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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
CONCENTRA CORPORATION
(NAME OF SUBJECT COMPANY)
CONCENTRA CORPORATION
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $.00001 PER SHARE
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
(TITLE OF CLASS OF SECURITIES)
205897 10 1
(CUSIP NUMBER OF CLASS OF SECURITIES)
ALEX N. BRAVERMAN
CHIEF FINANCIAL OFFICER
CONCENTRA CORPORATION
21 NORTH AVENUE
BURLINGTON, MASSACHUSETTS 01803-3301
(781) 229-4600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICE AND
COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT)
WITH A COPY TO:
WILLIAM E. KELLY, ESQ.
PEABODY & ARNOLD LLP
50 ROWES WHARF
BOSTON, MASSACHUSETTS 02110
(617) 951-2100
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Concentra Corporation, a Delaware
corporation ("Concentra" or the "Company"), and the address of its principal
executive offices is 21 North Avenue, Burlington, Massachusetts 01803-3301.
The title of the class of equity securities to which this statement relates is
the common stock, par value $.00001 per share, of the Company (the "Common
Stock") and the associated Series A Participating Cumulative Preferred Stock
purchase rights (the "Rights" and, together with the Common Stock, the
"Shares") issued pursuant to the Rights Agreement between the Company and The
First National Bank of Boston, as Rights Agent, dated as of April 24, 1997, as
amended November 10, 1998 (the "Rights Agreement").
ITEM 2. TENDER OFFER OF THE BIDDER
This statement relates to the tender offer by KL Acquisition Corporation
("Purchaser"), a Delaware corporation and a wholly owned subsidiary of Oracle
Corporation, a Delaware corporation ("Oracle" or "Parent"), to purchase all of
the outstanding Shares held by the Company's stockholders other than Parent or
its affiliates (such stockholders, the "Public Stockholders" and such Shares,
the "Publicly Held Shares") at $7.00 per Share, net to the seller in cash (the
"Offer Price"), upon the terms and subject to the conditions set forth in
Purchaser's Offer to Purchase dated as of November 17, 1998 (the "Offer to
Purchase") and the related Letter of Transmittal (which together with the
Offer to Purchase constitute the "Offer"), copies of which are filed
respectively as Exhibits 1 and 2 hereto and are incorporated herein by
reference in their entirety. The Offer is disclosed in a Tender Offer
Statement on Schedule 14D-1 dated November 17, 1998 (the "Schedule 14D-1")
which has been filed with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules promulgated by the SEC thereunder. The Offer is being
made by Purchaser pursuant to an Agreement and Plan of Merger, dated as of
November 10, 1998, by and among Parent, Purchaser and the Company (as the same
may be amended from time to time, the "Merger Agreement"), a copy of which is
filed as Exhibit 3 hereto and incorporated herein by reference in its
entirety.
According to the Purchaser's Schedule 14D-1, the address of the principal
executive offices of each of the Purchaser and Parent is 500 Oracle Parkway,
Redwood Shores, California 94065.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Except as described herein, in Annex 1 attached hereto which is
incorporated herein by reference, and in the Company's Proxy Statement dated
July 16, 1998 relating to the Company's Annual Meeting of Stockholders held on
August 10, 1998 (attached hereto as Exhibit 4 and incorporated herein by
reference), to the knowledge of the Company, as of the date hereof there are
no material contracts, agreements, arrangements or understandings, or any
potential or actual conflicts of interest between the Company or its
affiliates and (1) the Company, its executive officers, directors or
affiliates, or (2) the Purchaser, its executive officers, directors or
affiliates.
MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
Such summary is qualified in its entirety by reference to the Merger
Agreement.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable after the date thereof, but in no event
later than five business days after the initial public announcement of
Purchaser's intention to commence the Offer (within the meaning of Rule 14d-
2(a) under the Exchange Act) for all of the outstanding Shares at a price of
$7.00 per Share, net to the seller in cash, without interest thereon. The
Merger Agreement further provides that the obligation of the Purchaser to
accept for
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payment and to pay for any Shares (and associated Rights) tendered shall be
subject only: (i) to such number of Shares, when added to the number of Shares
already owned by Parent, the Purchaser or any direct or indirect wholly-owned
subsidiary of Parent, as shall constitute fifty-one percent of the Company's
Fully Diluted Shares being validly tendered prior to the expiration or
termination of the Offer and not withdrawn (the "Minimum Share Condition");
and (ii) certain other conditions that are described therein (the "Offer
Conditions"). The Merger Agreement provides that the Purchaser shall not,
without the prior written consent of the Company amend or modify the terms of
the Offer to (i) reduce the cash price to be paid pursuant to the Offer, (ii)
reduce the number of Shares (and associated Rights) as to which the Offer is
made, (iii) change the form of consideration to be paid in the Offer, (iv)
impose conditions to the Offer in addition to the Offer Conditions or modify
the Offer Conditions (other than to waive any Offer Condition to the extent
permitted by the Merger Agreement), or (v) make any other change or
modification in any of the terms of the Offer in any manner that is adverse to
holders of the Shares (and associated Rights). Subject to the terms and
conditions thereof, the Offer shall expire at midnight, New York City time, on
the date that shall be 20 business days after the date on which the Offer
shall be commenced. The Offer may not be extended without the Company's prior
written consent; provided, however, that the Purchaser may (x) from time to
time extend (and re-extend) the Offer, if, at the scheduled expiration date of
the Offer, any of the Offer Conditions (other than the Minimum Share
Condition) shall not have been satisfied or waived, until such time as such
conditions shall be satisfied or waived, (y) extend the Offer for any period
required by any rule, regulation, interpretation or position of the SEC or the
staff thereof applicable to the Offer, or (z) extend (and re-extend) the Offer
for any reason on one or more occasions for an aggregate period of not more
than 20 business days beyond the latest expiration date that would otherwise
be permitted under clause (x) or (y) above if on such expiration date there
shall not have been tendered at least that number of Shares (and associated
Rights) necessary to permit the Merger to be effected without a meeting of the
Company's stockholders in accordance with the DGCL.
The Merger. The Merger Agreement provides that as soon as practicable after
the purchase of Shares pursuant to the Offer and the satisfaction of the other
conditions set forth in the Merger Agreement and in accordance with the
relevant provisions of the DGCL, the Purchaser will be merged with and into
the Company. As a result of the Merger, the separate corporate existence of
the Purchaser will cease and the Company will continue as the Surviving
Corporation (as defined in the Merger Agreement) and will become a wholly-
owned subsidiary of Parent. At the Effective Time (as defined in the Merger
Agreement), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares held in the treasury of the Company, Shares
owned by Parent, the Purchaser or any direct or indirect wholly-owned
subsidiary of Parent or the Company or Shares held by stockholders who shall
have properly demanded and perfected appraisal rights under the DGCL) will be
canceled and converted automatically into the right to receive in cash an
amount equal to the highest price per Share paid pursuant to the Offer (the
"Merger Price").
The Purchaser or the designated paying agent will be entitled to deduct and
withhold from the consideration otherwise payable pursuant to the Merger
Agreement to any holder of Shares such amounts that the Purchaser 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.
Pursuant to the Merger Agreement, each share of common stock, par value
$0.001 per share, of the Purchaser issued and outstanding immediately prior to
the Effective Time will be converted into one validly issued, fully paid and
nonassessable share of common stock, par value $0.00001 per share, of the
Surviving Corporation.
Promptly upon the purchase by the Purchaser of Shares in the Offer, and from
time to time thereafter, the Purchaser will be entitled to designate that
number of directors, rounded up to the next whole number, on the Board of
Directors of the Company (the "Company Board") that equals the product of (i)
the total number of directors on the Company Board (giving effect to the
election of any additional directors pursuant to the Merger Agreement) and
(ii) the percentage that the number of Shares owned by the Purchaser, Parent
and any direct or indirect wholly-owned subsidiary of Parent (including Shares
purchased in the Offer) bears to the total number
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of Shares outstanding at such time, and, to effect the foregoing, the Company
will, upon request by the Purchaser, at the Company's election, either
increase the number of directors comprising the Company Board or seek and
accept resignations of incumbent directors. The first date on which designees
of the Purchaser will constitute a majority of the Company's Board of
Directors is referred to as the "Cut-Off Date." At such times, the Company
will cause individuals designated by the Purchaser to constitute the same
percentage of each committee of the Company Board as such individuals
represent on the Company Board.
Following the Cut-Off Date and prior to the Effective Time, if the Company
shall have at least one director who is neither an employee of the Company or
any of its subsidiaries nor otherwise affiliated with the Purchaser (one or
more of such directors, the "Independent Directors"), any amendment of the
Merger Agreement or the Certificate of Incorporation or Bylaws of the Company
or any of its subsidiaries, any termination or amendment of the Merger
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or the Purchaser
or any exercise or waiver of any of the Company's rights under the Merger
Agreement, will require the concurrence of a majority of the Independent
Directors.
The Merger Agreement provides that the directors of the Purchaser at the
Effective Time will be the initial directors of the Surviving Corporation and
that the officers of the Company at the Effective Time will be the initial
officers of the Surviving Corporation. The Merger Agreement provides that, at
the Effective Time, the Certificate of Incorporation of the Purchaser will be
the Certificate of Incorporation of the Surviving Corporation; provided,
however, that, at the Effective Time, Article I of the Certificate of
Incorporation of the Surviving Corporation will be amended to read as follows:
"The name of the corporation is Concentra Corporation." The Merger Agreement
also provides that the Bylaws of the Purchaser will be the Bylaws of the
Surviving Corporation.
At the Effective Time, each outstanding stock option to purchase shares of
Common Stock under the Company's stock option plans shall terminate and each
holder thereof shall receive in exchange for such termination a cash payment
equal to, subject to any applicable tax withholding required under the Code,
the excess, if any, of (i) the Merger Price times the number of shares of
Common Stock subject to such option which are vested and exercisable
(including such number of shares that become vested and exercisable by its
terms as a result of the transactions contemplated by the Merger Agreement),
over (ii) the aggregate exercise price of such option.
Under the Merger Agreement, the Company has agreed to take all actions
reasonably necessary to cause the last day of the then-current "offering," as
such term is defined in the Company's 1995 Employee Stock Purchase Plan (the
"Purchase Plan"), to be December 15, 1998 (the "Final Purchase Date"), and
shall apply on the Final Purchase Date the funds within each participant's
accumulated payroll account as of such date to the purchase of whole shares of
Common Stock in accordance with the terms of the Purchase Plan. No new
offering shall commence under the Purchase Plan following the Final Purchase
Date. The Company has agreed to take all steps required to terminate the
Purchase Plan immediately after the Effective Time.
