinafter defined), Sub shall be merged with and into the Company. As a result
of the Merger, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation following the Merger (the
"Surviving Corporation"). The corporate existence of the Company, with all its
purposes, rights, privileges, franchises, powers and objects, shall continue
unaffected and unimpaired by the Merger and, as the Surviving Corporation, it
shall be governed by the laws of the State of Oregon.
Section 1.4. Effective Time; Closing. As promptly as practicable (and in
any event within five (5) business days) after the satisfaction or waiver of the
conditions set forth in Article VI hereof, the parties hereto shall cause the
Merger to be consummated by filing articles of merger or plan of merger, if
applicable (the "Articles of Merger"), with the Secretary of State of the State
of Oregon and by making all other filings or recordings required under the OBCA
in connection with the Merger, in such form as is required by, and executed in
accordance with the relevant provisions of, the OBCA. The Merger shall become
effective at such time as the Articles of Merger are duly filed with the
Secretary of State of the State of Oregon, or at such other time as the parties
hereto agree shall be specified in the Articles of Merger (the date and time the
Merger becomes effective, the "Effective Time"). On the date of such filing, a
closing (the "Closing") shall be held at 10:00 a.m., Pacific Time, at the
offices of King & Spalding, 191 Peachtree Street, Atlanta, Georgia 30303, or at
such other time and location as the parties hereto shall otherwise agree.
Section 1.5. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the OBCA.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of the Company
and Sub shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
A-3
<PAGE> 46
Section 1.6. Conversion of Company Common Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of Sub, the Company
or the holders of any of the following securities:
(a) Each share of common stock of the Company, no par value (the
"Company Common Stock"), issued and outstanding immediately prior to the
Effective Time (other than shares canceled pursuant to Section 1.6(c), if
any) shall be canceled and shall by virtue of the Merger and without any
action on the part of the holder thereof be converted automatically into
the right to receive an amount in cash equal to $7.00 payable, without
interest, to the holder of such share of Company Common Stock, upon
surrender of the certificate that formerly evidenced such share of Company
Common Stock in the manner provided in Section 1.9 (the "Merger
Consideration");
(b) [INTENTIONALLY LEFT BLANK.]
(c) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time that is owned by Parent or Sub (or
a wholly owned subsidiary of Parent) and each share of Company Common Stock
and Preferred Stock (collectively, the "Company Stock") that is owned by
the Company as treasury stock or owned by a Subsidiary of the Company shall
be canceled and retired and cease to exist and no payment or distribution
shall be made with respect thereto;
(d) At the Effective Time, all shares of the Company Common Stock
converted pursuant to Section 1.6(a) shall no longer be outstanding and
shall automatically be canceled and retired and cease to exist, and each
holder of a certificate ("Certificate") representing any such shares of
Company Common Stock shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration in accordance with
Section 1.6(a); and
(e) Each share of common stock, no par value per share, of Sub issued
and outstanding immediately prior to the Effective Time shall be converted
into and become one validly issued, fully paid and nonassessable share of
common stock, no par value per share, of the Surviving Corporation and
shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.
Section 1.7. [INTENTIONALLY LEFT BLANK.]
Section 1.8. Stock Options. The Company shall, by written notice to each
holder of an option to purchase shares of Company Common Stock (the "Company
Options"), offer to pay such holder upon consummation of the Merger, in exchange
for the cancellation of all of such holder's Company Options (regardless of
exercise price) upon the consummation of the Merger, an amount in cash
determined by multiplying (A) the excess, if any, of the per share Merger
Consideration over the applicable exercise price per share of the Company
Options owned by such holder by (B) the number of shares of Company Common Stock
such holder could have purchased had such holder exercised such Company Options
(with an exercise price less than the per share Merger Consideration) in full
immediately prior to the consummation of the Merger (such amount is hereinafter
referred to as the "Option Consideration"), and all Company Options of such
holder shall thereafter be canceled.
Section 1.9. Surrender of Shares of Company Common Stock; Stock Transfer
Books.
(a) Prior to the Effective Time, Parent shall designate a bank or
trust company to act as agent (the "Paying Agent") for the holders of
shares of Company Common Stock to receive the funds necessary to make the
payments to such holders pursuant to Section 1.6 upon surrender of their
Certificates. Parent will, on or prior to the Effective Time, deposit with
the Paying Agent the Merger Consideration to be paid in respect of the
shares of Company Common Stock (the "Fund"). The Fund shall be invested by
the Paying Agent as directed by Parent. Any net profit resulting from, or
interest or income produced by, such investments, shall be payable to the
Surviving Corporation. Parent shall replace any monies lost through any
investment made pursuant to this Section 1.9(a). The Paying Agent shall
make the payments provided in Section 1.6.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder
of record of shares of Company Common Stock entitled to receive the Merger
Consideration pursuant to Section 1.6 a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent) and instructions for use in effecting the
surrender of the Certificates pursuant to such letter of transmittal. Upon
surrender to the Paying Agent of a Certificate, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be
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required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration
for each share of Company Common Stock formerly evidenced by such
Certificate, and such Certificate shall then be canceled. Until so
surrendered, each such Certificate shall, at and after the Effective Time,
represent for all purposes, only the right to receive such Merger
Consideration. No interest shall accrue or be paid to any beneficial owner
of shares of Company Common Stock or any holder of any Certificate with
respect to the Merger Consideration payable upon the surrender of any
Certificate. If payment of the Merger Consideration is to be made to a
person other than the person in whose name the surrendered Certificate is
registered on the stock transfer books of the Company, it shall be a
condition of payment that the Certificate so surrendered shall be endorsed
in blank or to the Paying Agent or otherwise be in proper form for transfer
and that the person requesting such payment shall have paid all transfer
and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such taxes either have been paid or are not
applicable. If any Certificate shall have been lost, stolen or destroyed,
upon making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation or Parent, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation or Parent may direct,
as indemnity against any claim that may be made against it with respect to
such Certificate, the Paying Agent will issue in exchange for such lost,
stolen or destroyed Certificate the applicable Merger Consideration such
holder is entitled to receive pursuant to Section 1.6.
(c) At any time following the sixth (6th) month after the Effective
Time, the Surviving Corporation shall be entitled to require the Paying
Agent to deliver to it any portion of the Fund which had been made
available to the Paying Agent and not disbursed to holders of shares of
Company Common Stock (including, without limitation, all interest and other
income received by the Paying Agent in respect of all amounts held in the
Fund or other funds made available to it), and thereafter each such holder
shall be entitled to look only to the Surviving Corporation (subject to
abandoned property, escheat and other similar laws), and only as general
creditors thereof, with respect to any Merger Consideration that may be
payable upon due surrender of the Certificates held by such holder. If any
Certificates representing shares of Company Common Stock shall not have
been surrendered immediately prior to such date on which the Merger
Consideration in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity (as hereinafter defined),
any such cash, shares, dividends or distributions payable in respect of
such Certificate shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto. Notwithstanding the
foregoing, none of the Surviving Corporation, Parent, Sub or the Paying
Agent shall be liable to any holder of a share of Company Common Stock for
any Merger Consideration delivered in respect of such share of Company
Common Stock to a public official pursuant to any abandoned property,
escheat or other similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company.
From and after the Effective Time, except for Parent and Sub, the holders
of shares of Company Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares
of Company Common Stock except as otherwise provided herein or by
applicable law, and all cash paid pursuant to this Article I upon the
surrender or exchange of Certificates shall be deemed to have been paid in
full satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificate.
(e) Parent, Sub, the Company, the Surviving Corporation and the Paying
Agent, as the case may be, shall be entitled to deduct and withhold from
the Offer Price, Merger Consideration or Option Consideration, as
applicable, otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock and Company Options such amounts that
Parent, Sub, the Company, the Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "Code"), the rules
and regulations promulgated thereunder or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by Parent, Sub,
the Company, the Surviving Corporation or the Paying Agent, such amounts
shall be treated for all purposes of this Agreement as having been paid to
the holder of the shares of Company Common Stock and Company Options in
respect of which such deduction and withholding was made by Parent, Sub,
the Company, the Surviving Corporation or the Paying Agent.
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ARTICLE II
THE SURVIVING CORPORATION
Section 2.1. Articles of Incorporation. The Articles of Incorporation of
Sub as in effect immediately prior to the Effective Time shall be the Articles
of Incorporation of the Surviving Corporation, until the same shall thereafter
be altered, amended or repealed in accordance with applicable law or such
Articles of Incorporation.
Section 2.2. Bylaws. The Bylaws of the Company as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable law, the Articles of Incorporation of the Surviving Corporation
or such Bylaws.
Section 2.3. Directors and Officers. From and after the Effective Time,
until the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified in accordance with
applicable law, (i) the directors of Sub at the Effective Time shall be the
directors of the Surviving Corporation, and (ii) the officers of Sub at the
Effective Time shall be the officers of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except to the extent set forth in the Company Disclosure Letter delivered
by the Company to the other parties hereto concurrently with the execution of
this Agreement (the "Company Disclosure Letter"), the Company represents and
warrants to each of the other parties hereto as follows:
Section 3.1. Organization and Standing. Each of the Company and each
Subsidiary (as defined below) (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has full corporate power and authority and all necessary
government approvals to own, lease and operate its properties and assets and to
conduct its business as presently conducted and (iii) is duly qualified or
licensed to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary. The Company has furnished or made available to Parent true and
complete copies of its articles of incorporation (including any certificates of
designations attached thereto, the "Company Articles of Incorporation") and
bylaws (the "Company Bylaws") and the articles of incorporation and bylaws (or
equivalent organizational documents) of each Subsidiary, each as amended to
date. Such articles of incorporation, bylaws or equivalent organizational
documents are in full force and effect, and neither the Company nor any
Subsidiary is in violation of any provision of its articles of incorporation,
bylaws or equivalent organizational documents.
Section 3.2. Capitalization. The authorized capital stock of the Company
consists of 10,000,000 shares of Company Common Stock; 10,300 shares of Class A
Preferred Stock, no par value per share (the "Series A Preferred Stock");
566,500 shares of Class C Preferred Stock, par value $10.00 per share (the
"Series C Preferred Stock"); and 5,000,000 shares of Series Preferred Stock, no
par value per share (the "Series Preferred Stock," and together with the Series
A Preferred Stock and Series C Preferred Stock, the "Preferred Stock"). As of
the date hereof, (i) 5,411,212 shares of Company Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) 1,491,689 Company Options are outstanding and,
except as set forth in Section 3.2 of the Company Disclosure Letter, all are
issued pursuant to the Company's 1995 Consolidated and Restated Stock Option
Plan, the Nonqualified Stock Option Plan dated October 15, 1993, the Amended and
Restated Outside Director Restricted Stock Plan, the Restated Outside Director
Compensation and Stock Option Plan, the Nonqualified Option Agreements dated
January 21, 1999, the Nonqualified Option Agreements dated April 18, 2000 or the
1994 Equity Incentive Plan of ULTRADATA Corporation (collectively, the "Company
Stock Option Plans") each such option entitling the holder thereof to purchase
one share of Company Common Stock, and 290,900 shares of Company Common Stock
are authorized and reserved for future issuance pursuant to the Company Stock
Option Plans, (iii) 127,449 shares of Company Common Stock are obligated to be
issued to employees of the Company pursuant to the Concentrex Employee Savings
and Stock Ownership Plan, (iv) not more than 7,017 shares of Series A Preferred
Stock are issued and outstanding, all of which are validly issued, fully paid
and nonassessable and free of preemptive rights, (v) no shares of Series C
Preferred Stock or Series Preferred Stock are issued or outstanding, and (vi)
556,822 shares of
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Company Common Stock are reserved for future issuance pursuant to warrants to
purchase shares of Company Common Stock. Section 3.2 of the Company Disclosure
Letter sets forth a true and complete list of the outstanding Company Options
with the exercise price. Except as set forth above or in Section 3.2 of the
Company Disclosure Letter, there are no options, warrants, convertible
securities, subscriptions, stock appreciation rights, phantom stock plans or
stock equivalents or other rights, agreements, arrangements or commitments
(contingent or otherwise) of any character issued or authorized by the Company
relating to the issued or unissued capital stock of the Company or any
Subsidiary or obligating the Company or any Subsidiary to issue or sell any
shares of capital stock of, or options, warrants, convertible securities,
subscriptions or other equity interests in, the Company or any Subsidiary. All
shares of Company Stock subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
Except as set forth in Section 3.2 of the Company Disclosure Letter, there are
no outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of Company Stock or any
capital stock of any Subsidiary or to pay any dividend or make any other
distribution in respect thereof or make any investment (in the form of a loan,
capital contribution or otherwise) in, any person. Section 3.2 of the Company
Disclosure Letter sets forth a correct and complete list of each corporation,
association, subsidiary, partnership, limited liability company or other entity
of which the Company controls, directly or indirectly, 30% or more of the
outstanding equity interests (each a "Subsidiary" and collectively, the
"Subsidiaries"). Except as set forth in Section 3.2 of the Company Disclosure
Letter, the Company owns beneficially and of record all of the issued and
outstanding capital stock of each Subsidiary and does not own an equity interest
in any other corporation, association, partnership, limited liability company or
other entity, other than in the Subsidiaries. Each outstanding share of capital
stock of each Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by the Company or another Subsidiary is
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on the Company's or such other
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever.
Section 3.3. Authority for Agreement.
(a) The Company has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and, subject
to obtaining any necessary stockholder approval, to consummate the Initial
Offer, the Subsequent Offer, the Merger and the other transactions
contemplated by this Agreement. The execution, delivery and performance by
the Company of this Agreement, and the approval by the Company of the
Initial Offer and the Subsequent Offer, and the approval and consummation
by the Company of the Merger and the other transactions contemplated by
this Agreement, have been duly authorized by all necessary corporate action
(including, without limitation, the approval of the Board of Directors of
the Company) and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the Initial
Offer, the Subsequent Offer, the Merger or the other transactions
contemplated by this Agreement (other than, with respect to the Merger, the
approval and adoption of this Agreement by the affirmative vote of a
majority of the voting power of the then outstanding shares of Company
Common Stock and the filing and recordation of appropriate merger documents
as required by the OBCA). This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Sub, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms. The affirmative vote of holders of the outstanding shares
of Company Common Stock entitled to vote is the only vote of the Company's
Stockholders necessary to approve this Agreement, the Merger and the other
transactions contemplated by this Agreement.
(b) At a meeting duly called and held on July 14, 2000, the Board of
Directors of the Company (i) determined that this Agreement and the
Stockholder's Agreements and the other transactions contemplated hereby and
thereby, including the Initial Offer, the Subsequent Offer and the Merger,
are fair to and in the best interests of the Company and the Company
Stockholders, (ii) approved, authorized and adopted this Agreement, the
Initial Offer, the Subsequent Offer, the Merger and the other transactions
contemplated hereby, and (iii) resolved to recommend approval and adoption
of this Agreement, the Initial Offer, the Subsequent Offer and the Merger
by the Company Stockholders. The actions taken by the Board of Directors of
the Company constitute approval of the Initial Offer, the Subsequent Offer,
the Merger, this Agreement and the Stockholder's Agreements and the other
transactions contemplated hereby and thereby by the Board of Directors of
the Company under the provisions of Sections 60.825 et seq. and 60.801 et
seq. of the OBCA and Article VI of the Company Articles of Incorporation
such that neither
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Sections 60.825 et seq. nor 60.801 et seq. of the OBCA nor Article VI of
the Company Articles of Incorporation apply to this Agreement, the
Stockholder's Agreements or the transactions contemplated hereby or
thereby. Other than Sections 60.825 et seq. and Articles VI of the Company
Articles of Incorporation, no state antitakeover or similar statute or
other provision in the Company's or its Subsidiaries' governing documents
is applicable to Parent or Sub in connection with the Initial Offer, the
Subsequent Offer, the Merger, this Agreement or the Stockholder's
Agreements or any of the transactions contemplated hereby or thereby. The
Company has amended its bylaws to provide that the Company, Parent and Sub
and the Initial Offer, the Subsequent Offer, the Merger, this Agreement and
the Stockholder's Agreements and the transactions contemplated hereby and
thereby are not subject to the Oregon control share acquisition statute
(OBCA Sections 601.801 et seq.).