Certain non-employee directors of the Company have received options to
purchase Common Stock under the Company's 1994 Directors Stock Option Plan
(the "Directors Plan"). All stock options granted pursuant to the Directors
Plan are fully vested and all directors holding options under the Directors
Plan have agreed that such options will terminate, to the extent not
previously exercised, as of the Effective Time.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including
representations by the Company, Parent and the Purchaser as to corporate
status and the enforceability of the Merger Agreement against each such party
and by the Company as to its capitalization, compliance with law, the accuracy
of financial statements and filings with the SEC and the absence of certain
material adverse changes or events concerning the Company's business.
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Covenants of the Company and Parent. In the event that Purchaser shall
acquire at least 90% of the then outstanding Shares (and associated Rights),
the Company has agreed, at the request of Purchaser, subject to the provisions
of the Merger Agreement, to take all necessary and appropriate action to cause
the Merger to become effective, in accordance with Section 253 of the DGCL,
including the preparation and mailing of an Information Statement, if the
Purchaser determines that such Information Statement is appropriate or
required to cause the Merger to become effective, as soon as reasonably
practicable after such acquisition, without a meeting of the stockholders of
the Company.
The Merger Agreement provides that, if the DGCL requires approval by the
Company's stockholders of the Merger Agreement or the Merger, then the Company
shall cause a stockholders' meeting to be duly called and held as soon as
practicable for the purpose of voting on the approval and adoption of the
Merger Agreement and the transactions contemplated thereby. The Company Board
shall recommend approval and adoption of the Merger Agreement and the Merger
by the Company's stockholders. In connection with such meeting, the Company
(i) shall promptly prepare and file with the SEC, use all reasonable efforts
to have cleared by the SEC and thereafter mail to its stockholders as promptly
as practicable all proxy materials for such meeting, (ii) shall notify Parent
of the receipt of any comments of the SEC with respect to such proxy materials
and of any requests by the SEC for any amendment or supplement thereto or for
additional information and shall promptly provide to Parent copies of all
correspondence between the Company or any representative of the Company and
the SEC, (iii) shall give Parent and its counsel the opportunity to review the
proxy materials prior to filing with the SEC and shall give Parent and its
counsel the opportunity to review all amendments and supplements to such proxy
materials and all responses to requests for additional information and replies
to comments prior to their being filed with, or sent to, the SEC, (iv) shall,
subject to the fiduciary duties of the Company Board, as advised by counsel,
use all reasonable efforts to obtain the necessary approvals by its
stockholders of the Merger Agreement and the transactions contemplated hereby
and (v) shall otherwise comply with all legal requirements applicable to such
meeting.
Pursuant to the Merger Agreement, the Company has agreed that neither it,
nor any of the employees, officers or directors of the Company, nor the
stockholders of the Company (the "Sellers") who have executed the Support
Agreements (as defined in the Merger Agreement) shall, and the Company shall
direct and cause the agents and representatives (including the Financial
Advisor or any other investment banker and any attorney or accountant retained
by it (collectively, "Company Advisors")) not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate the making of any
inquiries in respect of, or the making of any proposal for, a Third Party
Acquisition (as defined below). The Company further has agreed that neither
it, nor any of the employees, officers or directors of the Company, nor the
Sellers shall, and the Company shall direct and cause all Company Advisors not
to, directly or indirectly, engage in any negotiations concerning, or provide
any information or data to, or have any discussions with, any Third Party (as
defined below) relating to the proposal of a Third Party Acquisition, or
otherwise facilitate any effort or attempt to make or implement a Third Party
Acquisition; provided, however, that if at any time prior to the acceptance by
Purchaser for payment of Shares (and associated Rights) pursuant to the Offer,
the Company Board determines in good faith, after consultation with outside
counsel, that it is necessary to do so in order to comply with its fiduciary
duties to the Company's stockholders under applicable law, the Company may, in
response to an inquiry, proposal or offer for a Third Party Acquisition which
was not solicited subsequent to the date of the Merger Agreement and that does
not result from a breach of the Merger Agreement by the Company, (x) furnish
only such information with respect to the Company to any such person pursuant
to a customary confidentiality agreement as was delivered to Parent prior to
the execution of the Merger Agreement and (y) participate in discussions and
negotiations regarding such inquiry, proposal or offer. The Company has agreed
to notify Parent promptly (and in any event within 24 hours) if (i) any
inquiries relating to or proposals for a Third Party Acquisition are received
by the Company or any of the Company Advisors, (ii) any information about the
Company is requested from the Company or any of the Company Advisors, or (iii)
any negotiations or discussions in connection with a possible Third Party
Acquisition are sought to be initiated or continued with the Company or any of
the Company Advisors indicating, in each such case, in connection with such
notice, the principal terms and conditions of any such proposals or
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offers, including the identity of the offering party, and thereafter shall
keep Parent informed in writing, on a reasonably current basis, on the status
and terms of any such proposals or offers and the status of any such
negotiations or discussions.
Except as set forth below, the Company Board has agreed not to withdraw its
recommendation of the Offer or the Merger and other transactions contemplated
hereby or thereby or approve or recommend any Third Party Acquisition.
Notwithstanding the preceding sentence, if the Company Board determines that
it is necessary to do so in order to comply with its fiduciary duties to the
Company's stockholders under applicable law, the Company Board may withdraw or
alter its recommendation of the Offer or the Merger, or approve or recommend
or cause the Company to enter into an agreement with respect to a Superior
Proposal (as defined below), but in each case only (i) after providing written
notice to Parent advising it that the Company Board has received a Superior
Proposal and (ii) if Parent does not, within five business days (or within two
business days with respect to any amendment to any Superior Proposal) after
Parent's receipt of notice, make an offer which the Company Board determines
in its good faith judgment to be as favorable to the Company's stockholders as
such Superior Proposal; provided, however, that the Company will not be
entitled to enter into any agreement with respect to a Superior Proposal
unless the Merger Agreement is concurrently terminated by its terms.
For purposes of the Merger Agreement, "Third Party Acquisition" means the
occurrence of any of the following events: (i) the acquisition of the Company
by merger or otherwise by any person or entity (which includes a "person" as
such term is defined in Section 13(d)(3) of the Exchange Act) other than
Parent, the Purchaser or any affiliate thereof (a "Third Party"); (ii) the
acquisition by a Third Party of 20% or more of the total assets of the Company
(other than the purchase of the Company's products in the ordinary course of
business); (iii) the acquisition by a Third Party of 20% or more of the
outstanding Shares; (iv) the adoption by the Company of a plan of partial or
complete liquidation or the declaration or payment of an extraordinary
dividend; (v) the repurchase by the Company of 20% or more of the outstanding
Shares; or (vi) the acquisition by the Company by merger, purchase of stock or
assets, joint venture or otherwise of a direct or indirect ownership interest
or investment in any business whose annual revenues, net income or assets is
equal to or greater than 20% of the annual revenues, net income or assets of
the Company. For purposes of the Merger Agreement, a "Superior Proposal" means
any bona fide proposal to acquire directly or indirectly for consideration
consisting of cash and/or securities 100% of the Shares then outstanding or
all or substantially all the assets of the Company and otherwise on terms
which the Company Board by a majority vote determines in its good faith
judgment (based on consultation with the Financial Advisor or another
financial adviser of nationally recognized reputation) to be reasonably
capable of being completed (taking into account all legal, financial,
regulatory and other aspects of the proposal and the person or entity making
the proposal, including the availability of financing therefor) and more
favorable to the Company's stockholders than the Offer and the Merger.
Pursuant to the Merger Agreement, the Company has covenanted and agreed
that, between the date of the Merger Agreement and the Cut-Off Date, unless
Parent otherwise agrees in writing: (i) the businesses of the Company and its
subsidiaries will be conducted only in, and the Company will not take any
action except in, the ordinary course of business and in a manner consistent
with past practice; (ii) the Company will endeavor to preserve substantially
intact the business organization of the Company, to keep available the
services of the current officers and employees of the Company and to preserve
the current relationships of the Company with customers, suppliers and other
persons with which the Company has significant business relations; and (iii)
the Company will not declare or pay dividends, split, combine or reclassify
its stock, issue convertible securities or issue rights, warrants or options
to purchase Shares other than shares issuable upon exercise of warrants or
stock options outstanding as of the date of the Merger Agreement; amend its
Certificate of Incorporation or Bylaws; acquire or agree to acquire any
business or any corporation or other business organization or division
thereof; authorize any single capital expenditure which is in excess of
$100,000 or capital expenditures which are, in the aggregate, in excess of
$250,000; increase the compensation payable to its officers or employees,
except for increases in accordance with past practices, or grant any severance
or termination pay to, or enter into any employment or severance agreement
with any director, officer or other employee of the Company, or establish or
amend any collective bargaining, compensation, stock option, or other
arrangement for the benefit of any director, officer or employee; make any tax
election or settle or compromise any material federal, state, local or
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foreign income tax liability; pay or settle any suit, claim, liability or
obligation, other than the payment, discharge or satisfaction, in the ordinary
course of business and consistent with past practice, of liabilities reflected
or reserved against in the Company's balance sheet dated as of September 30,
1998 or subsequently incurred in the ordinary course of business and
consistent with past practice; amend or modify the warranty policy of the
Company; materially revalue any of its assets; or take any action that would
result in any of the representations and warranties of the Company set forth
in the Merger Agreement becoming untrue in any material respect or in any of
the conditions to the Offer or any of the conditions to the Merger not being
satisfied.
The Company and Parent are each obligated under the Merger Agreement to give
each other prompt notice of (i) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which would be likely to cause any
representation or warranty contained in the Merger Agreement to be untrue or
inaccurate and (ii) any failure of the Company, Parent or Purchaser, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it thereunder.
Under the Merger Agreement, Parent has agreed that all rights to
indemnification existing in favor of directors, officers or employees of the
Company (the "Indemnified Persons") as provided in the Company's Certificate
of Incorporation, Bylaws or any indemnification agreements listed in the
Company Disclosure Schedule, with respect to matters occurring through the
Effective Time, shall survive the Merger and shall continue in full force and
effect for a period of not less than six years from the Effective Time.
Effective upon the Effective Time, to the fullest extent permitted by law,
Parent shall be directly bound by, and shall guarantee the Company's and the
Surviving Corporation's performance of, the Company's and the Surviving
Corporation's obligations described in the prior sentence for a period of six
years after the Effective Time. If Parent, the Surviving Corporation or any of
either 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 provision shall be made so that the successors and assigns of Parent
and the Surviving Corporation assume the indemnification obligations set forth
in the Merger Agreement.
Under the Merger Agreement, each of the parties thereto will use its
reasonable efforts to take, or cause to be taken, all appropriate action, and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by the Merger Agreement, including, without
limitation, using its reasonable efforts to obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and parties to contracts with the Company and its subsidiaries as
are necessary for the consummation of the transactions and to fulfill the
conditions to the Offer and the Merger.
Under the Merger Agreement, Parent and the Company agree to consult with one
another before issuing any press release or otherwise making any public
statements with respect to the Merger Agreement or the transactions
contemplated thereby. Parent and the Company further agree not to 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 to which Parent or the Company is a party.
Conditions to the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions: (a) to the
extent required by the DGCL and the Company's Certificate of Incorporation,
the Merger Agreement and the Merger shall have been approved and adopted by
the affirmative vote or consent of the stockholders of the Company, (b) no
foreign, United States or state governmental authority or other agency or
commission or foreign, United States or state court of competent jurisdiction
will have enacted, issued, promulgated, enforced or entered any law, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is then in effect and has the
effect of making the acquisition of Shares by Parent or the Purchaser or any
affiliate of either of them illegal or otherwise restricting, preventing or
prohibiting consummation of the transactions contemplated by the Merger
Agreement, provided, however, that each of the parties will have used its
reasonable efforts to prevent the entry of any such injunction or other order
and to appeal as promptly as practicable any injunction or other order that
may be entered, (c) the waiting period applicable to the consummation of the
Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended ("HSR") will have expired or been terminated, and all other required
governmental filings and
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consents will have been made or obtained, other than the filing of the
Certificate of Merger, (d) the Purchaser will have purchased all Shares
validly tendered and not withdrawn pursuant to the Offer, (e) the
representations and warranties of the Company, Parent and the Purchaser set
forth in the Merger Agreement will be true and correct in all material
respects as of the date of the Merger Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date (as defined in the Merger Agreement) as though made on and as of the
Closing Date, and (f) the Company, Parent and the Purchaser shall have
performed in all material respects all obligations required to be performed by
each of them under the Merger Agreement at or prior to the Closing Date.
Termination; Certain Payments; Fees and Expenses. The Merger Agreement may
be terminated and the Merger may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval of the Merger Agreement
and the transactions contemplated thereby by the stockholders of the Company
only: (a) by mutual written consent duly authorized by the Boards of Directors
of the Company, Parent and the Purchaser; (b) by either Parent or the Company
if any court of competent jurisdiction or other governmental authority shall
have issued an order, decree, ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the acceptance for payment of,
or payment for, Shares pursuant to the Offer or the Merger and such order,
decree, ruling or other action shall have become final and nonappealable; (c)
by either Parent or the Company if (i) the Offer shall have terminated or
expired in accordance with its terms without the Purchaser having accepted for
payment any Shares pursuant to the Offer; or (ii) the Purchaser shall not have
accepted for payment any Shares pursuant to the Offer within 120 days
following the commencement of the Offer; provided, however, that the right to
terminate the Merger Agreement pursuant to this clause (c) will not be
available to any party (or to any of its affiliates) that has failed to
perform or breached in any material respect any of its obligations under the
Merger Agreement which results in the failure of any condition set forth in
Annex I of the Merger Agreement or a material breach of a representation or
warranty under the Merger Agreement by such party; (d) by Parent if (i) prior
to the purchase of Shares (and associated Rights) pursuant to the Offer, (A)
the Company Board or any committee thereof shall have withdrawn or modified
its approval or recommendation of the Offer, the Merger Agreement, the Merger
or any other transaction contemplated by the Merger Agreement; (B) the Company
Board or any committee thereof shall have recommended to the stockholders of
the Company, taken no position with respect to, or failed to recommend
against, acceptance of a Third Party Acquisition; (C) the Company shall have
entered into any definitive agreement with respect to a Third Party
Acquisition; (D) the Company Board fails to reconfirm its recommendation of
the Offer, the Merger Agreement, the Merger and the transactions contemplated
by the Merger Agreement within five days of any written request by the Parent
that the Company's Board of Directors reconfirm its recommendation; or (E) the
Company Board or any committee thereof shall have resolved to do any of the
foregoing; or (ii) the Company shall have breached in any material respect any
of its representations, warranties, covenants or other agreements contained in
the Merger Agreement which breach cannot be or has not been cured within 20
days after the giving of written notice to the Company, among other things; or
(e) by the Company if (i) the Company Board shall have withdrawn or modified
in a manner adverse to the Purchaser or Parent its approval or recommendation
of the Offer, the Merger Agreement or the Merger in order to approve the
execution by the Company of a definitive agreement providing for the
transactions contemplated by a Superior Proposal, provided that the Company
shall have complied with certain provisions of the Merger Agreement, including
the notice provisions therein, or (ii) Parent or the Purchaser shall have
breached in any material respect any of their respective representations,
warranties, covenants or other agreements contained in the Merger Agreement
which breach cannot be or has not been cured within 20 days after the giving
of written notice to Parent or the Purchaser, as applicable, except, in any
case, for such breaches which are not reasonably likely to affect adversely
Parent's or the Purchaser's ability to complete the Offer or the Merger.
In the event that: (i) the Merger Agreement is terminated pursuant to
Section 8.1 (d)(i) or 8.1 (e)(i) of the Merger Agreement, then the Company
shall pay Parent fifty percent of the Termination Fee (as defined below)
within five (5) days after the first of such events shall have occurred. The
Company shall pay the remaining fifty percent of the Termination Fee within
the earlier of (i) nine (9) months following such event, or (ii) five (5) days
after the consummation of a Third Party Acquisition or similar alternative
transaction with any person other than Parent or any of its affiliates. The
"Termination Fee" shall be a dollar amount equal to (A) three percent of the
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amount obtained by multiplying the total number of Fully Diluted Shares plus
the total number of Excluded Shares (as defined in the Merger Agreement) by
$7.00, plus (B) an amount equal to the actual and reasonably documented out-
of-pocket fees and expenses (not to exceed $200,000) incurred by Parent and
the Purchaser in connection with the Offer, the Merger, the Merger Agreement
and the transactions contemplated thereby, which amounts shall be payable in
immediately available funds. In the event the Merger Agreement is terminated
pursuant to Section 8.1(c) or 8.1(d)(ii) of the Merger Agreement, and the
Company shall have announced (and subsequently consummates) or shall have
consummated a Third Party Acquisition with any person other than Parent or any
of its affiliates before or within nine months after the date of such
termination, then the Company shall pay Parent the entire Termination Fee
within five (5) days after the consummation of the Third Party Acquisition. In
the event that the Company shall fail to pay any amounts owing upon
termination pursuant the Merger Agreement, interest shall be paid on such
unpaid amounts, commencing on the date such amounts became due, at a rate of
six percent (6%) per annum.
Parent Stock Option. In connection with the execution and delivery of the
Merger Agreement, the Company granted to Parent an irrevocable option (the
"Parent Option") to purchase, for $7.00 per share in cash, newly issued shares
of Common Stock representing 19.9% of the Company's total outstanding Common
Stock (and associated Rights), which percentage shall be calculated after
taking into account the exercise in full of the Parent Option. Parent may
exercise the Parent Option, in whole or in part, at any time or from time to
time from the day (the "Exercise Commencement Date") of: (i) the occurrence of
certain termination events under the Merger Agreement; or (ii) the purchase of
fifteen percent (15%) or more of the Shares pursuant to a tender offer is
consummated by any person or entity other than Parent, the Purchaser or any
affiliate thereof, whichever is earlier, until the day (the "Option
Termination Date") which is the earlier of (i) the Effective Time, or (ii) one
year after the termination of the Merger Agreement.
Except as otherwise agreed in writing all costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
will be paid by the party incurring such fees and expenses, whether or not the
transactions contemplated by the Merger Agreement are consummated.
Limitation on Total Profits. The Total Profit (as defined below) that Parent
shall be permitted to realize in respect of the Termination Fee and the Parent
Option shall not exceed four percent (4%) of the aggregate purchase price that
would have been payable for one hundred percent (100%) of the Company's Fully
Diluted Shares and one hundred percent (100%) of the Excluded Shares (as
defined in the Merger Agreement) at $7.00 per share. In the event Parent's
Total Profit would exceed such amount, Parent shall, at its sole election, (a)
reduce the number of Shares subject to the Parent Option, (b) deliver Shares
received upon an exercise of the Parent Option to the Company for
cancellation, (c) pay an amount of cash to the Company, or (d) do any
combination of the foregoing so that Parent's actual realized Total Profit
shall not exceed four percent (4%) of the aggregate purchase price that would
have been payable for one hundred percent (100%) of the Company's Fully
Diluted Shares and one hundred percent (100%) of the Excluded Shares at $7.00
per share. "Total Profit" means the aggregate (before taxes) of (i) any amount
received pursuant to the Company's repurchase of the Parent Option (or any
portion thereof), (ii) any amount received pursuant to the Company's
repurchase of the Shares (less the purchase price for such Shares) subject to
the Parent Option, (iii) any net cash received pursuant to the sale of Shares
received by Parent in any exercise of the Parent to any third party (less the
purchase price of such Shares), (iv) any amounts received on transfer of the
Parent Option or any portion thereof to a third party, (v) any equivalent
amounts received with respect to the Parent Option adjusted pursuant to
Section 5.5(e) of the Merger Agreement, and (vi) the Termination Fee.
INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER
In considering the recommendations of the Company Board with respect to the
Offer and the Merger and the fairness of the consideration to be received in
the Offer and the Merger, stockholders should be aware that certain officers
and directors of the Company have interests in the Offer and the Merger which
are described below and which may be in addition to their interests as
stockholders of the Company. Stockholders also should be aware that Parent and
the Purchaser have certain interests that present actual or potential
conflicts of interest
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in connection with the Offer and the Merger. The Company Board was aware of
these actual and potential conflicts of interest and considered them along
with the other matters described under "SPECIAL FACTORS -- Recommendations of
the Company Board; Fairness of the Offer and the Merger" as set forth in the
Offer to Purchase.