(c) The Independent Advisor has delivered to the Board of Directors of
the Company its written opinion, dated as of the date of this Agreement,
that, as of such date and based on the assumptions, qualifications and
limitations contained therein, the consideration to be received by the
Company Stockholders in the Initial Offer, the Subsequent Offer and the
Merger is fair to such holders from a financial point of view. A copy of
such opinion is included in Section 3.3(c) of the Company Disclosure
Letter.
Section 3.4. No Conflict. The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by the Company and the
consummation of the Initial Offer, the Subsequent Offer and the Merger and the
other transactions contemplated by this Agreement will not, (i) conflict with or
violate the Company Articles of Incorporation or Company Bylaws or equivalent
organizational documents of any of its Subsidiaries, (ii) subject to
Section 3.5, conflict with or violate any United States federal, state or local
or any foreign statute, law, rule, regulation, ordinance, code, order, judgment,
decree or any other requirement or rule of law (a "Law") applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected, or (iii) result in a
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, give to others any right of
termination, amendment, acceleration or cancellation of, result in triggering
any payment or other obligations, or result in the creation of a lien or other
encumbrance on any property or asset of the Company or any of its Subsidiaries
in any case that would, or would reasonably be expected to, result in a Company
Material Adverse Effect pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation or Material Contract (as hereinafter defined) to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any property or asset of any of them is bound or affected.
Section 3.5. Required Filings and Consents. The execution and delivery of
this Agreement by the Company do not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any United States federal, state or local or
any foreign government or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), except (i) for applicable requirements, if any, of the
Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws") and filing
and recordation of appropriate merger documents as required by the OBCA, (ii)
for those required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and (iii) for filings contemplated by Sections 1.1,
1.2 and 3.14 hereof.
Section 3.6. Compliance. Each of the Company and its Subsidiaries (i) has
been operated at all times in compliance in all material respects with all Laws
applicable to the Company or any of its Subsidiaries or by which any property,
business or asset of the Company or any of its Subsidiaries is bound or affected
and (ii) is not in default or violation in any material respect, individually or
in the aggregate, of any notes, bonds, mortgages, indentures, leases, licenses,
permits, franchises or Material Contract to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any property or asset of the Company or any of its Subsidiaries is bound or
affected.
Section 3.7. SEC Filings, Financial Statements.
(a) The Company and each Subsidiary, as necessary, has filed all
forms, reports, statements and documents required to be filed with the SEC
since January 1, 1997 (the "SEC Reports"), each of which has complied in
all material respects with the applicable requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and the rules and
regulations promulgated thereunder, or the Exchange Act, and the rules and
regulations promulgated thereunder. None of the SEC Reports (including, but
not limited to, any financial statements or
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schedules included or incorporated by reference therein) contained when
filed any untrue statement of a material fact or omitted or omits to state
a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Except to the
extent that information contained in any SEC Report has been revised or
superseded by a later filed SEC Report, none of the SEC Reports contains
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) All of the financial statements included in the SEC Reports, in
each case, including any related notes thereto, as filed with the SEC
(collectively referred to as the "Company Financial Statements"), have been
prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as may be permitted by Form 10-Q of the SEC and
subject, in the case of the unaudited statements, to normal, recurring
audit adjustments) and fairly present the consolidated financial position
of the Company and its Subsidiaries at the respective date thereof and the
consolidated results of its operations and changes in cash flows for the
periods indicated.
(c) There are no liabilities of the Company or any of its Subsidiaries
of any kind whatsoever, whether or not accrued and whether or not
contingent or absolute, that are material to the Company and its
Subsidiaries, taken as a whole, other than (i) liabilities disclosed or
provided for in the consolidated balance sheet of the Company and its
Subsidiaries at December 31, 1999, including the notes thereto, (ii)
liabilities disclosed in the SEC Reports or in the Company's preliminary
June 2000 financial statements attached hereto on Section 3.7(c) of the
Company Disclosure Letter, (iii) liabilities incurred on behalf of the
Company in connection with this Agreement and the contemplated Merger, and
(iv) liabilities incurred in the ordinary course of business consistent
with past practice since December 31, 1999, none of which liabilities
pursuant to this clause (iv) are, individually or in the aggregate,
reasonably likely to be materially adverse to the Company.
(d) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications which have not
yet been filed with the SEC to agreements, documents or other instruments
which previously had been filed by the Company with the SEC as exhibits to
the SEC Reports pursuant to the Securities Act and the rules and
regulations promulgated thereunder or the Exchange Act and the rules and
regulations promulgated thereunder.
Section 3.8. Absence of Certain Changes or Events. Except as contemplated
by this Agreement, since December 31, 1999 (and following the date hereof, other
than with respect to events or occurrences that are the result of the
transactions contemplated by this Agreement), the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary course and
consistent with prior practice and there has not been (i) any event or
occurrence of any condition that has had or would reasonably be expected to have
a Company Material Adverse Effect (as hereinafter defined), (ii) any
declaration, setting aside or payment of any dividend or any other distribution
with respect to any of the capital stock of the Company or any Subsidiary, (iii)
any material change in accounting methods, principles or practices employed by
the Company, or (iv) any action of the type described in Sections 5.1(b) or
5.1(c) which had such action been taken after the date of this Agreement would
be in violation of any such Section.
Section 3.9. Taxes. The Company and each of its Subsidiaries have timely
filed all Tax Returns (as hereinafter defined) required to be filed by any of
them. All such Tax Returns are true, correct and complete in all material
respects. All Taxes (as hereinafter defined) of the Company and its Subsidiaries
which are (i) shown as due on such Tax Returns, (ii) otherwise due and payable
or (iii) claimed or asserted by any taxing authority to be due, have been paid,
except for those Taxes being contested in good faith and for which adequate
reserves have been established in the financial statements included in the SEC
Reports in accordance with GAAP. There are no liens for any Taxes upon the
assets of the Company or any of its Subsidiaries, other than statutory liens for
Taxes not yet due and payable and liens for real estate Taxes contested in good
faith. The Company does not know of any proposed or threatened Tax claims or
assessments which, if upheld, could individually or in the aggregate have a
Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has made an election under Section 341(f) of the Code. Neither the Company nor
any of its Subsidiaries has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency. The Company and each Subsidiary has withheld and paid over to the
relevant
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taxing authority all Taxes required to have been withheld and paid in connection
with payments to employees, independent contractors, creditors, Stockholders or
other third parties. The unpaid Taxes of the Company and its Subsidiaries for
the current taxable period (A) did not, as of the most recent Company Financial
Statements, exceed the reserve for Tax liability set forth on the face of the
balance sheet in the most recent Company Financial Statements and (B) do not
exceed that reserve as adjusted for the passage of time through the Closing in
accordance with the past custom and practice of the Company and its Subsidiaries
in filing their Tax Returns. For purposes of this Agreement, (a) "Tax" (and,
with correlative meaning, "Taxes") means any federal, state, local or foreign
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, premium, withholding, alternative or added minimum, ad
valorem, transfer or excise tax, or any other tax, custom, duty, governmental
fee or other like assessment or charge of any kind whatsoever, together with any
interest or penalty or addition thereto, whether disputed or not, imposed by any
Governmental Entity, and (b) "Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return or declaration of estimated Tax.
Section 3.9 of the Company Disclosure Letter sets forth with reasonable
specificity: (i) all jurisdictions in which the Company or any Subsidiary
currently has a presence requiring it to pay Taxes (a "Taxable Presence") and
all jurisdictions in which the Company or any Subsidiary has had a Taxable
Presence since January 1, 1993, and (ii) all Tax Returns filed or due to be
filed applicable to the three year period ending on the date hereof. The Company
has previously provided Parent with all correspondence with any Tax authorities
pertaining to pending or completed audits since January 1, 1997.
Section 3.10. Assets.
(a) Except as set forth in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999 (the "10-K") or in
Section 3.10(a) of the Company Disclosure Letter, the Company and each of
its Subsidiaries have good and marketable title to, or a valid leasehold
interest in, all of their real and personal properties and assets reflected
in the 10-K or acquired after December 31, 1999 (other than assets disposed
of since December 31, 1999 in the ordinary course of business consistent
with past practice), in each case free and clear of all title defects,
liens, encumbrances and restrictions, except for (i) liens, encumbrances or
restrictions which secure indebtedness which are properly reflected in the
10-K; (ii) liens for Taxes accrued but not yet payable; (iii) liens arising
as a matter of law in the ordinary course of business with respect to
obligations incurred after December 31, 1999, provided that the obligations
secured by such liens are not delinquent; and (iv) liens that do not
individually or in the aggregate, materially detract from the value of the
assets subject thereto or materially impact the operation of the Company or
any Subsidiary. Section 3.10(a) of the Company Disclosure Letter sets forth
a true, correct and complete list of all real property (i) owned or leased
by the Company or a Subsidiary, (ii) as to which the Company or a
Subsidiary has a license, easement or right of way to use, (iii) as to
which the Company or a Subsidiary has the option to purchase, lease,
license or acquire an easement or right of way or (iv) in which the Company
or a Subsidiary has any other interest. Except as set forth in
Section 3.10(a) of the Company Disclosure Letter, the Company and each of
its Subsidiaries either own, or have valid leasehold or licensed interests
in, all properties and assets used by them in the conduct of their
business.
(b) Except as set forth in Section 3.10(b) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has any legal
obligation, absolute or contingent, to any other person to sell or
otherwise dispose of any of its assets outside of the ordinary course of
business consistent with past practice with an individual value of $25,000
or an aggregate value in excess of $250,000.
(c) The equipment of the Company and its Subsidiaries is in good
operating condition and repair (ordinary wear and tear excepted) and is
adequate for the uses to which it is being put, and none of such equipment
is in need of maintenance or repairs, except for ordinary routine
maintenance or repairs that are not in the aggregate material in nature or
cost. The equipment of the Company and its Subsidiaries is adequate for the
continued conduct of the business of the Company and its Subsidiaries after
the Effective Time in the same manner as conducted prior to the Effective
Time.
Section 3.11. Change of Control Agreements. Except as set forth in
Section 3.11 of the Company Disclosure Letter, neither the execution and
delivery of this Agreement nor the consummation of the Initial Offer, the
Subsequent Offer, or the Merger or the other transactions contemplated by this
Agreement, will (either alone or in conjunction with
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any other event) result in, cause the accelerated vesting or delivery of, or
increase the amount or value of, any payment or benefit to any director, officer
or employee of the Company. Except as set forth in Section 3.11 of the Company
Disclosure Letter, without limiting the generality of the foregoing, no amount
paid or payable by the Company in connection with the Initial Offer, the
Subsequent Offer or the Merger or the other transactions contemplated by this
Agreement, including accelerated vesting of options, (either solely as a result
thereof or as a result of such transactions in conjunction with any other event)
will be an "excess parachute payment" within the meaning of Section 280G of the
Code.
Section 3.12. Litigation. Except for such matters disclosed in Section
3.12 of the Company Disclosure Letter and such other matters which, in either
case, if adversely determined individually or in the aggregate, are not, and
would not reasonably be expected to be, material to the Company (except as
specifically disclosed in such Section 3.12 of the Company Disclosure Letter),
there are no claims, suits, actions, investigations, indictments or information,
or administrative, arbitration or other proceedings ("Litigation") pending or,
to the knowledge of the Company, threatened against the Company or any of its
Subsidiaries. There are no judgments, orders, injunctions, decrees, stipulations
or awards (whether rendered by a court, administrative agency, or by
arbitration, pursuant to a grievance or other procedure) against or relating to
the Company or any of its Subsidiaries which have not yet been paid or satisfied
in full or which contain ongoing obligations or restrict the Company's or its
Subsidiaries' activities going forward.
Section 3.13. Contracts and Commitments. Section 3.13 of the Company
Disclosure Letter sets forth a true, correct and complete list of the following
contracts to which the Company or a Subsidiary is a party (including every
amendment, modification or supplement to the foregoing): (i) any contracts of
employment and contracts or agreements entered into by the Company or a
Subsidiary, or, to the knowledge of the Company, entered into by any employee
which limit or restrict the Company, any Subsidiary or any employee from
engaging in any business in any jurisdiction, (ii) pending agreements or
arrangements for, or any agreements or arrangements with continuing obligations
relating to, the purchase or sale of any assets (otherwise than in the ordinary
course of business), (iii) all bonds, debentures, notes, loans, credit or loan
agreements or commitments, mortgages, indentures or guarantees or other
agreements or contracts relating to the borrowing of money involving amounts in
excess of $25,000, (iv) agreements with unions, material independent contractor
agreements and material leased or temporary employee agreements, (v) leases of
any real or personal property involving annual rent equal to or in excess of
$25,000 or more, (vi) all other contracts, agreements or commitments (other than
with respect to contracts, agreements or commitments of the type identified in
Section 3.25(b) of the Company Disclosure Letter) involving payments to be made
by or to the Company or a Subsidiary equal to or in excess of $100,000 in any
12-month period, and (vii) all contracts, agreements or commitments with Major
Customers identified in Section 3.25(b) of the Company Disclosure Letter
(individually, a "Material Contract" and collectively, "Material Contracts").
Except for agreements, arrangements or commitments disclosed in Section 3.13 of
the Company Disclosure Letter, neither the Company nor any of its Subsidiaries
is a party to any agreement, arrangement or commitment which is material to the
business of the Company or any of its Subsidiaries. The Company has delivered or
made available true, correct and complete copies of all such agreements,
arrangements and commitments to Parent. Neither the Company nor any of its
Subsidiaries is in default under any such agreement, arrangement or commitment
which defaults individually or in the aggregate would reasonably be expected to
result in a Company Material Adverse Effect.
Section 3.14. Information Supplied. None of the information supplied or
to be supplied by the Company in writing to Parent specifically for inclusion or
incorporation by reference in the Schedule TO will, at the date such documents
are first published, sent or delivered to Company Stockholders or, unless
promptly corrected, at any time during the pendency of the Initial Offer or
Subsequent Offer contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. Neither the Schedule 14D-9 at the date such document
is first published, sent or delivered to the Company Stockholders or, unless
promptly corrected, at any time during the pendency of the Initial Offer or
Subsequent Offer, nor the proxy statement to be mailed to the Company
Stockholders in connection with the meeting (the "Stockholder's Meeting") to be
called to consider the Merger (the "Proxy Statement") (if applicable) at the
date such document is first published, sent or delivered to Company Stockholders
or, unless promptly corrected, at any time during the pendency of the
Stockholder's Meeting, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The Schedule 14D-9 and the
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Proxy Statement (if applicable) will comply as to form and substance in all
material respects with the requirements of the Exchange Act and the applicable
rules and regulations of the SEC thereunder. Notwithstanding the foregoing, no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Sub for inclusion or incorporation by reference in any of the
foregoing documents.