Indemnification and Insurance. Under the DGCL, corporations incorporated
under the laws of the State of Delaware are permitted to indemnify their
current and former directors, officers, employees and agents under certain
circumstances against certain liabilities and expenses incurred by them by
reason of their serving in such capacities. The Company's Certificate of
Incorporation provides that each director and officer will be indemnified by
the Company to the fullest extent permitted under the DGCL against liabilities
and expenses incurred in connection with any threatened, pending or completed
legal action or proceeding to which he or she may be made a party or
threatened to be made a party by reason of being a director of the Company or
a predecessor company, or serving any other enterprise as a director or
officer at the request of the Company. The directors and officers of the
Company have entered into indemnification agreements with the Company for the
purpose of confirming such rights. The Company has also purchased directors'
and officers' liability insurance for the benefit of these persons. Pursuant
to the Merger Agreement, all rights to indemnification existing in favor of
directors, officers or employees of the Company (the "Indemnified Persons") as
provided in the Company's Certificate of Incorporation, Bylaws or any
indemnification agreements listed in Section 5.7 of the Company Disclosure
Schedule to the Merger Agreement, with respect to matters occurring through
the Effective Time, shall survive the Merger and shall continue in full force
and effect for a period of not less than six (6) years from the Effective
Time. Effective upon the Effective Time, to the fullest extent permitted by
law, Parent shall be directly bound by, and shall guarantee the Company's and
the Surviving Corporation's performance of, the Company's and the Surviving
Corporation's obligations described in the prior sentence for a period of six
(6) years after the Effective Time. If Parent, the Surviving Corporation or
any of either 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 provision shall be made so that the successors and assigns
of Parent and the Surviving Corporation assume the indemnification obligations
set forth above.
Interests of Company Executives and Board Members. Certain members of the
Company's management and Board of Directors may have or be deemed to have
certain interests in the Merger that are in addition to their interests as
stockholders of the Company generally. The Company has informed Parent that
the Company's Board of Directors was aware of and discussed these interests in
connection with its consideration and approval of the Merger Agreement. In
considering the recommendation of the Company Board with respect to the Offer
and the Merger, stockholders of the Company should be aware of these interests
which may present actual or potential conflicts of interest.
Stock Option Matters. Pursuant to the Merger Agreement, all options to
purchase Common Stock outstanding under the Company's Stock Option Plans (as
defined in the Merger Agreement) shall terminate at the Effective Time and
each holder of such options shall receive in exchange for such termination a
cash payment equal to the excess, if any, of the Merger Price times the number
of shares of Common Stock subject to such option which are vested and
exercisable (including shares which become vested and exercisable as a result
of the Merger) over the aggregate exercise price of such option. The fair
market value of the Common Stock on the Effective Date shall be deemed to
equal the Merger Price.
Pursuant to pre-existing arrangements with the Company, options to purchase
shares of Common Stock issued under the Company's Stock Option Plans held by
certain executive officers will become fully vested and exercisable if such
persons are terminated without cause or resign for good reason within twelve
months following a change in control of the Company (such as the Merger).
Because Mr. Rosenfeld's employment is being terminated in connection with the
Merger, unvested options held by him will accelerate as a result of the Merger
and he will receive a cash payment (as described above under "Stock Option
Matters") in exchange for the termination of all such options he holds. The
amount of the cash payment Mr. Rosenfeld will receive in exchange for the
termination of the unvested portion of his stock options is approximately
$223,000.
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Biographical information for certain executive officers of the Company may
be found in Annex I attached hereto.
Parent has agreed to treat all unvested options held by the executive
officers other than Mr. Rosenfeld as fully vested and exercisable as of the
Effective Time and therefore all such options will be terminated in exchange
for a cash payment (calculated in the manner described above). The amounts to
be received at or immediately following the Effective Time by Messrs. Lemont,
Braverman, Phillips, Buck, Mishkin, and Lanell and by Ms. Henrich and Ms.
Mehegan, with respect to their unvested stock options (net of exercise price)
are approximately $208,806, $90,941, $86,147, $95,388, $94,688, $93,463,
$58,594 and $10,547, respectively. In addition, Parent has agreed that each
Company employee other than the executive officers who becomes an employee of
Parent following the Merger shall receive a cash payment equal to the value of
his or her unvested stock options at the Effective Time (which options shall
have terminated at the Effective Time) if he or she remains in the employ of
Parent for six months following the Merger.
Certain non-employee directors of the Company have received options to
purchase Common Stock under the Directors Plan. All stock options granted
pursuant to the Directors Plan are fully vested and all directors holding
options under such plan have agreed that such options will terminate, to the
extent not previously exercised, as of the Effective Time.
Severance Arrangements. In June 1993, Mr. Rosenfeld entered into a
Noncompetition and Termination Agreement with the Company that provides that
if the Company terminates his employment without cause, the Company shall make
a termination payment (the "Termination Payment") equal to the sum of his
then-current annual base salary plus 80% of his then-current maximum variable
compensation amount, which Termination Payment would be paid out in equal
monthly payments over a twelve-month period. This agreement also provides
that, if terminated as described above, Mr. Rosenfeld's options would continue
vesting during the twelve-month severance period and shall become fully vested
on the first anniversary of his termination date. Mr. Rosenfeld's employment
with the Company will terminate in connection with the Merger. Parent and Mr.
Rosenfeld have agreed that Mr. Rosenfeld will be entitled to receive a
Termination Payment of $392,000 immediately following the Merger.
Pursuant to pre-existing arrangements between the Company and each of
Messrs. Lemont, Braverman, Buck, Lanell, Mishkin and Phillips and Ms. Henrich
and Ms. Mehegan, each such executive officer is entitled to severance pay
equal to six months' of his or her base salary in the event he or she is
terminated other than for cause within twelve months following a change in
control of the Company, such as the Merger.
Mr. Rosenfeld's Noncompetition and Termination Agreement, as well as the
severance arrangements for the other executive officers described in the
preceding paragraph, will terminate on the Closing Date (as defined in the
Merger Agreement).
Oracle Consulting Arrangements. In connection with the Merger, Parent has
entered into a Consulting Agreement with Mr. Rosenfeld whereby Mr. Rosenfeld
will become a consultant to Parent to assist with the transition of the
Company into a subsidiary of Parent and related strategic business issues for
three months following the Merger in exchange for a monthly consulting fee of
$37,000.
Oracle Employment Arrangements. In connection with the Merger, the following
executive officers of the Company entered into offer letters with Parent
whereby Parent agreed to employ such persons following the Merger in the
capacities and on the terms as described below. Mr. Lemont will become a Vice
President and General Manager of Parent with an annual starting salary of
$250,000; he will be eligible to receive bonus payments during his first year
of employment totaling a maximum of $112,500 and will receive options to
purchase 30,000 shares of Parent Common Stock. Mr. Phillips will become a Vice
President and Chief Architect of Configuration Technology of Parent with an
annual starting salary of $160,000; he will be eligible to receive bonus
payments during his first year of employment totaling a maximum of $24,000 and
will receive options to purchase 25,000 shares of Parent Common Stock. Mr.
Buck will become a Vice President of Development of
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Parent with an annual starting salary of $160,000; he will be eligible to
receive bonus payments during his first year of employment totaling a maximum
of $24,000 and will receive options to purchase 25,000 shares of Parent Common
Stock. Mr. Mishkin will become a Vice President of Configuration Integration
of Parent with an annual starting salary of $145,000; he will be eligible to
receive bonus payments during his first year of employment totaling a maximum
of $21,750 and will receive options to purchase 15,000 shares of Parent Common
Stock. Ms. Henrich will become a Senior Practice Director of Parent with an
annual starting salary of $130,000; she will be eligible to receive bonus
payments during her first year of employment totaling a maximum of $13,000 and
will receive options to purchase 10,000 shares of Parent Common Stock. Mr.
Lanell will become a Vice President of Product Configuration Sales of Parent
with an annual starting salary of $160,000; he will be eligible to receive
bonus payments during his first year of employment totaling a maximum of
$24,000 and will receive options to purchase 20,000 shares of Parent Common
Stock. Each of the above officers will also be eligible to receive
discretionary incentive compensation based on individual productivity and
Parent's performance. In addition, each officer, except Mr. Lemont, is
entitled under the terms of his or her offer letter to receive severance pay
equal to six months' of his or her base salary in the event his or her
employment is terminated other than for cause or if such person resigns as a
result of a material adverse change in his or her position or responsibility
or because he or she is required to relocate, in each case, within two years
following the Merger. In Mr. Lemont's case, he is entitled under the terms of
his offer letter to receive severance pay equal to $150,000 in the event his
employment is terminated other than for cause or he resigns as a result of a
material adverse change in his position, responsibility or compensation or his
being required to relocate at any time following the Merger. The above
severance arrangements are in exchange for the individual's agreement to
terminate all rights he or she has under existing arrangements with the
Company relating to his or her termination of employment.
The parties expect Parent and each of Ms. Mehegan and Mr. Braverman to enter
into transition employment arrangements whereby such individuals will be
employed by Parent for three months following the Effective Time to assist
with the transition of the Company into a subsidiary of Parent.
Noncompetition Agreements. Each of the following individuals entered into a
Noncompetition Agreement with Parent whereby such person agreed for the
indicated time period following the Merger and in exchange for the cash
payment indicated not to become employed by or otherwise provide services to
an entity engaged in the development or marketing of configuration software
products: Mr. Rosenfeld: $150,000, one year; Mr. Lemont: $100,000, two years:
Mr. Braverman: $60,000, one year; Mr. Phillips: $50,000, two years; Mr. Buck:
$50,000, two years; Mr. Mishkin: $50,000, two years; Ms. Henrich: $50,000, two
years; and Mr. Lanell: $50,000, two years. In addition, each of the above
individuals agreed not to solicit employees or consultants of Parent or the
Company for two years following the Merger. The parties expect Parent and Ms.
Mehegan to enter into a customary Noncompetition Agreement for a period of one
year in exchange for a one-time cash payment of $15,000.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) The Company Board has unanimously determined that each of the Offer and
the Merger is fair to, and in the best interests of, the stockholders of the
Company and the Company Board unanimously recommends that the stockholders of
the Company accept the Offer and tender their Shares pursuant to the Offer.
(b) BACKGROUND OF THE OFFER AND THE MERGER
On September 5, 1998, David J. Roux, the Executive Vice President, Corporate
Development, of Parent, contacted Stephen J. Cucchiaro, a director of the
Company and a former business colleague of Mr. Roux, to discuss generally the
possible acquisition of the Company by Parent. Mr. Cucchiaro informed Mr. Roux
that the Company Board might be interested in considering such an acquisition.
On September 11, 1998, Mr. Roux contacted Lawrence W. Rosenfeld, the
Chairman of the Board, Chief Executive Officer and President of the Company,
to initiate discussion of a potential acquisition of the Company by Parent. At
that time, the Parent and the Company entered into a confidentiality agreement
concerning the proposed transaction under which the Company began to furnish
to Parent certain financial and business information concerning the Company.
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On September 16, 1998, Messrs. Rosenfeld, David I. Lemont, Senior Vice
President, Chief Operating Officer, Marvin Mishkin, Vice President, OEM
Integration, and Robert E. Phillips, Ph.D., Chief Technology Officer and Vice
President Product Definition of the Company, met with John E. Somorjai,
Director, Corporate Development, Donald Klaiss, Vice President, Manufacturing
and Distribution Products, and Kurt Robson, Vice President, Design and
Architecture of Parent at the DCI trade show in San Jose, California, and
discussed the respective businesses of Parent and the Company as well as the
potential framework of an acquisition of the Company.
Immediately upon the initiation of these discussions, the Company enlisted
the assistance of Volpe Brown Whelan & Company, LLC ("VBW&C") as financial
advisors to the Company in its discussions with Parent. During September 1998,
VBW&C identified and contacted other potential buyer companies to determine
their interest in acquiring the Company. No interest in submitting a
competitive bid was indicated in response to these contacts.
On September 18, 1998, Parent commenced its formal due diligence review of
the Company. On the same date, and again on September 29, 1998, Mr. Rosenfeld
reported to the Company's Board of Directors on the status of the discussions
with Parent.
On October 2, 1998, Mr. Somorjai delivered a non-binding term sheet to the
Company proposing a potential all cash tender offer by a subsidiary of Parent
for all of the outstanding shares of the Company with a subsequent cash-out
merger at a price per Share of $4.75.
On October 3, 1998, Mr. Rosenfeld contacted the chief executive officer of a
software company traded on Nasdaq to inquire as to that company's interest in
a potential acquisition of the Company. At that time, the company that had
been contacted declined to pursue discussions regarding an acquisition of the
Company.
The draft term sheet proposed by Parent was discussed at a meeting of the
Company's Board of Directors on October 5, 1998. VBW&C made a presentation of
their preliminary analysis of the terms of the proposed offer and possible
alternatives to that offer. The Board authorized management to proceed with
negotiations based upon the proposed term sheet.
Negotiations between representatives of Parent and the Company continued
between October 5, 1998 and October 18, 1998, with Mr. Rosenfeld reporting to
the Company's Board of Directors at meetings on October 8, 1998 and October
16, 1998. Counsel and VBW&C representatives participated at both meetings and
the Board considered alternative courses of action.
On October 18, 1998, Mr. Roux and Mr. Rosenfeld met to finalize the term
sheet. At this meeting, Messrs. Roux and Rosenfeld finalized the term sheet
and tentatively agreed upon a cash acquisition price of $5.00 per share of
Company Common Stock.
On October 18, 1998, the Company's Board and on October 19, 1998, the
Parent's Board held special meetings to review the proposed term sheet. Each
Board approved the term sheet and authorized the parties to continue
negotiations toward a definitive agreement.
From October 20, 1998, to November 8, 1998, representatives of Parent and
the Company, together with their respective legal counsel, held telephonic
meetings and negotiated the terms of the definitive agreement.
On October 22, 1998, Messrs. Rosenfeld and Lemont met with the chief
executive officer and the vice president of corporate development of another
Nasdaq-listed software company to discuss a possible offer by that company to
acquire the Company, but that company indicated no interest.
On November 4, 1998, Mr. Rosenfeld contacted the chief executive officer of
the software company which on October 3 had declined to pursue discussions
regarding an acquisition of the Company. In that conversation and in
subsequent telephone conversations on November 5, 1998, the chief executive
officer indicated to Mr. Rosenfeld that his company would consider extending
an offer.
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On November 6, 1998, the Board of Directors of the Company met at the
offices of its counsel, Peabody & Arnold LLP ("P&A"), in Boston,
Massachusetts. Mr. Rosenfeld reported the status of discussions between
representatives of Parent and key Company employees. Representatives of VBW&C
made a presentation to the Company Board in person and by speaker phone, of
their analysis of Parent's offer and their preliminary views on the fairness
of that offer. P&A attorneys discussed with the Company Board the legal
aspects of the transaction, and the key provisions of the draft definitive
agreement. During the course of the Company Board meeting, Mr. Rosenfeld
informed the Company Board that the Company had received communications from
the other software company, proposing a stock-for-stock merger with the
Company.
On November 7, 1998, the company that had proposed a stock-for-stock merger
with the Company commenced a due diligence review of the Company. On November
7, 1998 and November 8, 1998 representatives of that company and of the
Company, together with their respective legal and accounting advisers,
negotiated the terms of the proposed merger and a definitive plan and
agreement of merger. On November 8, 1998, the Company's representatives
informed Parent's representatives that on November 6, 1998 the other software
company had expressed interest in acquiring the Company in a stock-for-stock
merger and that the Company had on November 8, 1998 reached a tentative
agreement with such company concerning such a merger.
On November 8, 1998, and November 9, 1998, Parent's representatives
negotiated with the Company's representatives on a revised acquisition
proposal. During that time, Mr. Rosenfeld kept the Company's Board of
Directors informed of the progress of those negotiations through a series of
conference calls. On the morning of November 9, 1998, Mr. Roux met with Mr.
Rosenfeld to discuss proposed revised acquisition terms. Later that night,
Parent raised its proposed bid price to $7.00 per share in cash.
On November 10, 1998, the Company's Board of Directors met by conference
call and received a further presentation by VBW&C including a summary of
VBW&C's opinion with respect to the fairness of the revised acquisition terms
by Parent and the fairness of the terms proposed by the other bidder. Once
again, attorneys from P&A addressed the legal aspects of the transaction as
well as the legal aspects of the transaction proposed by the other bidder. At
the conclusion of this meeting, the Company's Board of Directors approved the
revised terms of Parent's tender offer and related transactions and authorized
the execution of definitive agreements. Also on that same day, the Company
Board adopted an amendment to the Rights Agreement to exclude the transaction
with Parent from the application of the Rights Agreement.
At 7:00 p.m. (EST) on November 10, 1998, Parent, the Purchaser and the
Company executed the Merger Agreement and, simultaneously, Parent and certain
stockholders of the Company executed the Support Agreements. Shortly
thereafter, Parent and the Company issued a press release announcing the
execution of the Merger Agreement.
RECOMMENDATIONS OF THE COMPANY BOARD; FAIRNESS OF THE OFFER AND THE MERGER
The Company Board. The Company Board has unanimously determined that each of
the Offer and the Merger is fair to, and in the best interests of, the
stockholders of the Company (other than Parent and Purchaser), and the Company
Board unanimously recommends that the Company's stockholders accept the Offer
and tender their Shares pursuant to the Offer. In reaching these
determinations, the Company Board considered the following factors, each of
which, in the view of the Company Board, supported such determinations:
(i) the historical market prices and recent trading activity of the
Shares, including the fact that the $7.00 per Share cash consideration to
be received by the stockholders of the Company (other than Parent and
Purchaser) in the Offer and Merger represents a premium of approximately
96% over the reported closing price on November 10, 1998, the last full
trading day preceding the public announcement of the Merger Agreement, and
a premium of approximately 106% and 119% over the average closing price for
the one-month and three-month periods, respectively, preceding such date,
and the fact that such price would be payable in cash, thus eliminating any
uncertainties in valuing the consideration to be received by the Company's
stockholders;
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(ii) the history of the negotiations between the Company Board and its
representatives and Parent and its representatives, including the Company
Board's belief that Parent and the Purchaser would not further increase the
Offer Price and that $7.00 per Share was the highest price that could be
obtained from Parent and the Purchaser;
(iii) the opinion of VBW&C that the consideration to be received by
holders of the Company's common stock (other than Parent and the Purchaser)
pursuant to the Offer and the Merger was fair to such stockholders from a
financial point of view, and the report and analysis presented by VBW&C in
connection therewith;
(iv) the terms and conditions of the Merger Agreement;
(v) the effect of the Minimum Share Condition that, without the consent
of the Company Board, the Offer will not be consummated unless at least
that number of Shares that, when added to the Shares already owned by
Parent, the Purchaser or any direct or indirect subsidiary of Parent, will
constitute fifty-one percent of the Shares then outstanding (on a fully
diluted basis) are validly tendered pursuant to the Offer and not properly
withdrawn;
(vi) the availability of appraisal rights in the Merger for the
stockholders of the Company under the DGCL;
(vii) the possibility that, because of a future decline in the Company's
business, the trading price of the Shares or the stock market in general,
the consideration that the stockholders of the Company (other than Parent
and Purchaser) would obtain in a future or alternative transaction might be
less advantageous than the consideration they would receive pursuant to the
Offer and the Merger;
(viii) the review of the possible alternatives to the Offer and the
Merger (including the possibility of continuing to operate the Company as
an independent entity in light of the Company's relative size and the
presence of significant competitors in the configuration software market),
the range of possible benefits and risks to the Company's stockholders of
such alternatives and the timing and the likelihood of actually
accomplishing any such alternatives;
(ix) the likelihood that the proposed acquisition would be consummated,
based in part on the financial condition of Parent;
(x) the fact that pursuant to the Merger Agreement the Company is not
prohibited from responding to any unsolicited Superior Proposal (as such
term is defined in the Merger Agreement) to acquire the Company, and that,
after giving the Parent notice of the receipt of a Superior Proposal and an
opportunity to make an offer which the Company Board determines, in its
good faith judgment, is as favorable as the Superior Proposal, the Company
may elect to terminate the Merger Agreement and pay the termination fee and
or trigger the Parent Option provided for in the Merger Agreement; and
(xi) the structure of the transaction, which is designed, among other
things, to result in receipt by the stockholders at the earliest
practicable time of the consideration to be paid in the Offer and the fact
that the per Share consideration to be paid in the Offer and the Merger is
the same.
Additional Considerations of the Company Board. The members of the Company
Board evaluated the various factors listed above in light of their knowledge
of the business, financial condition and prospects of the Company and based
upon the advice of financial and legal advisors. In light of the number and
variety of factors that the Company Board considered in connection with its
evaluation of the Offer and the Merger, the Company Board did not find it
practicable to assign relative weights to the foregoing factors and,
accordingly, the Company Board did not do so. In addition to the factors
listed above, the Company Board considered the fact that while consummation of
the Offer would result in the stockholders of the Company receiving a premium
for their Shares over the then current trading prices of the Shares,
consummation of the Offer and the Merger would eliminate any opportunity for
stockholders of the Company (other than Parent and Purchaser) to participate
in the potential future growth prospects of the Company. The Company Board
determined, however, that (i) the loss of opportunity is reflected in the
Offer Price, and (ii) there are continued business risks associated with
independent operations which could impact the Company's long-term financial
prospects.