Section 3.15. Employee Benefit Plans. All material employee benefit
plans, compensation arrangements and other benefit arrangements covering
employees of the Company or any of its Subsidiaries (the "Company Benefit
Plans") and all employee agreements providing for compensation, severance or
other benefits to any employee or former employee of the Company or any of its
Subsidiaries are listed Section 3.15 in the Company Disclosure Letter. Except as
set forth in Section 3.15 of the Company Disclosure Letter, true, correct and
complete copies of the following documents with respect to each of the Company
Benefit Plans have been provided by the Company to Parent: (i) any plans and
related trust documents and amendments thereto, (ii) summary plan descriptions
and material modifications thereto, (iii) general written communications made
since September 1, 1999 to employees relating to the Company Benefit Plans and
(iv) written descriptions of all non-written agreements relating to the Company
Benefit Plans. To the extent applicable, the Company Benefit Plans comply with
the requirements of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code, and any Company Benefit Plan intended to be
qualified under Section 401(a) of the Code has received a determination letter
or is a model prototype plan and continues to satisfy the requirements for such
qualification. Neither the Company nor any of its Subsidiaries nor any ERISA
Affiliate of the Company maintains, contributes to or has maintained or
contributed in the past six (6) years to any benefit plan which is covered by
Title IV of ERISA or Section 412 of the Code that may result in a material
penalty to the Company or any Subsidiary. Neither any Company Benefit Plan, nor
the Company nor any Subsidiary has incurred any liability or penalty under
Section 4975 of the Code or Section 502(i) of ERISA or engaged in any
transaction that is reasonably likely to result in any such liability or
penalty. Each of the Company and its Subsidiaries and any ERISA Affiliate which
maintains a "group health plan" within the meaning of Section 5000(b)(1) of the
Code has complied with the notice and continuation requirements of Section 4980B
of the Code, Part 6 of Subtitle B of Title I of ERISA and the regulations
thereunder (COBRA), and the creditable coverage certification requirements and
limitations on pre-existing condition exclusion requirements of Section 9801 of
the Code, Part 7 of Subtitle B of Title I of ERISA and the regulations
thereunder (HIPAA). Except as set forth in Section 3.15 of the Company
Disclosure Letter, each Company Benefit Plan has been maintained and
administered in compliance with its terms and with ERISA and the Code to the
extent applicable thereto. There is no pending or, to the knowledge of the
Company, threatened or anticipated Litigation against or otherwise involving any
of the Company Benefit Plans and no Litigation (excluding claims for benefits
incurred in the ordinary course of Company Benefit Plan activities) has been
brought against or with respect to any such Company Benefit Plan. All
contributions required to be made as of the date hereof to the Company Benefit
Plans have been made or provided for. Except as described in the SEC Reports or
as required by Law, neither the Company nor any of its Subsidiaries maintains or
contributes to any plan or arrangement which provides or has any liability to
provide life insurance or medical or other employee welfare benefits to any
employee or former employee upon his retirement or termination of employment,
and neither the Company nor any of its Subsidiaries has ever represented,
promised or contracted (whether in oral or written form) to any employee or
former employee that such benefits would be provided.
Any individual who performs services for the Company or any of its
Subsidiaries (other than through a contract with an organization other than such
individual) and who is not treated as an employee for federal income tax
purposes by the Company or its Subsidiaries is not an employee for such
purposes. Except as set forth in Section 3.15 of the Company Disclosure Letter,
there are no agreements in effect between the Company or any Subsidiary and any
individual retained by the Company or any Subsidiary to provide services as a
consultant or independent contractor.
For purposes of this Agreement "ERISA Affiliate" means any business or
entity which is a member of the same "controlled group of corporations," an
"affiliated service group" or is under "common control" with an entity within
the meanings of Sections 414(b), (c) or (m) of the Code, is required to be
aggregated with the entity under Section 414(o) of the Code, or is under "common
control" with the entity, within the meaning of Section 4001(a)(14) of ERISA, or
any regulations promulgated or proposed under any of the foregoing Sections.
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Section 3.16. Labor and Employment Matters. Except as set forth in
Section 3.16 of the Company Disclosure Letter:
(a) There are no agreements or arrangements on behalf of any officer,
director or employee providing for payment or other benefits to such person
contingent upon the execution of this Agreement, the Closing or a
transaction involving a change of control of the Company.
(b) Neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement or other contracts,
arrangements, agreements or understandings with a labor union or labor
organization that was certified by the National Labor Relations Board
("NLRB"). There is no existing, pending or, to the knowledge of the
Company, threatened (i) unfair labor practice charge or complaint, labor
dispute, labor arbitration proceeding or any other matter before the NLRB
or any other comparable state agency against or involving the Company or
any of its Subsidiaries, (ii) activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of
its Subsidiaries, (iii) certification or decertification question relating
to collective bargaining units at the premises of the Company or any of its
Subsidiaries or (iv) lockout, strike, organized slowdown, work stoppage or
work interruption with respect to such employees.
(c) Neither the Company nor any of its Subsidiaries has taken any
action that would constitute a "Mass Layoff" or "Plant Closing" within the
meaning of the Worker Adjustment and Retraining Notification ("WARN") Act
or would otherwise trigger notice requirements or liability under any state
or local plant closing notice law. No agreement, arbitration or court
decision or governmental order in any way limits or restricts any of the
Company, any of its Subsidiaries or Parent from relocating or closing any
of the operations of the Company or any of its Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries has failed to pay
when due any wages (including overtime wages), bonuses, commissions,
benefits, taxes, penalties or assessments or other monies, owed to, or
arising out of the employment of or any relationship or arrangement with,
any officer, director, employee, sales representative, contractor,
consultant or other agent. The Company and its Subsidiaries are in
compliance in all material respects with all applicable Laws relating to
employment and the payment of wages and benefits. There are no, and the
Company has no reason to believe there would be any, citations,
investigations, administrative proceedings or formal complaints of
violations of any federal or state wage and hour laws pending or, to the
knowledge of the Company, threatened before the Department of Labor or any
federal, state or administrative agency or court against or involving the
Company or any of its Subsidiaries.
(e) The Company and each of its Subsidiaries are in all material
respects in compliance with all immigration laws relating to employment and
have properly completed and maintained all applicable forms (including but
not limited to I-9 forms) and, to the knowledge of the Company, there are
no citations, investigations, administrative proceedings or formal
complaints of violations of the immigration laws pending or threatened
before the Immigration and Naturalization Service or any federal, state or
administrative agency or court against or involving the Company or any of
its Subsidiaries.
(f) There are no investigations, administrative proceedings, charges
or formal complaints of discrimination (including discrimination based upon
sex, age, marital status, race, national origin, sexual preference,
disability, handicap or veteran status) pending or threatened before the
Equal Employment Opportunity Commission or any federal, state or local
agency or court against or involving the Company or any of its
Subsidiaries. No discrimination, sexual harassment, retaliation and/or
wrongful or tortious conduct claim is pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries under
the 1866, 1877, 1964 or 1991 Civil Rights Acts, the Equal Pay Act, the Age
Discrimination in Employment Act, as amended, the Americans with
Disabilities Act, the Family and Medical Leave Act, the Fair Labor
Standards Act, ERISA, or any other federal law relating to employment or
any comparable state or local fair employment practices act regulating
discrimination in the workplace, and no wrongful discharge, libel, slander,
invasion of privacy or other claim (including but not limited to violations
of the Fair Credit Reporting Act, as amended, and any applicable
whistleblower statutes) under any state or federal law is pending or, to
the knowledge of the Company, threatened against the Company or any of its
Subsidiaries.
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(g) If the Company or any of its Subsidiaries is a Federal, State or
local contractor obligated to develop and maintain an affirmative action
plan, no discrimination claim, show-cause notice, conciliation proceeding,
sanctions or debarment proceedings is pending or, to the knowledge of the
Company, has been threatened against the Company or any of its Subsidiaries
with the Office of Federal Contract Compliance Programs or any other
Federal agency or any comparable state or local agency or court and no desk
audit or on-site review is in progress.
(h) There are no citations, investigations, administrative proceedings
or formal complaints of violations of local, state or federal occupational
safety and health laws pending or, to the knowledge of the Company,
threatened before the Occupational Safety and Health Review Commission or
any federal, state or local agency or court against or involving the
Company or any of its Subsidiaries.
(i) No workers' compensation or retaliation claim is pending against
the Company or any of its Subsidiaries in excess of $100,000 in the
aggregate and the Company maintains adequate insurance with respect to
workers' compensation claims pursuant to insurance policies that are
currently in force, or has accrued an adequate liability for such
obligations, including, without limitation, adequate accruals with respect
to accrued but unreported claims and retroactive insurance premiums.
Section 3.17. Environmental Compliance and Disclosure. Except as set
forth in Section 3.17 of the Company Disclosure Letter:
(a) Each of the Company and its Subsidiaries possesses, and is in
compliance in all material respect with, all permits, licenses and
governmental authorizations and has filed all notices that are required
under, all Environmental Laws (as hereinafter defined) applicable to the
Company or any Subsidiary, as applicable, and the Company and each of its
Subsidiaries is in compliance with all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in those laws or contained
in any Law, regulation, code, plan, order, decree, judgment, notice, permit
or demand letter issued, entered, promulgated or approved thereunder,
including, but not limited to, with respect to the use, storage, treatment,
manufacture, generation, disposal and handling of Hazardous Materials;
(b) Neither the Company nor any Subsidiary has received notice of
actual or threatened liability under the Federal Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or any
similar state or local statute or ordinance from any governmental agency or
any third party and, to the knowledge of the Company, there are no facts or
circumstances which could form the basis for the assertion of any claim
against the Company or any Subsidiary under any Environmental Laws
including, without limitation, CERCLA or any similar local, state or
foreign Law with respect to any on-site or off-site location;
(c) No Hazardous Materials have ever been, are being, or are
threatened to be spilled, released, discharged, disposed, placed or
otherwise caused to become located in buildings or the soil, sub-surface
strata, air, water or ground water under, or upon any plant, facility,
site, area or property currently or previously owned or leased by the
Company or any Subsidiary or on which the Company or any Subsidiary is
conducting or has conducted its business or operations;
(d) Neither the Company nor any Subsidiary has entered into or agreed
to, nor does it contemplate entering into, any consent decree or order, and
neither the Company nor any Subsidiary is subject to any judgment, decree
or judicial or administrative order relating to compliance with, or the
cleanup of Hazardous Materials under, any applicable Environmental Laws;
(e) Neither the Company nor any Subsidiary has been subject to any
administrative or judicial proceeding pursuant to and, to the knowledge of
the Company, has not been alleged to be in violation of, applicable
Environmental Laws or regulations either now or any time during the past
five years;
(f) Neither the Company nor any Subsidiary has received notice that it
is subject to any claim, obligation, liability, loss, damage or expense of
whatever kind or nature, contingent or otherwise, incurred or imposed or
based upon any provision of any Environmental Law and arising out of any
act or omission of the Company or any Subsidiary, its employees, agents or
representatives or, to the knowledge of the Company, arising out of the
ownership, use, control or operation by the Company or any Subsidiary of
any plant, facility, site, area or property (including, without limitation,
any plant, facility, site, area or property currently or previously owned
or leased by the
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Company or any Subsidiary) or any other area on which the Company or any
Subsidiary is conducting or has conducted its business or operations from
which any Hazardous Materials were released into the environment (the term
"release" meaning any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing
into the environment, and the term "environment" meaning any surface or
ground water, drinking water supply, soil, surface or subsurface strata or
medium, or the ambient air) and there is no basis for any such notice and,
to the knowledge of the Company, none are threatened or foreseen;
(g) Neither the Company nor any Subsidiary has any files or documents
relating to environmental matters. Neither the Company nor any Subsidiary
has paid any fines, penalties or assessments within the last five years
with respect to environmental matters; and
(h) To the knowledge of the Company, no real property leased by the
Company or any Subsidiary contains any friable asbestos, regulated PCBs or
underground storage tanks.
As used in this Section 3.17, the term "Environmental Laws" means any and
all past, present and future laws (including without limitation statutes,
regulations, and common law) of the United States, any State or political
subdivision thereof, or any other nation or political subdivision, for the
protection of the environment or human health and safety, including without
limitation, judgments, awards, decrees, regulations, rules, standards,
requirements, orders and permits issued by any court, administrative agency or
commission or other Governmental Entity under such laws, and shall include
without limitation the Comprehensive Environmental Response Compensation and
Liability Act (42 USC 9601 et seq.), the Clean Air Act (42 USC sec.sec. 7401 et
seq.), the Resource Conservation and Recovery Act (42 USC sec.sec. 6901 et
seq.), the Clean Water Act (33 USC sec.sec. 1251 et seq.), the Occupational
Safety and Health Act (29 U.S.C. sec.sec. 651 et seq.), the Toxic Substance
Control Act (15 USC sec.sec. 2601 et seq.), and the Safe Drinking Water Act (42
USC sec.sec. 300f et seq.), as well as any and all state or local laws that
relate to pollution, contamination of the environment, human health, or safety,
and all future amendments to such laws, and all past, present and future
regulations, rules, standards, requirements, orders and permits issued
thereunder.
As used in this Section 3.17, the term "Hazardous Materials" means any
waste, pollutant, hazardous substance, toxic, radioactive, ignitable, reactive
or corrosive substance, hazardous waste, special waste, controlled waste,
industrial substance, by-product, process intermediate product or waste,
petroleum or petroleum-derived substance or waste, chemical liquids or solids,
liquid or gaseous products, or any constituent of any such substance or waste or
any other material which may be harmful to human health or the environment.
Section 3.18. Intellectual Property.
(a) Section 3.18(a) of the Company Disclosure Letter sets forth a true
and complete list of all of the following items which the Company and/or
its Subsidiaries own in whole or in part and/or have a valid claim of
ownership in whole or in part (such as a contract right of assignment from
an employee or independent contractor) (hereinafter referred to as the
"Intellectual Property Rights"): (i) all United States and foreign patents
and applications therefor, (ii) all United States and foreign trademark,
trade name, service mark, collective mark, and certification mark
registrations and applications therefor at the federal, state or local
level, (iii) all material trademarks, trade names, service marks,
collective marks, and certification marks which have been used by the
Company or its Subsidiaries in commerce at any time in the last five years,
and (iv) all United States and foreign and copyright registrations and
applications therefor. Section 3.18(a) of the Company Disclosure Letter
also sets forth a true and complete list of all items described in
subsections (i) through (iii) of the previous sentence in which the Company
or any of its Subsidiaries own a license (the "Licensed Rights").
Section 3.18(a) of the Company Disclosure Letter sets forth a true and
accurate list with respect to the Company and its Subsidiaries of (i) all
unpatented inventions which have been the subject of a patent application
by the Company or any Subsidiary, and (ii) all material copyrightable
software products (excluding derivative works) which have not been the
subject of a copyright registration or application therefor by the Company
or any Subsidiary, including but not limited to software code, manuals and
other text works. Prior to the date hereof, the Company has provided Parent
with reasonable access to all of the Company's and its Subsidiaries'
material trade secrets, proprietary information, databases and data. The
Company represents and warrants that, except as expressly stated in
Section 3.18(a) of the Company Disclosure Letter, (i) the Intellectual
Property Rights are free and clear of any liens, claims or encumbrances,
are not subject to any license (royalty bearing or royalty free) and are
not subject to any other arrangement requiring any payment to any person or
the obligation to grant rights to any person in exchange; (ii) to the
knowledge of the Company, the
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Licensed Rights are free and clear of any liens, claims, encumbrances,
royalties or other obligations; and (iii) the Intellectual Property Rights
and the Licensed Rights are all those material rights necessary to the
conduct of the business of each of the Company, its Subsidiaries and the
Company's affiliates as presently conducted. To the knowledge of the
Company, the validity of the Intellectual Property Rights and title thereto
and validity of the Licensed Rights, (i) have not been questioned in any
prior Litigation; (ii) are not being questioned in any pending Litigation;
and (iii) are not the subject(s) of any threatened or proposed Litigation.