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In addition, the Company Board determined that the Offer and the Merger are
procedurally fair to the stockholders of the Company because, among other
things: (i) the Company Board retained VBW&C as its independent financial
advisor to assist it in evaluating the Offer and the Merger; (ii) the Minimum
Share Condition, which may not be waived without the consent of the Company,
was made a condition to the Offer; (iii) there were deliberations pursuant to
which the Company Board evaluated the Offer and the Merger and alternatives
thereto; and (iv) the $7.00 per Share price and the other terms and conditions
of the Merger Agreement resulted from active arm's-length bargaining between
representatives of the Company, on the one hand, and representatives of
Parent, on the other.
Consummation of the Offer is conditioned upon, among other things, the
Minimum Share Condition, which may not be waived without consent of the
Company. Pursuant to the Merger Agreement, the purchase by the Purchaser of
all Shares validly tendered in the Offer and not withdrawn is a condition to
the Merger.
In making its determinations and recommendations, the Company Board was
aware of the matters set forth above in Item 3(b) "Interests of Certain
Persons in the Offer and Merger."
OPINION OF FINANCIAL ADVISOR TO THE COMPANY
VBW&C Opinion. Concentra retained VBW&C to render an opinion to the
Concentra Board of Directors as to the fairness, from a financial point of
view, to Concentra of the consideration to be received by the shareholders of
Concentra pursuant to the Offer and the Merger (the "Fairness Opinion"). On
November 10, 1998, VBW&C rendered the Fairness Opinion to Concentra's Board of
Directors to the effect that, as of such date and based on and subject to the
matters stated in the Fairness Opinion, the Acquisition Price (as defined in
the Fairness Opinion) is fair, from a financial point of view, to the
shareholders of Concentra.
THE FULL TEXT OF VBW&C'S WRITTEN OPINION DATED NOVEMBER 10, 1998, WHICH SETS
FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED, AND LIMITATIONS ON THE REVIEW
UNDERTAKEN, IS ATTACHED AS EXHIBIT 6 AND IS INCORPORATED HEREIN BY REFERENCE.
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF
SUCH OPINION. HOLDERS OF CONCENTRA STOCK ARE URGED TO, AND SHOULD, READ THIS
OPINION CAREFULLY IN ITS ENTIRETY. THE ENGAGEMENT OF VBW&C AND ITS OPINION ARE
FOR THE BENEFIT OF THE CONCENTRA BOARD. VBW&C'S OPINION ADDRESSES ONLY THE
FAIRNESS OF THE ACQUISITION PRICE FROM A FINANCIAL POINT OF VIEW TO THE
SHAREHOLDERS OF CONCENTRA AND IT DOES NOT ADDRESS ANY OTHER ASPECT OF THE
OFFER OR THE MERGER NOR DOES IT CONSTITUTE A RECOMMENDATION TO ANY HOLDER OF
CONCENTRA STOCK AS TO WHETHER TO TENDER THEIR SHARES IN THE OFFER OR HOW TO
VOTE WITH RESPECT TO THE MERGER.
In arriving at its opinion, VBW&C (i) reviewed a copy of the executed Merger
Agreement; (ii) discussed the terms of the Merger Agreement with Concentra
management and the Concentra Board of Directors; (iii) interviewed management
of Concentra concerning the business prospects, financial outlook and
operating plans of the Company; (iv) reviewed certain historical and projected
financial statements and other relevant financial and operating data of
Concentra prepared by the management of the Company; (v) assessed the
positioning of the Acquisition (as defined in the Fairness Opinion) in an
effort to evaluate Concentra's alternatives and strategic options and the
potential market reaction to the Acquisition and the potential likelihood that
the shareholders of Concentra would accept the Offer; (vi) reviewed the
valuation of selected publicly-traded companies VBW&C deemed relevant for the
valuation analysis; (vii) reviewed the historical stock trading patterns of
Concentra and analyzed the premium of the Acquisition Price in relation to
historical Concentra stock trading ranges; (viii) reviewed premiums paid in
comparable M&A transactions and M&A transactions generally in relation to the
premium represented by the Acquisition Price at different time periods prior
to the date of announcement; (ix) reviewed, to the extent publicly-available,
the financial terms of selected merger and acquisition transactions that VBW&C
deemed relevant for the valuation analysis; (x) performed a discounted cash
flow analysis of the SellingPoint business and the ICAD cash flow stream based
upon financial projections of Concentra
16
<PAGE>
management; (xi) performed a maximum price payable for no dilution valuation
based on the maximum non-dilutive price payable under purchase accounting
conventions; (xii) performed a valuation analysis of LoanData based on a
discount to the valuation established by the last investment round made in
LoanData; and (xiii) performed other such studies, analyses and inquiries and
considered other such information as VBW&C deemed relevant.
In rendering its opinion, VBW&C relied without independent verification upon
the accuracy and completeness of all of the financial, accounting, legal, tax,
operating and other information provided to VBW&C by Concentra and relied upon
the assurances of Concentra that all such information is complete and accurate
in all material respects and that there is no additional material information
known to it that would make any of the information made available to VBW&C
either incomplete or misleading. Concentra also retained outside legal,
accounting, and tax advisors to advise on matters relating to the Offer and
Merger. Accordingly, VBW&C assumed the accuracy of such advice for purposes of
its opinion and did not independently verify or confirm such advice and
expressed no opinion on such matters. Although Concentra had discussions with
third parties concerning possible business combinations, for purposes of its
Fairness Opinion VBW&C was not requested to consider, and VBW&C expressed no
opinion as to, the relative merits of any transaction as compared to any
alternative business strategies that might exist for Concentra or the effect
of any other acquisition or business combination in which Concentra might
engage. With respect to the projected financial data of Concentra and its
component businesses, all of which has been provided by the management of
Concentra, VBW&C relied upon assurances of Concentra that such data was
prepared in good faith on a reasonable basis reflecting the best currently
available estimates and judgments of Concentra management as to the future
financial performance of Concentra and its component businesses. VBW&C's
analysis is based, in large part, on these projected financial data and
estimates.
VBW&C relied upon the information provided to it by Concentra for the
purposes of rendering its Opinion. VBW&C expresses no opinion and has made no
investigation with respect to the validity, accuracy or completeness of the
information provided to it and does not warrant any projections included in
such information. Actual results that Concentra might achieve in the future as
a stand-alone entity may vary materially from those used in VBW&C's analysis.
VBW&C assumed that the Offer and the Merger will be consummated in accordance
with the terms of the Merger Agreement and that no subsequent material changes
or amendments will be made prior to completion of the Offer and the Merger.
Any material changes could impact the VBW&C analysis and opinion. VBW&C did
not make any independent appraisals or valuations of any assets of Concentra
or any of its component businesses, nor was VBW&C furnished with any such
appraisals or valuations. VBW&C performed no investigations relating to the
representations and warranties made by Concentra, Parent, the Purchaser or any
other person, including representations with respect to intellectual property
rights and status of any litigation pending or threatened against either
company. While VBW&C believes that its review, as described therein, is an
adequate basis for the Fairness Opinion, the Fairness Opinion is necessarily
based upon market, economic and other conditions that exist and can be
evaluated as of the date of the Fairness Opinion, and any change in such
conditions would require a re-evaluation of the Fairness Opinion.
The Fairness Opinion addresses only the fairness, from a financial point of
view, of the Acquisition Price and does not address the relative merits of the
Acquisition, any alternatives to the Acquisition, Concentra's decision to
proceed with or the effect of the Acquisition, or any other aspect of the
Acquisition.
The preparation of a fairness opinion involves various judgments as to
appropriate and relevant quantitative and qualitative methods of financial
analyses and the application of those methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to summary
description. Accordingly, VBW&C's analyses and the factors utilized in such
analysis must be considered as a whole and considering any portion of such
analyses or factors, without considering all analyses and factors could create
a misleading or incomplete view of the process underlying the Fairness
Opinion. In its analyses, VBW&C made numerous assumptions with respect to
industry performance, general business and other conditions and matters, many
of which are beyond Concentra's control and are not susceptible to accurate
prediction.
17
<PAGE>
No opinion is expressed by VBW&C as to the future trading price or range of
prices of any securities of Parent or Concentra issued at any time.
Furthermore, the opinion does not constitute a recommendation as to the
Company Board's decision on whether to support any transaction and recommend
it to Concentra's shareholders and does not constitute a recommendation to
shareholders as to whether to tender their shares in the Offer or vote in
favor of the Merger. The opinion and related materials were prepared for the
use and benefit of the Company Board. Although developments following the date
of the Fairness Opinion may affect the Fairness Opinion, VBW&C assumed no
obligation to update, revise or reaffirm the opinion.
As a customary part of its investment banking business, VBW&C engages in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of securities,
private placements and valuations for corporate and other purposes. In the
ordinary course of its business, VBW&C and its affiliates may actively trade
the equity securities of Concentra, Parent and their affiliates for their own
account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.
VBW&C will receive a fee for rendering the Fairness Opinion, no portion of
which is conditioned upon the Fairness Opinion being favorable. In addition,
VBW&C is to be paid a fee upon the close of any combination transaction. See
"Item 5--Persons Retained, Employed or to Be Compensated".
The following is a brief summary of the material analyses performed by VBW&C
in rendering its opinion to the Board of Directors of Concentra.
Stock Trading Analysis: VBW&C performed a stock trading analysis to analyze
the latest 12 month ("L12M") and latest 6 month ("L6M") trading history of
Concentra. VBW&C noted that the median trading price of Concentra for the L12M
and L6M period was $4.00 and $3.50 respectively. VBW&C also noted that 100% of
the trades for the L12M and L6M periods were below the Acquisition Price.
Premium Analysis: VBW&C analyzed the premiums paid in select Sales Force
Automation Software ("SFA") transactions generally and compared them to the
premium represented by the Acquisition Price. For one day premiums in SFA
transactions, the premiums ranged from -4.3% to 83.8% (with a median of
25.3%). One month premiums ranged from 4.3% to 105.9% (with a median of
46.9%). VBW&C also analyzed the premiums of all public to public technology
transactions between $30 and $50 million since January 1, 1997. For one day
premiums, the premiums ranged from -4.5% to 150.2% (with a median of 24.7%)
and one month premiums ranged from -2.7% to 175.9% (with a median of 40.0%).