The business of each of the Company and its Subsidiaries, as presently
conducted, does not conflict with and, to the knowledge of the Company, has
not been alleged to conflict with any patents, trademarks, trade names,
service marks, copyrights or other intellectual property rights of others.
The consummation of the transactions contemplated hereby will not result in
the loss or impairment of any of the Intellectual Property Rights or the
Company's or its Subsidiaries' right to use any of the Licensed Rights.
Except as expressly authorized by the Company, there are no third parties
using any of the Intellectual Property Rights material to the business of
the Company or its Subsidiaries as presently conducted.
(b) Each of the Company and its Subsidiaries owns, or possesses
sufficiently broad and valid rights to, all computer software programs that
are material to the conduct of the business of the Company and its
Subsidiaries. There are no infringement suits, actions or proceedings
pending or, to the knowledge of the Company, threatened against the Company
or any Subsidiary with respect to any software owned or licensed by the
Company or any Subsidiary.
Section 3.19. Brokers. Except pursuant to the Independent Advisor
Engagement Letter (as hereinafter defined), no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with this Agreement, the Initial Offer, the Subsequent Offer, the
Merger or the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. Section 3.19 of the Company
Disclosure Letter includes a complete and correct copy of all agreements between
the Company and the Independent Advisor pursuant to which such firm would be
entitled to any payment relating to this Agreement, the Initial Offer, the
Subsequent Offer, the Merger or the other transactions contemplated by this
Agreement.
Section 3.20. Insurance Policies. Section 3.20 of the Company Disclosure
Letter contains a complete and accurate list of all insurance policies in force
naming the Company, any of its Subsidiaries or employees thereof as an insured
or beneficiary or as a loss payable payee or for which the Company or any
Subsidiary has paid or is obligated to pay all or part of the premiums. Neither
the Company nor any Subsidiary has received notice of any pending or threatened
cancellation or premium increase (retroactive or otherwise) with respect
thereto, and each of the Company and the Subsidiaries is in compliance in all
material respects with all conditions contained therein. There are no material
pending claims against such insurance policies by the Company or any Subsidiary
as to which insurers are defending under reservation of rights or have denied
liability, and there exists no material claim under such insurance policies that
has not been properly filed by the Company or any Subsidiary. Except for the
self-insurance retentions or deductibles set forth in the policies contained in
the aforementioned list, the policies are adequate in scope and amount to cover
all prudent and reasonably foreseeable risks which may arise in the conduct of
the business of the Company and the Subsidiaries.
Section 3.21. Notes and Accounts Receivable.
(a) Except as disclosed in Section 3.21(a) of the Company Disclosure
Letter, there are no notes receivable of the Company or any Subsidiary
owing by any director, officer, stockholder or employee of the Company or
any Subsidiary ("Affiliate Debt").
(b) Except as disclosed in Section 3.21(b) of the Company Disclosure
Letter, all accounts receivable of the Company and any Subsidiary are
current or covered by adequate reserves for uncollectability, and there are
no material disputes regarding the collectibility of any such accounts
receivable.
Section 3.22. Transactions with Affiliates. Except as set forth in
Section 3.22 of the Company Disclosure Letter (other than compensation and
benefits received in the ordinary course of business as an employee or director
of the Company or its Subsidiaries) (collectively, the "Affiliate
Transactions"), no director, officer or other "affiliate" or "associate" (as
hereinafter defined) of the Company or any Subsidiary or any entity in which, to
the knowledge of the Company, any such director, officer or other affiliate or
associate, owns any beneficial interest (other than a publicly held corporation
whose stock is traded on a national securities exchange or in the
over-the-counter market and less than 1% of
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the stock of which is beneficially owned by any such persons) has any interest
in: (i) any contract, arrangement or understanding with, or relating to the
business or operations of Company or any Subsidiary; (ii) any loan, arrangement,
understanding, agreement or contract for or relating to indebtedness of the
Company or any Subsidiary; or (iii) any property (real, personal or mixed),
tangible, or intangible, used or currently intended to be used in, the business
or operations of the Company or any Subsidiary.
Section 3.23. No Existing Discussions. As of the date hereof, the Company
is not engaged, directly or indirectly, in any negotiations or discussions with
any other party with respect to an Acquisition Proposal (as hereinafter
defined).
Section 3.24. Stockholders' Rights Agreement. Neither the Company nor any
Subsidiary has adopted, or intends to adopt, a stockholders' rights agreement or
any similar plan or agreement which limits or impairs the ability to purchase,
or become the direct or indirect beneficial owner of, shares of Company Common
Stock or any other equity or debt securities of the Company or any of its
Subsidiaries.
Section 3.25. Major Suppliers and Customers.
(a) Section 3.25(a) of the Company Disclosure Letter sets forth a list
of each supplier of goods or services to Company and the Subsidiaries to
whom the Company and the Subsidiaries paid in the aggregate more than
$200,000 during the 12-month period ended March 31, 2000 (each a "Major
Supplier" and, collectively, "Major Suppliers"), together with in each case
the amount paid during such period. Neither the Company nor any Subsidiary
is engaged in any material dispute with any Major Supplier and, to the
knowledge of the Company, no Major Supplier intends to terminate, limit or
reduce its business relations with the Company or any Subsidiary. The
Company has no reason to believe that the consummation of the transactions
contemplated hereunder will have any material adverse effect on the
business relationship of the Company or any Subsidiary with any Major
Supplier. Except as set forth in Section 3.25(a) of the Company Disclosure
Letter, none of the officers or directors of the Company or any Subsidiary,
or any "affiliate" or "associate" of any officer or director of the Company
or any Subsidiary, or any company or other organization in which any
officer or director of the Company or any Subsidiary or any "affiliate" or
"associate" of any officer or director of the Company or any Subsidiary has
a direct or indirect or indirect financial interest, has any financial
interest in any supplier of the Company or any Subsidiary (other than a
publicly held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 1% of the stock of
which is beneficially owned by any such persons).
(b) Section 3.25(b) of the Company Disclosure Letter sets forth a list
of each customer which the Company and the Subsidiaries invoiced in the
aggregate more than $250,000 during the 12-month period ended March 31,
2000 (each a "Major Customer" and, collectively, "Major Customers")
together with the amount of the invoices issued during such period. Neither
the Company nor any Subsidiary is engaged in any material dispute with any
Major Customer and, to the knowledge of the Company, no Major Customer
intends to terminate, limit or reduce its business relations with the
Company or any Subsidiary. As of the date hereof, the Company has no reason
to believe that the consummation of the transactions contemplated hereunder
will materially adversely affect the business relationship of the Company
or any Subsidiary with any Major Customer. Except as set forth in
Section 3.25(b) of the Company Disclosure Letter, none of the officers or
directors of the Company or any Subsidiary, or any "affiliate" or
"associate" of any officer or director of the Company or any Subsidiary, or
any company or other organization in which any officer or director of the
Company or any Subsidiary or any "affiliate" or "associate" of any officer
or director of the Company or any Subsidiary has a direct or indirect
financial interest, has any financial interest in any customer of the
Company or any Subsidiary (other than a publicly held corporation whose
stock is traded on a national securities exchange or in the
over-the-counter market and less than 1% of the stock of which is
beneficially owned by any such persons).
Section 3.26. Liability Assumptions. Section 3.26 of the Company
Disclosure Letter sets forth a true and accurate list of certain assets and
liabilities of the Company (the "Fixed Payments") existing as of June 30, 2000.
Section 3.27. Disclosure. No representation or warranty made by the
Company in this Agreement or in the Company Disclosure Letter contains an untrue
statement of a material fact or omits to state a material fact required to be
stated herein or therein or necessary to make the statements contained herein or
therein not misleading.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub represents and warrants to the Company as follows:
Section 4.1. Organization and Standing. Such person (a) is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has full corporate power and authority to
own, lease and operate its properties and assets and to conduct its business as
presently conducted and (c) is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed would not, individually or in the
aggregate, have a material adverse effect on Parent or Sub.
Section 4.2. Authority for Agreement. Such person has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Initial Offer, the Subsequent
Offer, the Merger and the other transactions contemplated by this Agreement. The
execution, delivery and performance by such person of this Agreement, and the
consummation by each such person of the Initial Offer, the Subsequent Offer, the
Merger and the other transactions contemplated by this Agreement, have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of such person are necessary to authorize this Agreement or to
consummate the Initial Offer, the Subsequent Offer, the Merger or the other
transactions contemplated by this Agreement (other than, with respect to the
Merger, the filing and recordation of appropriate merger documents as required
by the OBCA). This Agreement has been duly executed and delivered by such person
and, assuming due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of such person
enforceable against such person in accordance with its terms.
Section 4.3. No Conflict. The execution and delivery of this Agreement by
such person do not, and the performance of this Agreement by such person and the
consummation of the Initial Offer, the Subsequent Offer, the Merger and the
other transactions contemplated by this Agreement will not, (i) conflict with or
violate the certificate of incorporation or bylaws of such person, (ii) conflict
with or violate any Law applicable to such person or by which any property or
asset of such person is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of such person pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which such person is a party or
by which such person or any property or asset of either of them is bound or
affected, except in the case of clauses (ii) and (iii) for any such conflicts,
violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, prevent or materially delay the performance by
such person of its respective obligations under this Agreement or the
consummation of the Initial Offer, the Subsequent Offer, the Merger or the other
transactions contemplated by this Agreement.
Section 4.4. Required Filings and Consents. The execution and delivery of
this Agreement by such person do not, and the performance of this Agreement by
such person will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Exchange Act, Blue Sky Laws and filing
and recordation of appropriate merger documents as required by the OBCA, (ii)
for those required by the HSR Act, (iii) for filings contemplated by Sections
1.1, 1.2 and 3.14 and (iv) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
individually or in the aggregate, prevent or materially delay the performance by
such person of any of its respective obligations under this Agreement or the
consummation of the Initial Offer, the Subsequent Offer, the Merger or the other
transactions contemplated by this Agreement.
Section 4.5. Information Supplied. None of the information supplied or to
be supplied by such person for inclusion or incorporation by reference in the
Schedule 14D-9 or the Proxy Statement (if applicable) will, at the date such
documents are first published, sent or delivered to Company Stockholders or,
unless promptly corrected, at any time during the pendency of the Initial Offer
or the Subsequent Offer contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of
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the circumstances under which they were made, not misleading. Neither the
Schedule TO, at the date such document is first published, sent or delivered to
the Company Stockholders or, unless promptly corrected, at any time during the
pendency of the Initial Offer or the Subsequent Offer, nor the Proxy Statement
(if applicable) at the date such document is first published, sent or delivered
to Company Stockholders or, unless promptly corrected, at any time during the
pendency of the Stockholder's Meeting, will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Schedule 14D-1
will comply as to form and substance in all material respects with the
requirements of the Exchange Act and the applicable rules and regulations of the
SEC thereunder. Notwithstanding the foregoing, no representation or warranty is
made by such person with respect to statements made or incorporated by reference
therein based on information supplied by the Company for inclusion or
incorporation by reference in any of the foregoing documents.
Section 4.6. Brokers. Other than UBS Warburg, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission payable by such person in connection with this Agreement, the Initial
Offer, the Subsequent Offer, the Merger or the other transactions contemplated
by this Agreement based upon arrangements made by or on behalf of such person.
ARTICLE V
COVENANTS
Section 5.1. Conduct of the Business Pending the Merger.
(a) The Company covenants and agrees that between the date of this
Agreement and the Effective Time unless Parent shall otherwise agree in
writing, (i) the business of the Company and its Subsidiaries shall be
conducted only in, and the Company and its Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner
consistent with prior practice, (ii) the Company and its Subsidiaries shall
use reasonable best efforts to preserve intact their business
organizations, to keep available the services of their current officers and
employees and to preserve the current relationships of the Company and its
Subsidiaries with customers, suppliers and other persons with which the
Company or its Subsidiaries has business relations, and (iii) the Company
and its Subsidiaries will comply with all applicable Laws and regulations
wherever its business is conducted, including, without limitation, the
timely filing of all reports, forms or other documents with the SEC
required pursuant to the Securities Act or the Exchange Act. Without
limiting the foregoing, neither the Company nor any of its Subsidiaries
shall, except in the ordinary course of business consistent with past
practice as of December 31, 1999, (i) materially reduce the expenses of the
Company or its Subsidiaries relating to sales or customer service or
support, (ii) materially discount the price or materially alter the terms
of any of the Company's or its Subsidiaries' products or services, (iii)
reduce or discount any accounts receivable of the Company or any Subsidiary
to accelerate collection of such accounts receivable or sell or factor any
accounts receivable of the Company or any Subsidiary, or (iv) manage the
accounts payable of the Company or any Subsidiary in a manner inconsistent
with the Company's past practice as of December 31, 1999.
(b) The Company covenants and agrees that between the date of this
Agreement and the Effective Time the Company shall not, nor shall the
Company permit any of its Subsidiaries to, (i) declare or pay any dividends
on or make other distributions (whether in cash, stock or property) in
respect of any of its capital stock, except for dividends by a wholly owned
Subsidiary of the Company to the Company or another wholly owned Subsidiary
of the Company, (ii) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock;
(iii) repurchase or otherwise acquire any shares of its capital stock; (iv)
issue, deliver or sell, or authorize or propose the issuance, delivery or
sale of, any shares of its capital stock or any securities convertible into
any such shares of its capital stock, or any rights, warrants or options to
acquire any such shares or convertible securities or any stock appreciation
rights, phantom stock plans or stock equivalents, other than the issuance
of shares of Company Common Stock upon (A) the exercise of Company Options
outstanding as of the date of this Agreement, (B) the exercise of warrants
outstanding as of the date of this Agreement or (C) the conversion of
convertible notes outstanding on the date of this Agreement which notes
have been identified in Section 3.2 of the Company Disclosure Letter; (v)
change the exercise price of any warrants or options to acquire any shares
of Company Common Stock; or (vi) take any action
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that would, or could reasonably be expected to, result in any of the
conditions set forth in Article VI not being satisfied.
(c) Except as expressly contemplated by this Agreement, the Company
covenants and agrees that between the date of this Agreement and the
Effective Time the Company shall not, nor shall the Company permit any of
its Subsidiaries to, without the prior written consent of Parent, (i) amend
its articles of incorporation (including any certificate of designations
attached thereto) or bylaws or other equivalent organizational documents;
(ii) create, assume or incur any indebtedness for borrowed money or
guaranty any such indebtedness of another person, other than (A) borrowings
or payments under existing lines of credit (or under any refinancing of
such existing lines) or (B) indebtedness owing to, or guaranties of
indebtedness owing to, the Company; (iii) accelerate the timing of payment
of any outstanding indebtedness for borrowed money; (iv) make any loans or
advances to any other person other than loans or advances between any
Subsidiaries of the Company or between the Company and any of its
Subsidiaries (other than normal trade terms and loans or advances less than
$25,000 in any case made in the ordinary course of business consistent with
past practice); (v) mortgage or pledge any of its assets or properties;
(vi) merge or consolidate with any other entity in any transaction, or sell
any business or assets in a single transaction or series of transactions in
which the aggregate consideration is $25,000 or greater other than with
respect to transactions in the ordinary course of business consistent with
past practice; (vii) change its accounting policies except as required by
GAAP; (viii) make any change in employment terms for any of its directors
or officers; (ix) except as expressly identified in Section 5.1(c) of the
Company Disclosure Letter and following notice by the Company to Parent,
alter, amend or create any obligations with respect to compensation,
severance, benefits, change of control payments or any other payments to
employees, directors or affiliates of the Company or its Subsidiaries or
enter into any new, or amend any existing, employment agreements other than
in the ordinary course of business consistent with past practice; (xi) make
any change to the Company Benefit Plans; (xii) amend or cancel or agree to
the amendment or cancellation of any Material Contract or enter into a
contract that would have been a Material Contract had such contract been in
existence as of the date of this Agreement; (xiii) pay, loan or advance
(other than the payment of compensation, directors' fees or reimbursement
of expenses in the ordinary course of business) any amount to, or sell,
transfer or lease any properties or assets (real, personal or mixed,
tangible or intangible) to, or enter into any agreement with, any of its
officers or directors or any "affiliate" or "associate" of any of its
officers or directors; (xiv) form or commence the operations of any
business or any corporation, partnership, joint venture, business
association or other business organization or division thereof; (xv) make
any Tax election (other than in the ordinary course of business consistent
with past practice) or settle or compromise any tax liability involving
amounts in excess of $25,000 in the aggregate; (xvi) enter into any
agreements, arrangements or understandings with respect to the purchase,
sale or lease of any real property or amend, cancel or extend any
agreement, arrangement or understanding with respect to the lease of any
real property; or (xvii) pay, discharge, settle or satisfy any claims,
litigation, liabilities or obligations (whether absolute, accrued, asserted
or unasserted, contingent or otherwise) outside the ordinary course of
business consistent with past practice involving amounts in excess of
$25,000 in the aggregate.
Section 5.2. Access to Information; Confidentiality.
(a) From the date hereof to the Effective Time, the Company shall, and
shall cause the officers, directors, employees, auditors, attorneys,
financial advisors, lenders and other agents (collectively, the
"Representatives") of the Company to, afford the Representatives of Parent
and Sub reasonable access at all reasonable times to the officers,
employees, agents, properties, offices and other facilities, books and
records of the Company and its Subsidiaries, and shall furnish Parent and
Sub with all financial, operating and other data and information as Parent
or Sub, through its Representatives, may reasonably request. The Company
shall furnish to Parent and Sub all monthly financial and operating data
and information normally prepared by the Company as promptly as practicable
following the end of each calendar month. Parent and the Company will
remain subject to the terms of the proprietary nondisclosure agreement
between Parent and the Company dated June 23, 2000 (the "Confidentiality
Agreement").
(b) No investigation pursuant to this Section 5.2 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
Section 5.3. Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence, or nonoccurrence, of any event which would be likely to
cause
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any representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure by such party (or Sub, in the case of Parent) to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.3 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice. If any event or matter
arises after the date of this Agreement which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
the Company Disclosure Letter or which is necessary to correct any information
in the Company Disclosure Letter which has been rendered inaccurate thereby,
then the Company shall promptly supplement, or amend, and deliver to Parent the
Company Disclosure Letter which it has delivered pursuant to this Agreement.
Section 5.4. Reasonable Best Efforts; Further Assurances.
(a) Subject to the terms and conditions of this Agreement, each of the
parties hereto will use its reasonable best efforts to (i) take, or cause
to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate the Initial Offer, any Subsequent Offer, the Merger and the
other transactions contemplated by this Agreement as soon as practicable
after the date hereof and (ii) obtain and maintain all approvals, consents,
waivers, registrations, permits, authorizations, clearances and other
confirmations required to be obtained from any third party and/or any
Governmental Entity that are necessary, proper or advisable to consummate
the Initial Offer, the Subsequent Offer, the Merger and the transactions
contemplated hereby (each a "Required Approval"). In furtherance and not in
limitation of the foregoing, each party hereto agrees to make as promptly
as practicable, to the extent it has not already done so, (i) an
appropriate filing of a Notification and Report Form pursuant to the HSR
Act with respect to the transactions contemplated hereby (which filing
shall be made in any event within ten business days of the date hereof),
(ii) all necessary filings with other Governmental Entities relating to the
Initial Offer, the Subsequent Offer and the Merger, and, in each case, to
supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the such laws and to
use its best efforts to cause the expiration or termination of the
applicable waiting periods under the HSR Act and the receipt of Required
Approvals under such other laws as soon as practicable.
(b) Each of the parties hereto shall, in connection with the efforts
referenced in Section 5.4(a) to obtain all Required Approvals, use its
reasonable best efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a
private party, (ii) promptly inform the other party of any communication
received by such party from, or given by such party to, the Antitrust
Division of the Department of Justice (the "DOJ") or any other Governmental
Entity and of any material communication received or given in connection
with any proceeding by a private party, in each case regarding any of the
transactions contemplated hereby, and (iii) promptly inform the other party
of the timing and content of any communications with the DOJ or any such
other Governmental Entity or, in connection with any proceeding by a
private party, with any other person, and to the extent permitted by the
DOJ or such other applicable Governmental Entity or other Person, give the
other party the opportunity to attend and participate in such meetings and
conferences.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 5.4(a) and 5.4(b), if any administrative or
judicial action or proceeding, including any proceeding by a private party,
is instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law (as
hereinafter defined), or if any statute, rule, regulation, executive order,
decree, injunction or administrative order is enacted, entered, promulgated
or enforced by a Governmental Entity which would make the Initial Offer,
the Subsequent Offer, the Merger or the transactions contemplated hereby
illegal or would otherwise prohibit or materially impair or delay the
consummation of the Initial Offer, the Subsequent Offer, the Merger or the
transactions contemplated hereby, each of the parties hereto shall
cooperate in all respects with each other and use its respective
commercially reasonable efforts to contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other action or order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents or
restricts consummation of the Initial Offer, the Subsequent Offer, the
Merger or the transactions contemplated by this Agreement and to have such
statute, rule, regulation, executive order, decree, injunction or
administrative order repealed, rescinded or made inapplicable.
Notwithstanding any provision of this Agreement to the contrary, neither
Parent nor the Surviving Corporation shall be required under the terms of
this Agreement to dispose of or hold separate all or any portion of the
businesses or assets of the Company or any of its Subsidiaries or of Parent
or any of its Subsidiaries in order to remedy or otherwise
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address the concerns (whether or not formally expressed) of any
Governmental Entity under the HSR Act or any other antitrust statute or
regulation. For purposes of this Agreement, "Regulatory Law" means the
Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal, state and
foreign, if any, statutes, rules, regulations, orders, decrees,
administrative and judicial doctrines and other laws that are designed or
intended to regulate mergers, acquisitions or other business combinations.
(d) At and after the Effective Time, the officers and directors of the
Surviving Corporation and Parent will be authorized to execute and deliver,
in the name and on behalf of the Company, any deeds, bills of sale,
assignments or assurances and to take any other actions and do any other
things, in the name and on behalf of the Company, reasonably necessary to
vest, perfect or confirm of record or otherwise in the Surviving
Corporation any and all right, title and interest in, to and under any of
the rights, properties or assets of the Company acquired or to be acquired
by the applicable Surviving Corporation as a result of, or in connection
with, the Merger.
(e) In connection with, and without limiting the foregoing, the
Company shall (i) take all actions necessary to ensure that no state
antitakeover statute or similar statute or regulation is or becomes
operative with respect to this Agreement, the Initial Offer, the Subsequent
Offer, the Merger or any other transactions contemplated by this Agreement
or the Stockholder's Agreements and (ii) if any state antitakeover statute
or similar statute or regulation is or becomes operative with respect to
this Agreement, the Stockholder's Agreements, the Initial Offer, the
Subsequent Offer, the Merger or any other transaction contemplated by this
Agreement or the Stockholder's Agreements, take all actions necessary to
ensure that this Agreement, the Stockholder's Agreements, the Initial
Offer, the Subsequent Offer, the Merger and any other transactions
contemplated by this Agreement or the Stockholder's Agreements may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and the Stockholder's Agreements and otherwise to minimize the
effect of such statute or regulation on the Initial Offer, the Subsequent
Offer, the Merger and the other transactions contemplated by this Agreement
and the Stockholder's Agreements.
Section 5.5. Board Recommendations.
(a) In connection with the Initial Offer, the Subsequent Offer, the
Merger and Stockholders' Meeting, the Board of Directors of the Company
shall (i) subject to Section 5.5(b), recommend to the holders of the
Company Common Stock to tender their shares of Company Common Stock in the
Initial Offer and any Subsequent Offer and to vote in favor of the Merger
and use its reasonable best efforts to obtain the necessary approvals by
the Company Stockholders of this Agreement and (ii) otherwise comply with
all legal requirements applicable to such meeting.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall, except as expressly permitted by this Section 5.5(b) (i)
withdraw, qualify or modify, or propose publicly to withdraw, qualify or
modify, in a manner adverse to Parent, the approval or recommendation of
such Board of Directors or such committee of the Initial Offer, the
Subsequent Offer, the Merger or this Agreement, (ii) approve or recommend,
or propose publicly to approve or recommend, any transaction involving an
Acquisition Proposal (as hereinafter defined) from a third party (an
"Alternative Transaction"), or (iii) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, an "Acquisition Agreement") related to any
Alternative Transaction. Notwithstanding the foregoing, if prior to the
termination of the Initial Offer, the Board of Directors of the Company
determines in good faith, after it has received a Superior Proposal (as
hereinafter defined) in compliance with Section 5.9 and after taking into
consideration the opinion of outside counsel with respect to its fiduciary
duties to Company Stockholders under applicable Law, that such action is
required for the Board of Directors of the Company to comply with its
fiduciary obligations to the Company Stockholders under applicable Law, the
Board of Directors of the Company may (subject to this and the following
sentences) inform Company Stockholders that it no longer believes that the
Initial Offer, the Subsequent Offer and the Merger are advisable and no
longer recommends approval (a "Subsequent Determination") and enter into an
Acquisition Agreement with respect to a Superior Proposal, but only at a
time that is after the third business day (or the second business day, in
the case of a material amendment to a Superior Proposal) following Parent's
receipt of written notice advising Parent that the Board of Directors of
the Company is prepared to accept a Superior Proposal. Such written notice
shall specify the material terms and conditions of such Superior Proposal
(and include a copy thereof with all accompanying documentation, if in
writing), identify the person making such Superior Proposal and state that
the
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Board of Directors of the Company intends to make a Subsequent
Determination. During such three business day period (or two business day
period in the case of a material amendment), the Company shall provide an
opportunity for Parent to propose such adjustments to the terms and
conditions of this Agreement as would enable the Company to proceed with
its recommendation to its stockholders without a Subsequent Determination.
For purposes of this Agreement, a "Superior Proposal" means any proposal
(on its most recently amended or modified terms, if amended or modified)
made by a third party to enter into an Alternative Transaction which the
Board of Directors of the Company determines in its good faith judgment
(based on, among other things, the written advice of an independent
financial advisor) to be more favorable to the Company Stockholders than
the Initial Offer, the Subsequent Offer and the Merger from a financial
point of view (taking into account whether, in the good faith judgment of
the Board of Directors of the Company, after obtaining the advice of such
independent financial advisor, the third party is reasonably able to
finance the transaction, and any proposed changes to this Agreement that
may be proposed by Parent in response to such Alternative Transaction).
(c) Nothing contained in this Section 5.5 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14(e)-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company Stockholders if, in the good faith judgment of
the Board of Directors of the Company, after consultation with outside
counsel, failure to so disclose would be inconsistent with applicable Law;
provided, however, neither the Company nor its Board of Directors nor any
committee thereof shall, except as specifically permitted by
Section 5.5(b), withdraw, qualify, or modify, or propose to withdraw,
qualify or modify, its position with respect to the Initial Offer, the
Subsequent Offer, the Merger or this Agreement or approve or recommend, or
propose to approve or recommend an Alternative Transaction.
Section 5.6. Stockholder Litigation.
The Company shall give Parent the opportunity to participate in the defense
or settlement of any stockholder Litigation against the Company and its
directors relating to the transactions contemplated by this Agreement or the
Merger; provided, however, for so long as this Agreement has not been
terminated, no such settlement shall be agreed to without Parent's consent which
consent will not be unreasonably withheld.
Section 5.7. Indemnification.
(a) It is understood and agreed that all rights to indemnification by
the Company now existing in favor of each present and former director and
officer of the Company or its Subsidiaries (the "Indemnified Parties") as
provided in the Company Articles of Incorporation or the Company Bylaws, in
each case as in effect on the date of this Agreement, or pursuant to any
other agreements in effect on the date hereof, copies of which have been
provided to Parent, shall survive the Merger and Parent shall (i) cause the
Surviving Corporation to continue in full force and effect for a period of
at least five (5) years from the Effective Time and (ii) perform, or cause
the Surviving Corporation to perform, in a timely manner, the Surviving
Corporation's obligation with respect thereto. Parent and Sub agree that
any claims for indemnification hereunder as to which they have received
written notice prior to the fifth anniversary of the Effective Time shall
survive, whether or not such claims shall have been finally adjudicated or
settled.
(b) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation shall, maintain in effect for five (5) years from the Effective
Time, if available, the current directors' and officers' liability
insurance policies ("D&O Insurance") (provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are not materially less favorable)
with respect to matters occurring prior to the Effective Time; provided,
however, that in no event shall the Surviving Corporation be required to
expend pursuant to this Section 5.7(b) more than an amount per year equal
to one hundred fifty percent (150%) of current annual premiums paid by the
Company for such insurance. In the event that, but for the proviso to the
immediately preceding sentence, the Surviving Corporation would be required
to expend more than one hundred fifty percent (150%) of current annual
premiums, the Surviving Corporation shall obtain the maximum amount of such
insurance obtainable by payment of annual premiums equal to one hundred
fifty percent (150%) of current annual premiums.
(c) If the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and
assets to any person, then, and in each such case, proper
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provision shall be made so that the successors and assigns of the Surviving
Corporation shall assume the obligations set forth in this Section 5.7.
Section 5.8. Public Announcements. Except for the initial press release
of the Company announcing the transactions contemplated by this Agreement
(included in Section 5.8 of the Company Disclosure Letter), which is expressly
approved by Parent, Parent and the Company shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement, the Initial Offer, the Subsequent Offer or the Merger and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by Law or any listing agreement
with a national securities exchange or trading system to which Parent or the
Company is a party.
Section 5.9. Acquisition Proposals. The Company shall not, nor shall it
authorize or permit any of its Subsidiaries or Representatives to, directly or
indirectly, (a) solicit, initiate or encourage the submission of any Acquisition
Proposal or (b) participate in or encourage any discussion or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action to facilitate any inquiries or the making of, any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal; provided, however, that the foregoing shall not prohibit
the Board of Directors of the Company from furnishing information to, or
entering into discussions or negotiations with, any person or entity that makes
an unsolicited Acquisition Proposal prior to the termination of the Initial
offer if, and to the extent that, (A) the Board of Directors of the Company,
after taking into consideration advice of independent outside legal counsel,
determines in good faith that such action is required for the Board of Directors
of the Company to comply with its fiduciary obligations to the Company
Stockholders under applicable Law, (B) prior to taking such action, the Company
receives from such person or entity an executed agreement in reasonably
customary form relating to the confidentiality of information to be provided to
such person or entity and (C) the Board of Directors of the Company concludes in
good faith, based upon written advice from its independent financial advisor,
that the Acquisition Proposal is a Superior Proposal. The Company shall provide
immediate oral and written notice to Parent of (a) the receipt of any such
Acquisition Proposal or any inquiry which could reasonably be expected to lead
to any Acquisition Proposal, (b) the material terms and conditions of such
Acquisition Proposal or inquiry, (c) the identity of such person or entity
making any such Acquisition Proposal or inquiry and (d) the Company's intention
to furnish information to, or enter into discussions or negotiations with, such
person or entity. The Company shall continue to keep Parent informed of the
status and details of any such Acquisition Proposal or inquiry. For purposes of
this Agreement, "Acquisition Proposal" means any bona fide proposal with respect
to a merger, consolidation, share exchange, tender offer or similar transaction
involving the Company, or any purchase or other acquisition of all or any
significant portion of the assets of the Company or any equity interest in the
Company.