The one day premium per share valuation for SFA transactions yielded a range
of equivalent per share values from $3.71 per share to $7.12 per share (with a
median of $4.86) and the one month premium per share valuation yielded a range
of equivalent values from $3.72 per share to $7.33 per share (with a median of
$5.23 per share). For all technology transactions, the one day premium per
share values ranged from $3.70 to $9.70 per share (with a median of $4.83 per
share) and the one month premium per share values ranged from $3.47 to $9.83
per share (with a median for $4.99 per share.)
Comparable Publicly-Traded Company Analysis: VBW&C compared certain
financial information of Concentra with selected publicly-traded companies it
deemed comparable to Concentra (the "SFA Group"). The SFA Group was composed
of companies providing sales force software solutions to large enterprises.
The financial information reviewed by VBW&C included: projected 1998, 1999 and
trailing 12 month earnings per share ("EPS"); market value (defined as stock
price multiplied by shares outstanding) in relation to book value of
stockholders' equity; and enterprise value (defined as market value plus debt
less cash) in relation to L12M revenue, L12M EBITDA and L12M EBIT. Calendar
year 1998 net income and 1999 net income were based on estimates provided by
Concentra.
VBW&C noted that, based on closing stock prices and earnings estimates as of
October 30, 1998, the SFA group traded in a range of 5.9 to 39.4 times L12M
earnings (with a median of 21.6 times), 8.0 to 45.4 times
18
<PAGE>
1998 earnings (with a median of 21.3 times), 5.5 to 29.2 times 1999 earnings
(with a median of 12.0 times), and 1.4 to 7.8 times book value (with a median
of 2.5 times). The enterprise value of the SFA Group implied from the stock
prices provided a range of 0.3 to 8.1 times L12M revenues (with a median of
0.8 times), 2.6 to 29.8 times EBITDA (with a median of 7.9 times) and 2.9 to
81.6 times EBIT (with a median of 9.8 times).
The valuation range per share with respect to book value was between $1.32
per share and $5.82 per share (with a median of $2.10 per share). The
enterprise value to L12M Revenue ranged between $.59 per share and $8.85 per
share (with a median of $1.14 per share.) Combining the median per share
valuations with the value of LoanData and the ICAD System derives a range of
per share combined values of $2.13 per share to $8.52 per share (with a median
of $2.80 per share.) All other financial information was deemed "non-
meaningful" based on negative financial results.
Comparable Merger and Acquisition Transaction Analysis: VBW&C prepared a
valuation of Concentra based upon 16 merger and acquisition transactions of
target companies in the Sales Force Automation Industry ("SFA Industry").
VBW&C reviewed the SFA Transaction financial terms, to the extent publicly
available. The equity value of these transactions ranged from 30.0 to 140.1
times L12M Net Income (with a median of 60.6 times), 8.3 to 69.8 times N12M
Net Income (with a median of 32.2 times) and 4.6 to 84.7 times book value
(with a median of 7.0 times). The enterprise value of these transactions
ranged from 1.1 to 30.8 times L12M revenue (with a median of 4.7 times), 0.1
to 4.6 times next twelve months ("N12M"), and, in the case of Concentra,
defined as Q4:98 through Q3:99, forecasted revenue (with a median of 2.1
times), 14.5 to 90.4 times EBITDA (with a median of 30.7 times), 22.4 to 183.3
times EBIT (with a median of 41.8 times).
VBW&C applied these results to two sets of projections for Concentra
provided by Concentra management, a "Case A" and a more conservative "Case B".
For Case A, the per share valuation range with respect to book value was
between $1.51 per share and $33.87 per share (with a median of $5.42 per
share). The enterprise value to L12M Revenue ranged between $.64 per share and
$13.79 per share (with a median of $6.58 million.) Combining the median
valuations with the value of LoanData and the ICAD System derives a range of
Case A per share combined values of $2.25 per share to $25.01 per share (with
a median of $7.18 per share). For Case B, the valuation range with respect to
book value was between $1.51 per share and $33.87 per share (with a median of
$5.42 per share). The enterprise value to L12M Revenue ranged between $.55 per
share and $10.37 per share (with a median of $4.99 per share.) Combining the
median valuations with the value of LoanData and the ICAD System derives a
range of Case B per share combined values of $2.21 per share to $23.30 per
share (with a median of $6.38 per share). All other financial information was
deemed "non-meaningful" based on negative or non-meaningful financial results.
Discounted Cash Flow Analysis: VBW&C performed a discounted cash flow
analysis of two components of Concentra, SellingPoint and LoanData based on
projections provided by Concentra management through March 2000 and
extrapolated by VBW&C and reviewed by Concentra management thereafter.
Unlevered free cash flows were calculated as net income available to common
stockholders plus the sum of depreciation, amortization and other non-cash
charges minus capital expenditures and plus or minus changes in working
capital and minus tax adjusted interest expense. VBW&C calculated terminal
values by applying exit multiples on 2003 net income; and the cash flow
streams and terminal values were then discounted to the present using a range
of discount rates deemed appropriate by VBW&C Based on this analysis, VBW&C
calculated a Case A range of SellingPoint values between $14.46 per share to
$20.90 per share (with a median of $17.49 per share). The Case B analysis
calculated a range of per share values between $3.13 per share and $4.03 per
share (with a median of $3.20 per share). For the ICAD System, the per share
valuation was $.98 per share.
Maximum Price Payable No Dilution Analysis: VBW&C performed a maximum price
payable with no dilution analysis using purchase accounting and Fiscal 1999
projected results based on Parent's May fiscal year end. VBW&C combined the
net income of both companies and included the effect of goodwill amortization
and cost of cash. For Case A, the analysis provided a per share valuation of
$12.88. On a Concentra "fully taxed" analysis, the per share valuation was
$7.93. For Case B, the per share and "fully taxed" valuations were $11.39 and
$7.04 respectively.
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<PAGE>
Valuation of LoanData: VBW&C valued Concentra's majority investment in
LoanData based on a discount to LoanData's last financing valuation. This
yielded a value of $.20 per share.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, VBW&C considered the results of all of its analyses
as a whole and did not attribute any particular weight to any analysis or
factor considered by it. Furthermore, selecting any portion of the analysis,
without considering all of the analyses, would create an incomplete view of
the process underlying its opinion. In addition, VBW&C may have given various
analyses and factors more or less weight than other analyses and factors, and
may have deemed various assumptions more or less probable than other
assumptions, so that the ranges of valuations resulting from any particular
analysis described above should not be taken to be VBW&C's view of the actual
value of Concentra.
The analyses performed by VBW&C are not necessarily indicative of actual
value, which may be significantly more or less favorable than suggested by
such analyses. Such analyses were prepared solely as part of VBW&C's analysis
of the fairness of the Acquisition Price from a financial point of view to the
shareholders of Concentra. The analyses do not purport to be appraisals or to
reflect the prices at which Concentra might actually be purchased. Because
such estimates are inherently subject to uncertainty, none of Concentra,
Parent, VBW&C nor any other person assumes responsibility for their accuracy.
Consequently, the VBW&C analyses described herein should not be viewed as
determinative of the opinion of the Concentra Board of Directors with respect
to the value of Concentra or of whether the Company Board or Parent's Board of
Directors would have been willing to agree to a different Acquisition Price.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
In connection with the Offer and other matters arising in connection
therewith, VBW&C has been retained as the financial advisor to the Company.
Pursuant to an engagement letter dated October 5, 1998 (the "Engagement
Letter"), VBW&C agreed to render the following financial advisory services to
the Company: (i) review with the Company Board and members of management the
Company's financial plans, its strategic plans and business alternatives; (ii)
assist the Company in the screening of potential acquirors and represent the
Company in contacting, qualifying and negotiating with potential acquirors
approved by the Company; (iii) meet with the Company Board (iv) assist the
Company in the structuring and negotiating the financial aspects of a sale
transaction; (v) if requested, render a Fairness Opinion for the use of the
Company Board as to the fairness from a financial point of view to the Company
of the consideration to be received by the Company and its stockholders in
connection with the sale of the Company; and (vi) render such other
appropriate and customary financial advisory services as the Company and VBW&C
may agree in connection with the sale of the Company. Pursuant to the
Engagement Letter, the Company paid VBW&C a retainer in the amount of $50,000,
which retainer is to be credited against any fee due to VBW&C upon
consummation of a sale transaction and has agreed to pay VBW&C (i) if a
Fairness Opinion is requested by the Company, a fee, payable in cash on
delivery of such Fairness Opinion (orally or in writing, whichever occurs
first), equal to $300,000, such fee to be credited against any further fees
payable pursuant to the Engagement Letter, and (ii) upon consummation of the
sale of the Company, an additional fee, payable in cash at closing, equal to
two percent (2%) of consideration, less any Fairness Opinion fee previously
paid. The Company also agreed to pay VBW&C a fee of $75,000 if the Company
requests an updated Fairness Opinion; such fee will not be credited against
any other fees payable by the Company to VBW&C. In addition, the Company
agreed to reimburse VBW&C for reasonable out-of-pocket expenses incurred in
connection with the Merger and to indemnify VBW&C for certain liabilities that
may arise out of its engagement by the Company and the rendering of its
opinion. VBW&C is a nationally recognized firm and, as part of its investment
banking activities, is regularly engaged in the valuation of businesses and
their securities in connection with merger transactions and other types of
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. VBW&C also has performed certain investment banking services for the
Company. The Company selected VBW&C as its financial advisor on the basis of
its experience and expertise in transactions similar to the Offer and the
Merger, its reputation in the technology and investment communities and its
knowledge of and familiarity with the Company resulting from the investment
banking services it has previously provided to the Company.
20
<PAGE>
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Except as set forth herein, to the best knowledge of the Company, no
transactions in Shares have been effected during the past 60 days by the
Company or any of its executive officers, directors, or affiliates. On
September 30, 1998, the following executive officers of the Company purchased
Common Stock at $3.03 per share pursuant to an election made by such executive
officers on April 1, 1998 under the Company's 1995 Employee Stock Purchase
Plan:
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
EXECUTIVE OFFICER PURCHASED
----------------- ------------
<S> <C>
Peter T. Lanell............................................... 2,394
Alex N. Braverman............................................. 1,651
David I. Lemont............................................... 594
Robert E. Phillips............................................ 396
Richard Buck.................................................. 1,926
Marvin Mishkin................................................ 1,131
-----
Total....................................................... 8,092
=====
</TABLE>
(b) To the best knowledge of the Company, all of its executive officers,
directors or affiliates presently intend to tender all Shares to Purchaser
pursuant to the Offer, which are owned beneficially by such persons, subject
to and consistent with any fiduciary obligations in the case of Shares held by
fiduciaries.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in Item 3 or in Item 4(b) above, or below, the
Company is not engaged in any negotiations in response to the Offer which
relate to or would result in (i) an extraordinary transaction, such as a
merger or reorganization, involving the Company or any subsidiary of the
Company; (ii) a purchase, sale or transfer of a material amount of assets by
the Company or any subsidiary of the Company; (iii) a tender offer for or
other acquisition of securities by or of the Company, or (iv) any material
change in the present capitalization or dividend policy of the Company.