Section 5.10. Company Stockholders' Meeting.
(a) The Company shall cause the Stockholders' Meeting (if such meeting
is required) to be duly called and held as soon as practicable following
the consummation of the Initial Offer (or, at Sub's option, the Subsequent
Offer, if applicable) for the purpose of voting on the approval and
adoption of this Agreement and the Merger. The Company shall take all
action necessary in accordance with applicable Law and the Company Articles
of Incorporation and Company Bylaws to duly call, give notice of, and
convene the Stockholders' Meeting, if such meeting is required.
(b) The Company shall, at the direction of Parent, solicit from
holders of shares of Company Stock entitled to vote at the Stockholders'
Meeting proxies in favor of such approval and shall take all other action
necessary or, in the reasonable judgment of Parent, helpful to secure the
vote or consent of such holders required by the OBCA or this Agreement to
effect the Merger.
Section 5.11. Proxy Statement.
(a) If required by applicable Law, Parent and the Company will as
promptly as practicable following the consummation of the Initial Offer
(or, at Sub's option, the Subsequent Offer, if applicable) jointly prepare,
and the Company shall file, the Proxy Statement with the SEC and will use
all commercially reasonable efforts to respond to the comments of the SEC
and to cause the Proxy Statement to be mailed to the Company Stockholders
at the earliest practical time. The Company shall furnish all information
concerning it and the holders of its capital stock as Parent may reasonably
request in connection with such actions. Each party to this Agreement will
notify the other
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parties and the Board of Directors of the Company promptly of the receipt
of the comments of the SEC, if any, and of any request by the SEC for
amendments or supplements to the Proxy Statement or for additional
information with respect thereto, and will supply the other parties with
copies of all correspondence between such party or its Representatives, on
the one hand, and the SEC or members of its staff, on the other hand, with
respect to the Proxy Statement, the Initial Offer, the Subsequent Offer or
the Merger. If (A) at any time prior to the Stockholders' Meeting, any
event should occur relating to the Company or any of its Subsidiaries which
should be set forth in an amendment of, or a supplement to, the Proxy
Statement, the Company will promptly inform Parent and (B) if at any time
prior to the Stockholders' Meeting, any event should occur relating to
Parent or Sub or any of their respective associates or affiliates, or
relating to the plans of any such persons for the Company after the
Effective Time that should be set forth in an amendment of, or a supplement
to, the Proxy Statement, Parent will promptly inform the Company, and in
the case of (A) or (B) the Company and Parent, will, upon learning of such
event, promptly prepare, and the Company shall file and, if required, mail
such amendment or supplement to the Company Stockholders; provided, prior
to such filing or mailing, the Company and Parent shall consult with each
other with respect to such amendment or supplement and shall incorporate
the other's comments thereon. Parent shall vote, or cause to be voted, in
favor of the Merger and this Agreement all shares of Company Stock directly
or indirectly beneficially owned by it.
(b) The Company hereby consents to the inclusion in the Proxy
Statement of the recommendation of the Board of Directors of the Company
described in Section 3.3, subject to any modification, amendment or
withdrawal thereof, and represents that the Independent Advisor has,
subject to the terms of its engagement letter with the Company and the
Board of Directors of the Company (the "Independent Advisor Engagement
Letter"), consented to the inclusion of references to its opinion in the
Proxy Statement. The Company and its counsel shall permit Parent and its
counsel to participate in all communications with the SEC and its staff,
including any meetings and telephone conferences, relating to the Proxy
Statement, the Initial Offer, the Subsequent Offer, the Merger or this
Agreement.
(c) Notwithstanding the foregoing, if at any time Sub and/or any
direct or indirect subsidiary of Parent shall acquire at least 90% of the
outstanding shares of Company Common Stock, Sub and the Company shall take
all necessary and appropriate action to cause the Merger to become
effective as promptly as practicable after the expiration of the Initial
Offer or Subsequent Offer, if applicable, and the satisfaction or waiver of
the conditions set forth in Article VI without the Stockholders' Meeting in
accordance with Section 60.491 of the OBCA.
Section 5.12. Stockholder Lists. The Company shall promptly upon the
request by Parent, or shall cause its transfer agent to promptly, furnish Parent
and Sub with mailing labels containing the names and addresses of all record
holders of shares of Company Stock and with security position listings of shares
of Company Stock held in stock depositories, each as of the most recent
practicable date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of shares of Company Stock. The Company shall furnish Parent
and Sub with such additional information, including, without limitation, updated
listings and computer files of the Company Stockholders, mailing labels and
security position listings, and such other assistance as Parent, Sub or their
agents may reasonably request.
Section 5.13. Shares Held by Company Subsidiaries. The Company agrees to
cause each of the Subsidiaries of the Company that owns any shares of Company
Stock not to tender any such shares pursuant to the Initial Offer or Subsequent
Offer.
Section 5.14. Directors. Promptly upon the acceptance for payment of, and
payment by Sub for, shares of Company Common Stock pursuant to the Initial
Offer, Sub shall be entitled to designate such number of directors on the Board
of Directors of the Company as will give Sub, subject to compliance with
Section 14(f) of the Exchange Act, representation on such Board of Directors
equal to at least that number of directors, rounded up to the next whole number,
which is the percentage that (i) such number of shares of Company Common Stock
so accepted for payment and paid for by Sub in the Initial Offer plus the number
of shares of Company Stock otherwise owned by Parent, Sub or any other
subsidiary of Parent bears to (ii) the total number of shares of Company Common
Stock outstanding, and the Company shall, at such time, cause Sub's designees to
be appointed or elected. Subject to applicable Law, the Company shall take all
action requested by Parent necessary to effect any such appointment or election,
including mailing to its stockholders an information statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder (either separately or combined with the Schedule 14D-9),
and the Company agrees
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to make such mailing with the mailing of the Schedule 14D-9 (provided that Sub
shall have provided to the Company on a timely basis all information required to
be included in such information statement with respect to Sub's designees). In
connection with the foregoing, the Company will promptly, at the option of Sub,
use its best efforts to either increase the size of the Board of Directors of
the Company or obtain the resignation of such number of its current directors as
is necessary to enable Sub's designee to be elected or appointed to the Board of
Directors of the Company as provided above.
Section 5.15. Undertakings of Parent. Parent shall perform, or cause to
be performed, when due all obligations of Sub under this Agreement.
Section 5.16. Director Resignations. The Company shall cause to be
delivered to Parent resignations of all the directors of the Company's
Subsidiaries to be effective upon the purchase of outstanding shares of Company
Common Stock by Sub pursuant to the Initial Offer. The Company shall cause such
directors, prior to resignation, to appoint new directors nominated by Parent to
fill such vacancies.
Section 5.17. Company Options.
(a) As promptly as practicable following the date hereof, and in any
event prior to the termination date of the Initial Offer, the Company shall
amend the Company Stock Option Plans and any other agreements pursuant to
which Company Options have been granted to provide that (i) all Company
Options with an exercise price less than the per share Merger Consideration
shall vest upon the consummation of the Merger, (ii) upon the consummation
of the Merger, each Company Option shall represent only the right to
receive upon payment of the applicable exercise price, the per share Merger
Consideration, in lieu of a share of Company Common Stock and (iii) other
than with respect to the right to receive the per share Merger
Consideration pursuant to clause (ii) of this sentence, all Company Options
shall be terminated upon consummation of the Merger.
(b) As promptly as practicable following the date hereof, the Company
shall use its best efforts to cause each director of the Company to agree
to terminate and cancel all Company Options owned by such director with
exercise prices equal to or in excess of the per share Merger Consideration
upon consummation of the Merger.
Section 5.18. Series A Preferred Stock. Promptly following the acceptance
for payment of, and payment by Sub for, shares of Company Common Stock pursuant
to the Initial Offer, the Company shall, if requested to do so by Parent, redeem
all of the outstanding shares of Series A Preferred Stock in accordance with its
terms and shall irrevocably deposit funds sufficient to redeem such shares of
Series A Preferred Stock in an account to pay for such redemption. Concurrently
with the acceptance for payment, and payment by Sub for, shares of Company
Common Stock pursuant to the Initial Offer, if Parent requests that the Company
redeem the Series A Preferred Stock, Parent shall by wire transfer of
immediately available funds to an account designated by the Company, advance to
the Company an amount equal to the amount necessary to redeem all outstanding
shares of Series A Preferred Stock.
ARTICLE VI
CONDITIONS
Section 6.1. Conditions to the Obligation of Each Party. The respective
obligations of Parent, Sub and the Company to effect the Merger are subject to
the satisfaction of the following conditions, unless waived in writing by all
parties:
(a) Each of the conditions set forth in Annex I shall have been
satisfied or waived by Sub, and Sub or its permitted assignee shall have
purchased the shares of Company Common Stock validly tendered and not
withdrawn pursuant to the terms of the Initial Offer; provided, however,
that this condition shall not be applicable to the obligations of Parent or
Sub if, in breach of this Agreement or the terms of the Initial Offer, Sub
or its permitted assignee fails to purchase any shares of Company Common
Stock validly tendered and not withdrawn pursuant to the Initial Offer;
(b) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of the Company Stockholders, if and to the extent
required by the OBCA, the Company Articles of Incorporation and the Company
Bylaws;
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(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect; provided, however, that the parties invoking
this condition shall use all commercially reasonable efforts to have any
such order or injunction vacated;
(d) There shall not be overtly threatened, instituted or pending any
action, proceeding, application or counterclaim by any Governmental Entity
before any court or Governmental Entity before any court or governmental
regulatory or administrative agency, authority or tribunal which is
reasonably likely to restrain or prohibit the consummation of the Merger;
(e) All actions by or in respect of or filings with any Governmental
Entity required to permit the consummation of the Merger shall have been
obtained or made (including the expiration or termination of any applicable
waiting period under the HSR Act); and
(f) The offering period with respect to the Subsequent Offer, if
applicable, shall have expired.
Section 6.2. Conditions to Obligations of Parent and Sub to Effect the
Merger. The obligations of Parent and Sub to effect the Merger are further
subject to satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(a) (i) The representations and warranties of the Company in this
Agreement that are qualified by materiality shall be true and correct in
all respects as of the date of this Agreement and as of the Effective Time
(unless such representations or warranties refer to a specific date, in
which case such representations or warranties shall be true and correct in
all respects as of such date); (ii) the representations and warranties of
the Company in this Agreement that are not qualified by materiality shall
be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time (unless such representations or
warranties refer to a specific date, in which case such representations or
warranties shall be true and correct in all material respects as of such
date); (iii) the Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement; and (iv)
the Company shall have delivered to Parent and Sub a certificate to the
effect that each of the conditions specified in (i), (ii) and (iii) above
is satisfied in all respects; and
(b) The Company and its Subsidiaries shall have procured all third
party consents legally required for the consummation of the Merger.
Section 6.3. Conditions to Obligations of the Company to Effect the
Merger. The obligations of the Company to effect the Merger are further subject
to satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) The representations and warranties of Parent and Sub in this
Agreement that are qualified by materiality shall be true and correct in
all respects as of the date of this Agreement and as of the Effective Time;
(b) The representations and warranties of Parent and Sub in this
Agreement that are not qualified by materiality shall be true and correct
in all material respects as of the date of this Agreement and as of the
Effective Time;
(c) Parent and Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement; and
(d) Parent and Sub shall have delivered to the Company a certificate
to the effect that each of the conditions specified in Sections 6.3(a), (b)
and (c) is satisfied in all respects.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, whether before or
after approval of matters presented in connection with the Merger by the Company
Stockholders:
(a) By mutual written consent of duly authorized representatives of
Parent and the Company;
(b) By any of Parent, Sub or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree, ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; provided however, that
the party terminating this Agreement pursuant to this Section 7.1(b) shall
use all commercially reasonable efforts to have such order, decree, ruling
or action vacated;
(c) By any of Parent, Sub or the Company if the Merger shall not have
been consummated on or before December 31, 2000; provided, however, that
the right to terminate this Agreement under this Section 7.1(c) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement has been the primary cause of, or resulted in, the failure
to consummate the Merger on or before such date;
(d) By Parent or Sub if the Board of Directors of the Company (i)
shall have withdrawn or shall have modified in a manner adverse to Parent
or Sub its approval or recommendation of the Merger or this Agreement, (ii)
causes the Company to enter into an agreement with respect to an
Acquisition Proposal, (iii) shall have endorsed, approved or recommended
any Acquisition Proposal or (iv) shall have announced to do any of the
foregoing;
(e) By Parent or Sub, if as a result of the failure of any of the
conditions set forth in Annex I to this Agreement, the Initial Offer shall
have been terminated by Parent or Sub or expired in accordance with its
terms without Sub (or any permitted assignee) having purchased any shares
of Company Common Stock pursuant to the Initial Offer;
(f) By Parent or Sub, if (i) any of the conditions set forth in
Section 6.2 shall have become incapable of fulfillment and shall not have
been waived by Parent and Sub, (ii) holders of outstanding debt obligations
of the Company or any of its Subsidiaries under the Financing Agreement
dated as of August 13, 1999 by and among the Company, Foothill Capital
Corporation and Ableco Finance LLC (and the related agreements) shall have
exercised any remedies which result in the transfer, seizure or blockage of
any collateral arising out of a default under such agreement (or related
agreements) by the Company or any of its Subsidiaries or (iii) the Company
shall breach in any material respect any of its representations,
warranties, covenants or other obligations hereunder and, within ten (10)
days after written notice of such breach to the Company from Parent, such
breach shall not have been cured in all material respects or waived by
Parent or Sub;
(g) By the Company, if (i) any of the conditions set forth in
Section 6.3 shall have become incapable of fulfillment and shall not have
been waived by the Company or (ii) Parent or Sub shall breach in any
material respect any of their respective representations, warranties or
obligations hereunder and, within ten (10) days after written notice of
such breach to Parent from the Company, such breach shall not have been
cured in all material respects or waived by the Company; or
(h) By the Company if, in compliance with its obligations under
Sections 5.5 and 5.9, (i) the Board of Directors of the Company shall have
withdrawn or shall have modified in a manner adverse to Parent or Sub its
approval or recommendation of the Initial Offer, the Subsequent Offer, the
Merger or this Agreement and (ii) the Company shall have entered into an
agreement with respect to a Superior Proposal.
Section 7.2. Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 7.1 hereof, this Agreement shall forthwith be terminated and have
no further effect except as specifically provided herein and, except as
provided in this Section 7.2, there shall be no liability on the part of
any party hereto, provided that nothing herein shall relieve any party from
liability for any willful breach hereof.
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(b) If (i) Parent or Sub exercises its right to terminate this
Agreement under Section 7.1(d); (ii) (A) after the date of this Agreement
any Acquisition Proposal involving the Company, which the Company's Board
of Directors has endorsed as a Superior Proposal, shall have been
announced, (B) the Initial Offer shall have remained open until at least
the scheduled expiration date immediately following the date such
Acquisition Proposal is announced, (C) the Minimum Condition shall not have
been satisfied at the expiration of the Initial Offer and (D) this
Agreement or the Initial Offer shall thereafter be terminated, or (iii) the
Company exercises its right to terminate this Agreement under
Section 7.1(h), the Company shall pay to Parent upon demand $3.0 million
plus an amount equal to the reasonable costs and expenses of Parent and Sub
(including reasonable legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby (the "Termination
Fee"), payable in same-day funds.
(c) If (i) after the date of this Agreement any Acquisition Proposal
involving the Company shall have been announced, (ii) the Initial Offer
shall have remained open until at least the scheduled expiration date
immediately following the date such Acquisition Proposal is announced,
(iii) the Minimum Condition shall not have been satisfied at the expiration
of the Initial Offer and (iv) this Agreement or the Initial Offer shall
thereafter be terminated, the Company shall pay to Parent upon demand an
amount equal to the costs and expenses of Parent and Sub (including legal
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby, payable in same-day funds.
(d) If within one year after termination of this Agreement, the
Company shall enter into any agreement relating to, or consummate, an
Acquisition Proposal (i) at a per share purchase price greater than or
equal to 85% of the Offer Price with a person other than Parent or Sub or
(ii) at any price with a person other than Parent or Sub who made an
Acquisition Proposal after the date hereof and prior to the expiration date
of the Initial Offer, then immediately prior to, and as a condition of,
consummation of such transaction the Company shall pay to Parent upon
demand the Termination Fee, payable in same-day funds; provided that no
such amount shall be payable (A) if the Termination Fee shall have become
payable or have been paid in accordance with Section 7.2(b) of this
Agreement, (B) if the Initial Offer was not consummated because of the
failure of a condition contained in clause (i), (ii) or (iii) of Annex I or
(C) if this Agreement shall have been terminated by the Company in
accordance with clause (ii) of Section 7.1(g).
(e) Notwithstanding anything to the contrary set forth in this
Agreement, if the Company fails promptly to pay to Parent any amounts due
under this Section 7.2, the Company shall pay the costs and expenses
(including reasonable legal fees and expenses) of Parent in connection with
any action, including the filing of any lawsuit or other legal action,
taken to collect payment, together with interest on the amount of any
unpaid fee or obligation at the publicly announced prime rate of Citibank,
N.A. in effect from time to time from the date such fee or obligation was
required to be paid.
Section 7.3. Amendments. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto; provided,
however, that after approval of the Merger by the Company Stockholders, no
amendment may be made without the further approval of the Company Stockholders
if the effect of such amendment would be to reduce the Merger Consideration or
change the form thereof. Following the election or appointment of Sub's
designees pursuant to Section 5.14 and prior to the Effective Time, the
affirmative vote of the directors of the Company who are not designees of Sub
shall be required by the Company to (i) amend or terminate this Agreement by the
Company, (ii) exercise or waive any of the Company's rights or remedies under
this Agreement, or (iii) extend the time for performance of Parent's and Sub's
respective obligations under this Agreement.
Section 7.4. Waiver. At any time prior to the Effective Time, whether
before or after the Stockholders' Meeting, any party hereto, by action taken by
its board of directors, may (i) extend the time for the performance of any of
the covenants, obligations or other acts of any other party hereto or (ii) waive
any inaccuracy of any representations or warranties or compliance with any of
the agreements, covenants or conditions of any other party or with any
conditions to its own obligations. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party by its duly authorized
officer. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
The waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with
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respect to any other facts and circumstances and each such right shall be deemed
an ongoing right that may be asserted at any time and from time to time.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. No Third Party Beneficiaries. Other than the provisions of
Sections 5.6 and 5.7 hereof, nothing in this Agreement shall confer any rights
or remedies upon any person other than the parties hereto.
Section 8.2. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire Agreement among the parties with respect to the
subject matter hereof and supersede any prior understandings, agreements, or
representations by or among the parties, written or oral, with respect to the
subject matter hereof.
Section 8.3. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors. No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written approval of the
other parties; provided, however, that Sub may freely assign its rights to
another wholly owned subsidiary of Parent without such prior written approval
but no such assignment shall relieve Sub of any of its obligations hereunder.
Section 8.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 8.5. Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 8.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law thereof.
Section 8.7. Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
Section 8.8. Specific Performance. Each of the parties acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to seek an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction over the
parties and the matter, in addition to any other remedy to which it may be
entitled, at law or in equity.
Section 8.9. Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 8.10. Non-Survival of Representations and Warranties and
Agreements. This Agreement shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 7.1, as the case may be,
except that (i) the agreements set forth in Articles I and VIII and Sections
5.4, 5.6 and 5.7 shall survive the Effective Time indefinitely and (ii) the
agreements set forth in Sections 5.6, 5.7 and 7.2 and in Article VIII shall
survive the termination of this Agreement indefinitely.
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Section 8.11. Certain Definitions.
(a) For purposes of this Agreement, the terms "associate" and
"affiliate" shall have the same meaning as set forth in Rule l2b-2
promulgated under the Exchange Act, and the term "person" shall mean any
individual, corporation, partnership (general or limited), limited
liability company, limited liability partnership, trust, joint venture,
joint-stock company, syndicate, association, entity, unincorporated
organization or government or any political subdivision, agency or
instrumentality thereof.
(b) For purposes of this Agreement, the phrase "Company Material
Adverse Effect" shall mean, with respect to the Company, any change, event
or effect shall have occurred or been threatened that, when taken together
with all other adverse changes, events or effects that have occurred or
been threatened, is or is reasonably likely to (i) be materially adverse to
the business, operations, prospects, properties, condition (financial or
otherwise), assets, liabilities (including, without limitation, contingent
liabilities) of the Company and its Subsidiaries taken as a whole or (ii)
prevent or materially delay the performance by the Company of any of its
obligations under this Agreement or the consummation of the Merger or the
other transactions contemplated by this Agreement.
Section 8.12. Fees and Expenses. Except as provided in Section 7.2, all
costs and expenses incurred by the parties hereto in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
Section 8.13. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses, or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 8.13:
If to Parent or Sub:
John H. Harland Company
2939 Miller Road
Decatur, Georgia 30035
Telecopier: (770) 593-5619
Attention: John C. Walters
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Telecopier: (404) 572-5100
Attention: Alan J. Prince
Mark E. Thompson
If to the Company:
Concentrex Incorporated
400 SW Sixth Avenue, Suite 200
Portland, Oregon 97204
Telecopier: (503) 790-9229
Attention: Jeffrey P. Strickler
with a copy to:
Tonkon Torp LLP
1600 Pioneer Tower
888 SW Fifth Avenue
Portland, Oregon 97204-2099
Telecopier: (503) 972-3706
Attention: Ronald L. Greenman
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IN WITNESS WHEREOF, the Company, Parent and Sub and have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
CONCENTREX INCORPORATED
By: /s/ MATTHEW W. CHAPMAN
-------------------------------------
Name: Matthew W. Chapman
Title: Chairman and CEO
JOHN H. HARLAND COMPANY
By: /s/ TIMOTHY C. TUFF
-------------------------------------
Name: Timothy C. Tuff
Title: Chairman and CEO
JH ACQUISITION CORP.
By: /s/ JOHN C. WALTERS
-------------------------------------
Name: John C. Walters
Title: Vice President
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<PAGE> 75
ANNEX I
CONDITIONS OF THE INITIAL OFFER
Notwithstanding any other provision of the Initial Offer or the Agreement,
and in addition to and not in limitation of Sub's rights to extend or amend the
Initial Offer at any time, in its sole discretion (subject to the Agreement),
Sub shall not be required to accept for payment or, subject to any applicable
rules or regulations of the SEC, pay for any shares of Company Common Stock, and
(subject to such rules and regulations) may delay the acceptance of payment of
or, subject to any restriction referred to above, the payment for, and may
(except as provided in the Agreement) terminate the Initial Offer, if (a) the
shares of Company Common Stock tendered pursuant to the Initial Offer by the
expiration of the Initial Offer and not withdrawn, together with the shares of
Company Common Stock owned by Parent or a wholly owned subsidiary of Parent
represent, on a fully diluted basis, less than a majority of the outstanding
voting power of the Company Common Stock (the "Minimum Condition"), (b) the
waiting periods under the HSR Act applicable to the transactions contemplated by
the Agreement shall not have expired or been terminated, if applicable, or any
other regulatory approvals required under applicable Law have not been obtained,
which if not obtained would prevent the consummation of the Initial Offer, (c)
Tonkon Torp LLP, legal counsel for the Company, does not deliver an opinion
substantially in the form of Exhibit A hereto, or (d) at any time after the date
of this Agreement and prior to the acceptance for payment of the shares of
Company Common Stock, any of the following conditions exist:
(i) there shall be instituted, pending or threatened any action,
investigation or proceeding by any Governmental Entity, or there shall be
instituted, pending or threatened any action or proceeding by any other
person, domestic or foreign, before any Governmental Entity, which is
reasonably likely to be determined adversely to Sub, (A) challenging or
seeking to make illegal, to delay materially or otherwise, directly or
indirectly, to restrain or prohibit the making of the Initial Offer, the
acceptance for payment of or payment for some of or all the shares of
Company Common Stock by Sub or the consummation of the Merger, seeking to
obtain material damages or imposing any material adverse conditions in
connection therewith or otherwise, directly or indirectly, relating to the
transactions contemplated by the Initial Offer or the Merger, (B) seeking
to restrain, prohibit or delay the exercise of full rights of ownership or
operation by Sub or its affiliates of all or any portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of Sub or
any of its affiliates, or to compel Sub or any of its affiliates to dispose
of or hold separate all or any material portion of the business or assets
of the Company and its Subsidiaries, taken as a whole, or of Sub or any of
its affiliates, (C) seeking to impose or confirm limitations on the ability
of Sub or any of its affiliates effectively to exercise full rights of
ownership of the shares of Company Common Stock, including, without
limitation, the right to vote the shares of Company Common Stock acquired
or owned by Sub or any of its affiliates on all matters properly presented
to the Company Stockholders, (D) seeking to require divestiture by Sub or
any of its affiliates of the shares of Company Common Stock, or (E) that
otherwise would reasonably be expected to have a Company Material Adverse
Effect;
(ii) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to, or any consent or approval
withheld with respect to, the Initial Offer, the acceptance for payment of
or payment for any shares of Company Common Stock or the Merger, by any
Governmental Entity that, in the reasonable judgment of Sub, may, directly
or indirectly, result in any of the consequences referred to in clauses (A)
through (E) of paragraph (i) above;
(iii) there shall have occurred (A) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (B) any decline in either the
Dow Jones Industrial Average or the Standard and Poor's Index of 500
Industrial Companies by an amount in excess of twenty percent (20%),
measured from the date of the Agreement, (C) the declaration of any banking
moratorium or any suspension of payments in respect of banks or any
material limitation (whether or not mandatory) on the extension of credit
by lending institutions in the United States, (D) the commencement of a
war, material armed hostilities or other material international or national
calamity directly or indirectly involving the United States that has a
significant adverse effect on the functioning of the financial markets in
the United States, or (E) in the case of any of the foregoing existing at
the time of execution of the Agreement, a material acceleration or
worsening thereof;
(iv) (A) the representations and warranties of the Company in the
Agreement that are qualified by materiality shall not be true and correct
in all respects as of the date of the Agreement and as of the Effective
Time; (B) the representations and warranties of the Company in the
Agreement that are not qualified by materiality shall not be
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<PAGE> 76
true and correct in all material respects as of the date of the Agreement
and as of the Effective Time; (C) the Company shall not have performed in
all material respects all obligations required to be performed by it under
the Agreement; (D) the directors of the Company's Subsidiaries shall not
have resigned and appointed nominees to fill their vacancies as provided in
Section 5.16; (E) the representations and warranties contained in Section
3.26 are not true and correct in all respects; and (F) an officer of the
Company shall not have delivered to Parent and Sub a certificate to the
effect that each of the foregoing conditions is satisfied in all respects;
(v) the Company and its Subsidiaries shall not have procured all
necessary third party consents (other than from Governmental Entities) with
respect to matters material to the conduct of business by the Company
required in connection with the execution and delivery of the Agreement and
the consummation of the Merger and the other transactions contemplated
hereby; or
(vi) the Agreement shall have been terminated in accordance with its
terms,
which, in the reasonable judgment of Sub in any such case, and regardless of the
circumstances giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Sub and may be
asserted by Sub regardless of the circumstances giving rise to any such
condition (including any action or omission by Sub) or may be waived by Sub in
whole or in part at any time and from time to time, in its sole discretion. The
failure by Sub at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right; the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
Should the Initial Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Company Common Stock not theretofore accepted for payment
shall be returned forthwith.
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<PAGE> 77
EXHIBIT A
The opinions to be delivered on behalf of the Company will be to the following
effect, with only such assumptions and qualifications as are reasonably
satisfactory to Sub and Parent:
1. Each of the Company and each Subsidiary (i) is a corporation or
limited liability company duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (ii) has
full power and authority as a corporation or limited liability company, as
applicable, and, to our knowledge, all necessary government approvals to
own, lease and operate its properties and assets and to conduct its
business as presently conducted and (iii) based on the certificate of the
Company and each Subsidiary, is duly qualified or licensed to do business
as a foreign corporation or limited liability company, as applicable, and
is in good standing in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except where the failure
to be so qualified or licensed, individually or in the aggregate, has not
had, or would not reasonably be expected to have, a Company Material
Adverse Effect.
2. The Company has all necessary power and authority to execute and
deliver the Agreement, to perform its obligations thereunder and to
consummate the Offer, the Merger and the other transactions contemplated by
the Agreement.
3. The execution, delivery and performance by the Company of the
Agreement, and the consummation by the Company of the Offer, the Merger and
the other transactions contemplated by the Agreement, have been duly
authorized by all necessary corporate action, (including, without
limitation, the approval of the Board of Directors of the Company) and no
other corporate proceedings on the part of the Company are necessary to
authorize the Agreement or to consummate the Offer, the Merger or the other
transactions contemplated by the Agreement. The Company has duly and
validly executed and delivered the Agreement.
4. The Agreement and the transactions contemplated thereby constitute
the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization and moratorium laws, and general
principles of equity.
5. The execution and delivery of the Agreement by the Company do not,
and the performance of the Agreement by the Company and the consummation of
the Offer and the Merger and the other transactions contemplated by the
Agreement will not (i) conflict with or violate the Company Articles of
Incorporation or Company Bylaws or equivalent organizational documents of
any of its Subsidiaries, (ii) conflict with or violate any Law applicable
to the Company or any of its Subsidiaries by which any material property or
asset of the Company or any of its Subsidiaries is bound or affected or
(iii) based on the certificate of the Company and each Subsidiary, and
except as disclosed in the Agreement or the Company Disclosure Letter,
result in a breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, give to
others any right of termination, amendment, acceleration or cancellation
of, result in triggering any payment or other obligations, or result in the
creation of any lien or other encumbrance on any property or asset of the
Company or any of its Subsidiaries in any case that would be material to
the Company or any Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation or Material Contract to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any property or asset of any of them is bound or affected.