(b) Except as described in Item 3(b) above, there are no transactions,
Company Board resolutions, agreements in principle or signed contracts in
response to the Offer that relate to or would result in one or more of the
events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
NASDAQ MATTERS
Depending upon the number of Shares purchased pursuant to the Offer, the
Company's Shares may no longer meet the standards for continued inclusion in
The Nasdaq Stock Market. According to published guidelines, the Company's
Shares would not be eligible to be included for continued listing on the
Nasdaq National Market if, among other things, the number of publicly held
shares falls below 750,000, the number of holders of at least 100 Shares falls
below 400 or the aggregate market value of such publicly held shares falls
below $5,000,000. If these standards are not met, the Company's shares might
continue to be listed on The Nasdaq SmallCap Market, Inc., but if the number
of round lot holders falls below 300, or if the number of publicly held shares
falls below 500,000, or if the aggregate market value of such publicly held
shares falls below $1,000,000 or there are not at least two registered and
active market makers (one of which may be a market maker entering a
stabilizing bid), The Nasdaq Stock Market rules provide that the securities
would no longer qualify for inclusion and would cease to provide any
quotations. Shares held directly or indirectly by an officer or director of
the Company or by a beneficial owner of more than 10% of the Shares will
ordinarily not be considered as being publicly held for purposes of these
standards. In the event the Company's Shares are no longer eligible for
quotation on The Nasdaq Stock Market, quotations might still be available from
other sources. The extent of the public market for the Company's Shares
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<PAGE>
and the availability of such quotations would, however, depend upon the number
of holders of such shares remaining at such time, the interest in maintaining
a market in such shares on the part of securities firms, the possible
termination of registration of such shares under the Exchange Act as described
below, and other factors.
APPRAISAL RIGHTS
No appraisal rights are available in connection with the Offer. However, if
the Merger is consummated, stockholders of the Company may have certain rights
under the DGCL to dissent and demand appraisal of, and payment in cash for the
fair value of, the Shares. Such rights, if the statutory procedures are
complied with, could lead to a judicial determination of fair value (excluding
any element of value arising from accomplishment or expectation of the Merger)
required to be paid in cash to such dissenting holders for their Shares. Any
such judicial determination of the fair value of Shares could be based upon
considerations other than or in addition to the price paid in the Offer and
the market value of the Shares, including asset values and the investment
value of the Shares. The value so determined could be more or less than the
purchase price per Share pursuant to the Offer or the consideration per Share
to be paid in the Merger.
TAX MATTERS
The summary of Federal income tax consequences set forth below is for
general information only and is based on the law as currently in effect. The
tax consequences to each stockholder will depend in part upon such
stockholder's particular situation. Special tax consequences not described
herein may be applicable to particular classes of taxpayers, such as financial
institutions, broker-dealers, persons who are not citizens or residents of the
United States and stockholders who acquired their Shares through the exercise
of an employee stock option or otherwise as compensation. ALL STOCKHOLDERS
SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY
AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN
INCOME AND OTHER TAX LAWS AND OF CHANGES IN SUCH TAX LAWS.
The receipt of cash for Shares pursuant to the Offer will be a taxable
transaction for Federal income tax purposes under the Code, and may also be a
taxable transaction under applicable state, local or foreign income and other
tax laws. Generally, for Federal income tax purposes, a tendering stockholder
will recognize gain or loss in an amount equal to the difference between the
cash received by the stockholder pursuant to the Offer and the stockholder's
adjusted tax basis in the Shares tendered by the stockholder and purchased
pursuant to the Offer. For Federal income tax purposes, such gain or loss will
be a capital gain or loss if the Shares are a capital asset in the hands of
the stockholder, and will be treated as long-term capital gain or loss if the
Shares have been held for the applicable holding period.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may be subject to 31% backup withholding unless the stockholder
provides its Social Security number or employer identification number ("TIN")
and certifies that such number is correct or properly certifies that it is
awaiting a TIN, or unless an exemption applies. A stockholder who does not
furnish its TIN may be subject to a penalty imposed by the Internal Revenue
Service.
If backup withholding applies to a stockholder, the Depositary (as defined
in the Merger Agreement) is required to withhold 31% from payments to such
stockholder. Backup withholding is not an additional tax. Rather, the amount
of the backup withholding can be credited against the Federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
appropriate income tax return.
The receipt of cash by stockholders pursuant to the Merger should result in
Federal income tax consequences to such stockholders similar to those
described above.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1-- Form of Offer to Purchase dated as of November 17, 1998
(incorporated herein by reference to Exhibit (a)(1) to the
Schedule 14D-1 filed by the Purchaser and Parent with the SEC on
November 17, 1998).
Exhibit 2-- Form of Letter of Transmittal (incorporated herein by reference to
Exhibit (a)(2) to the Schedule 14D-1 filed by the Purchaser and
Parent with the SEC on November 17, 1998).
Exhibit 3--
Agreement and Plan of Merger dated as of November 10, 1998 by and
among Parent, the Purchaser and the Company (incorporated herein
by reference to Exhibit (c)(1) to the Schedule 14D-1 filed by
Purchaser and Parent with the SEC on November 17, 1998).
Exhibit 4-- Company's Proxy Statement dated July 16, 1998 relating to the
Company's Annual Meeting of Stockholders held on August 10, 1998
(incorporated herein by reference to the Company's proxy statement
filed on July 16, 1998).
Exhibit
5(a)-- Resolution adopted by the Compensation Committee of the Company's
Board of Directors at the May 23, 1997 meeting regarding the
severance packages for the Company's executive officers.
Exhibit Resolution adopted by the Compensation Committee of the Company's
5(b)-- Board of Directors at the May 14, 1996 meeting approving the
accelerated vesting of the Company's stock options for executive
officers terminated (other than for cause) within twelve months of
a change of control.
Exhibit 6--
Fairness Opinion rendered by Volpe Brown Whelan & Company, LLC
dated November 10, 1998.*
Exhibit 7-- Text of press release dated November 10, 1998 issued by the
Purchaser, Parent and the Company (incorporated herein by
reference to Exhibit (a)(8) to the Schedule 14D-1 filed by the
Purchaser and Parent with the SEC on November 17, 1998).
- --------
*Included in copies mailed to stockholders.
23
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Concentra Corporation
Dated: November 17, 1998 By: /s/ Alex N. Braverman
-----------------------------------
Name: Alex N. Braverman
Title:Chief Financial Officer
24
<PAGE>
ANNEX I
INFORMATION STATEMENT
SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about November 17, 1998 as
part of the Concentra Corporation (the "Company") Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") with respect to the tender
offer by KL Acquisition Corp. (the "Purchaser") to the holders of record of
the Company's common stock, par value $.00001 per share (the "Common Stock").
Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in the Schedule 14D-9. You are receiving this Information
Statement in connection with the possible election of persons designated by
Purchaser to a majority of the seats on the Board of Directors of the Company
(the "Company Board") pursuant to an Agreement and Plan of Merger dated as of
November 10, 1998 by and among Oracle Corporation (the "Parent"), Purchaser
and the Company (the "Merger Agreement"). The Merger Agreement provides, among
other things, that promptly upon the purchase by the Purchaser of Shares in
the Offer, and from time to time thereafter, the Purchaser will be entitled to
designate that number of directors, rounded up to the next whole number, on
the Company Board (the "Parent Designees") that equals the product of (i) the
total number of directors on the Company Board (giving effect to the election
of any additional directors pursuant to the Merger Agreement) and (ii) the
percentage that the number of Shares owned by the Purchaser, Parent and any
direct or indirect wholly owned subsidiary of Parent (including Shares (and
associated Rights) purchased in the Offer) bears to the total number of Shares
(and associated Rights) outstanding at such time, and to effect the foregoing
the Company shall upon request by the Purchaser, at the Company's election,
either increase the number of directors comprising the Company Board or obtain
and accept resignations of incumbent directors. The first date on which
designees of the Purchaser will constitute a majority of the Company Board is
referred to as the "Cut-Off Date." At such time, the Company will cause
individuals designated by the Purchaser to constitute the same percentage as
such individuals represent on the Company Board of (x) each committee of the
Board, (y) if requested by Purchaser, each board of directors or other
governing body of each Subsidiary of the Company, and (z) if requested by
Purchaser, each committee of each such board or governing body.
Following the Cut-Off Date and prior to the Effective Time (as defined in
the Merger Agreement), the Company Board shall have at least one director who
is neither an employee of the Company or any of its subsidiaries nor otherwise
affiliated with the Purchaser (one or more of such directors, the "Independent
Directors"), any amendment of the Merger Agreement or the Certificate of
Incorporation or Bylaws of the Company or any of its subsidiaries, any
termination or amendment of the Merger Agreement by the Company, any extension
by the Company of the time for the performance of any of the obligations or
other acts of Parent or the Purchaser or any waiver of any of the Company's
rights thereunder, will require the concurrence of a majority of the
Independent Directors.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended, and Rule 14F-1 promulgated thereunder.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action.
WE ARE NOT NOW ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY AT THIS TIME.
Parent has informed the Company that it will choose the Parent Designees
from the persons listed below. Parent has informed the Company that each of
the Parent Designees has consented to act as a director, if so designated.
Biographical information concerning each of the Parent Designees is presented
below. The following biographical information provided herein has been
furnished by Parent, and the Company assumes no responsibility for the
accuracy or completeness of such information.
25
<PAGE>
THOMAS THEODORES, 48, is Vice President/Deputy General Counsel of Parent
where he manages the Corporate, International and Strategic Licensing Group.
His responsibilities include corporate and securities, international, legal
policy administration, strategic transactions and technology licensing. Mr.
Theodores joined Parent in 1986. Prior to joining Parent, he was a partner at
the Nemir Law Firm in San Francisco.
DAVID J. ROUX, 41, has been Executive Vice President of Corporate
Development of Parent since March 1996, and Senior Vice President of Corporate
Development of Parent since September 1994. Since February 1998, he also has
served as the Chief Executive Officer and President of Network Computer, Inc.,
a subsidiary of Parent. Before joining Parent, Mr. Roux served as Senior Vice
President, Marketing and Business Development at Central Point Software from
April 1992 to July 1994. From October 1991 to April 1992, he served as Senior
Vice President of the