6. The Company's authorized capitalization consists of 10,000,000
shares of common stock and 5,576,800 shares of preferred stock. Except as
disclosed in the Agreement and the Company Disclosure Letter, to our
knowledge, there are no rights of first refusal, preemptive rights or other
rights, options, calls, warrants or other securities with rights
outstanding which are convertible into, exercisable for, or convertible
into, exercisable for, or related to any shares of capital stock of the
Company or any Subsidiary or other agreement either directly or indirectly
for the purchase or acquisition from the Company or any Subsidiary of any
shares of its capital stock.
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<PAGE> 78
APPENDIX B
FORM OF TENDER AGREEMENT
THIS TENDER AGREEMENT (this "Agreement") dated as of July 17, 2000 is
entered into by and among John H. Harland Company, a Georgia corporation
("Parent"), JH Acquisition Corp., an Oregon corporation and wholly owned
subsidiary of Parent ("Buyer"), and [NAME OF SECURITYHOLDER], in his capacity as
a stockholder of the Company and a resident of the State of Oregon
("Securityholder"), with respect to certain equity securities owned by
Securityholder of Concentrex Incorporated, an Oregon corporation (the
"Company").
WITNESSETH:
WHEREAS, Parent, Buyer and the Company have entered into an Agreement and
Plan of Merger (the "Merger Agreement") dated as of the date hereof pursuant to
which Buyer has agreed to make a cash tender offer described therein and
thereafter merge with and into the Company (the "Merger") in accordance with the
provisions of the Oregon Business Corporation Act;
WHEREAS, as of the date hereof, Securityholder beneficially owns and has
the power to vote certain shares of the common stock, no par value, of the
Company (the "Company Common Stock"); and
WHEREAS, in consideration of Buyer's and Parent's agreements herein and in
the Merger Agreement, Securityholder has agreed to cooperate with Buyer and
Parent with respect to the acquisition of the Company by Parent and Buyer upon
the terms and subject to the conditions set forth in the Merger Agreement.
NOW, THEREFORE, in contemplation of the foregoing and in consideration of
the mutual agreements, covenants, representations and warranties contained
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Certain Covenants.
1.1 Lock-Up. Securityholder hereby covenants and agrees during the
term of this Agreement that (a) except as consented to in writing by Parent
in its sole discretion, Securityholder will not, directly or indirectly,
sell, transfer, assign, pledge, hypothecate or otherwise dispose of or
limit its right to vote in any manner any of the Securities (as hereinafter
defined), or agree to do any of the foregoing, and (b) Securityholder will
not take any action which would have the effect of preventing or disabling
Securityholder from performing its obligations under this Agreement.
1.2 No Solicitation. During the term of this Agreement, neither
Securityholder nor any person acting as an agent of Securityholder or
otherwise on Securityholder's behalf shall, directly or indirectly,
solicit, encourage or initiate negotiations with, or provide any
information to (except as permitted under the Merger Agreement), any
corporation, partnership, person or other entity or group (other than
Parent or an affiliate or an associate of Parent) concerning any sale,
transfer, pledge or other disposition or conversion of the Securities.
Securityholder will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Securityholder will notify
Buyer immediately if any party contacts Securityholder following the date
hereof (other than Buyer or an affiliate or associate of Buyer) concerning
any sale, transfer, pledge or other disposition or conversion of the
Securities.
1.3 Voting Agreement.
(a) Securityholder has revoked or terminated any proxies, voting
agreements or similar arrangements previously given or entered into with
respect to the Securities and hereby irrevocably appoints Buyer,
expressly limited to the term of this Agreement, as proxy for
Securityholder to vote (or refrain from voting) in any manner as Buyer,
in its sole discretion, may see fit, all of the Securities of
Securityholder for Securityholder and in Securityholder's name, place
and stead, at any annual, special or other meeting or action of the
securityholders of the Company, as applicable, or at any adjournment
thereof or pursuant to any consent of securityholders of the Company, in
lieu of a meeting or otherwise, with respect and limited to the
following matters: (i) the adoption and approval of the Merger
Agreement, (ii) any extraordinary corporate transaction (other than the
Merger), such as a merger, consolidation, business combination, tender
or exchange offer,
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reorganization, recapitalization, liquidation or other change of control
involving the Company or any of its subsidiaries, including, but not
limited to, any Acquisition Proposal (as defined in the Merger
Agreement), and (iii) any sale or transfer of a material amount of the
assets or securities of the Company or any of its subsidiaries (other
than pursuant to the Merger). The parties acknowledge and agree that
neither Buyer, nor Buyer's successors, assigns, subsidiaries, divisions,
employees, officers, directors, shareholders, agents and affiliates
shall owe any duty to, whether in law or otherwise, or incur any
liability of any kind whatsoever, including without limitation, with
respect to any and all claims, losses, demands, causes of action, costs,
expenses (including reasonable attorney's fees) and compensation of any
kind or nature whatsoever to Securityholder in connection with, as a
result of or otherwise relating to any vote (or refrain from voting) by
Buyer of the Securities subject to the irrevocable proxy hereby granted
to Buyer at any annual, special or other meeting or action or the
execution of any consent of the securityholders of the Company.
(b) Notwithstanding the foregoing grant to Buyer of the irrevocable
proxy, in the event Buyer elects not to exercise its rights to vote the
Securities pursuant to the irrevocable proxy, Securityholder agrees to
vote all of the Securities during the term of this Agreement (i) if the
issue on which Securityholder is requested to vote is a proposal to
approve the Merger, Securityholder agrees to vote in favor of or give
its consent to, as applicable, such transaction or (ii) otherwise in the
manner directed by Buyer at any annual, special or other meeting or
action of securityholders of the Company, in lieu of a meeting or
otherwise with respect to any issue brought before the securityholders
of the Company.
1.4 Tender of Securities. Securityholder agrees to tender, and not
withdraw, the Securities owned by Securityholder to Buyer in the Initial
Offer (as defined in the Merger Agreement), and in any event no later than
10 business days following the commencement of the Initial Offer.
1.5 Public Announcement. Securityholder shall consult with Parent
before issuing any press releases or otherwise making any public statements
with respect to the transactions contemplated herein and shall not issue
any such press release or make any such public statement without the
approval of Buyer, except as may be required by law.
1.6 Stop Transfer Instruction. Promptly following the date hereof,
Securityholder and Buyer shall deliver joint written instructions to the
Company and to the Company's transfer agent stating that the Securities may
not be sold, transferred, pledged, assigned, hypothecated or otherwise
disposed of in any manner without the prior written consent of Buyer or
except in accordance with the terms and conditions of this Agreement.
2. Representation and Warranties.
2.1 Representations and Warranties of Buyer and Parent. Buyer and
Parent, hereby jointly and severally, represent and warrant to
Securityholder, as of the date hereof and as of the date Buyer purchases
shares of Company Common Stock pursuant to the Initial Offer, as follows:
(a) Authorization. Each of Buyer and Parent is a corporation duly
organized, validly existing and in good standing under the laws of its
state of incorporation. Each of Buyer and Parent has all requisite power
and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. Each of Buyer and Parent has duly
authorized, executed and delivered this Agreement and this Agreement is
a legal, valid and binding agreement of Buyer, enforceable against Buyer
in accordance with its terms.
2.2 Representations and Warranties of Securityholder. Securityholder
hereby represents and warrants to Buyer and Parent, as of the date hereof
and as of the date Buyer purchases shares of Company Common Stock pursuant
to the Initial Offer, as follows:
(a) Ownership. Securityholder is the record (individually or in
joint ownership with his spouse) and beneficial owner of, and has good
and marketable title to, shares of Company Common Stock
(collectively, the "Securities"), in each case free and clear of all
liabilities, claims, liens, options, proxies, charges, participations
and encumbrances of any kind or character whatsoever.
(b) Authorization. Securityholder has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby and has sole voting power and sole
power of disposition, with respect to all of the Securities owned by
Securityholder with no restrictions on its voting
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<PAGE> 80
rights or rights of disposition pertaining thereto. Securityholder has
duly authorized, executed and delivered this Agreement and this
Agreement is a legal, valid and binding agreement of Securityholder,
enforceable against Securityholder in accordance with its terms.
(c) No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will (a) require Securityholder to file or register with, or obtain any
material permit, authorization, consent or approval of, any governmental
agency, authority, administrative or regulatory body, court or other
tribunal, foreign or domestic, or any other entity, or (b) violate, or
cause a breach of or default under, any contract, agreement or
understanding, any statute or law, or any judgment, decree, order,
regulation or rule of any governmental agency, authority, administrative
or regulatory body, court or other tribunal, foreign or domestic, or any
other entity or any arbitration award binding upon Securityholder. No
proceedings are pending which, if adversely determined, will have a
material adverse effect on any ability to vote or dispose of any of the
Securities. Securityholder has not previously assigned or sold any of
the Securities to any third party.
(d) Securityholder Has Adequate Information. Securityholder is a
sophisticated seller with respect to the Securities and has adequate
information concerning the business and financial condition of the
Company to make an informed decision regarding the sale of the
Securities and has independently and without reliance upon Buyer or
Parent and based on such information as Securityholder has deemed
appropriate, made its own analysis and decision to enter into this
Agreement. Securityholder acknowledges that neither Buyer nor Parent has
made and neither make any representation or warranty, whether express or
implied, of any kind or character except as expressly set forth in this
Agreement. Securityholder acknowledges that the agreements contained
herein with respect to the Securities by Securityholder are irrevocable,
and that Securityholder shall have no recourse to the Securities or
Buyer or Parent, except with respect to breaches of representations,
warranties, covenants and agreements expressly set forth in this
Agreement.
(e) Buyer's Excluded Information. Securityholder acknowledges and
confirms that (a) Buyer or Parent may possess or hereafter come into
possession of certain non-public information concerning the Securities
and the Company which is not known to Securityholder and which may be
material to Securityholder's decision to sell the Securities ("Buyer's
Excluded Information"), (b) Securityholder has requested not to receive
Buyer's Excluded Information and has determined to sell the Securities
notwithstanding its lack of knowledge of Buyer's Excluded Information,
and (c) Buyer and Parent shall have no liability or obligation to
Securityholder, in connection with, and Securityholder hereby waives and
releases Buyer and Parent from, any claims which Securityholder or its
successors and assigns may have against Buyer or Parent (whether
pursuant to applicable securities laws or otherwise) with respect to,
the non-disclosure of Buyer's Excluded Information; provided, however,
nothing contained in this Section 2.2(e) shall limit Securityholder's
right to rely upon the express representations and warranties made by
Buyer and Parent in this Agreement, or Securityholder's remedies in
respect of breaches of any such representations and warranties.
(f) No Setoff. Securityholder has no liability or obligation
related to or in connection with the Securities other than the
obligations to Buyer and Parent as set forth in this Agreement. There
are no legal or equitable defenses or counterclaims that have been or
may be asserted by or on behalf of the Company, as applicable, to reduce
the amount of the Securities or affect the validity or enforceability of
the Securities.
3. Survival of Representations and Warranties. The respective
representations and warranties of Securityholder, Parent and Buyer contained
herein or in any certificates or other documents delivered in connection
herewith shall not be deemed waived or otherwise affected by any investigation
made by the other party hereto, and each representation and warranty contained
herein shall survive the closing of the transactions contemplated hereby until
the expiration of the applicable statute of limitations, including extensions
thereof.
4. Specific Performance. Securityholder acknowledges that Buyer and Parent
will be irreparably harmed and that there will be no adequate remedy at law for
a violation of any of the covenants or agreements of Securityholder which are
contained in this Agreement. It is accordingly agreed that, in addition to any
other remedies which may be available to Buyer and Parent upon the breach by
Securityholder of such covenants and agreements, Buyer and Parent shall have the
right to obtain injunctive relief to restrain any breach or threatened breach of
such covenants or agreements or otherwise to obtain specific performance of any
of such covenants or agreements.
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5. Miscellaneous.
5.1 Term. This agreement shall terminate upon the earlier of (i) the
termination of the Merger Agreement or (ii) the 30th day after the date
hereof if Parent has not commenced the Initial Offer.
5.2 Expenses. Each of the parties hereto shall pay its own expenses
incurred in connection with this Agreement. Each of the parties hereto
warrants and covenants to the others that it will bear all claims for
brokerage fees attributable to action taken by it.
5.3 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their
respective representatives and permitted successors and assigns.
5.4 Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings between the parties with respect to its subject matter. This
Agreement may be amended only by a written instrument duly executed by the
parties hereto.
5.5 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Time is of the essence with respect to
all provisions of this Agreement.
5.6 Assignment. This Agreement may not be transferred or assigned by
Securityholder but may be assigned by Buyer to any of its affiliates or to
any successor to its business and will be binding upon and inure to the
benefit of any such affiliate or successor.
5.7 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be an original, but both of which together shall
constitute one and the same Agreement.
5.8 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given if so given) by delivery, telegram or
telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any national courier service, provided that any
notice delivered as herein provided shall also be delivered by telecopy at
the time of such delivery. All communications hereunder shall be delivered
to the respective parties at the following addresses (or at such other
address for a party as shall be specified by like notice, provided that
notices of a change of address shall be effective only upon receipt
thereof):
(a) If to Parent or Buyer:
John H. Harland Company
2939 Miller Road
Decatur, Georgia 30035
Attention: John C. Walters
Telecopy: (770) 593-5619
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Alan J. Prince, Esq.
Mark E. Thompson, Esq.
Telecopy: (404) 572-5100
(b) If to Securityholder:
[NAME OF SECURITYHOLDER]
[ADDRESS OF SECURITYHOLDER]
Telecopy: [TELECOPY NUMBER OF
SECURITYHOLDER]
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with a copy to:
Tonkon Torp LLP
1600 Pioneer Tower
888 SW Fifth Avenue
Portland, Oregon 97204-2099
Attention: Ronald L. Greenman, Esq.
Telecopy: (503) 972-3706
5.9 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without
regard to its principles of conflicts of laws.
5.10 Enforceability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain
in full force and effect.
5.11 Further Assurances. From time to time at or after the date Buyer
purchases shares of Company Common Stock pursuant to the Initial Offer, at
Buyer's request and without further consideration, Securityholder shall
execute and deliver to Buyer such documents and take such action as Buyer
may reasonably request in order to consummate more effectively the
transactions contemplated hereby and to vest in Buyer good, valid and
marketable title to the Securities, including, but not limited to, using
its best efforts to cause the appropriate transfer agent or registrar to
transfer of record the Securities.
IN WITNESS WHEREOF, Buyer, Parent and Securityholder have caused this
Agreement to be duly executed as of the day and year first above written.
JH ACQUISITION CORP.
By:
------------------------------------------
Name:
Title:
JOHN H. HARLAND COMPANY
By:
------------------------------------------
Name:
Title:
------------------------------------------
[NAME OF SECURITYHOLDER]
B-5
<PAGE> 83
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent or delivered by each stockholder of Concentrex or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of the addresses set forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Hand: By Overnight Courier: By Mail:
Reorganization Department 85 Challenger Road Reorganization Department
120 Broadway Mail Stop-Reorg P.O. Box 3301
13th Floor Ridgefield, New Jersey 07660 South Hackensack, New Jersey 07606
New York, New York 10271
</TABLE>
<TABLE>
<S> <C>
By Facsimile Transmission: Confirm by Telephone:
(201) 296-4293 (201) 296-4860
</TABLE>
Any questions and requests for assistance may be directed to the
Information Agent at its telephone number and address listed below. Additional
copies of this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent. You may
also contact your broker, dealer, commercial bank or trust company for
assistance concerning the Offer.
The Information Agent for the Offer is:
(Georgeson Shareholder Communications Inc. Logo)
17 State Street, 10(th) Floor
New York, NY 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
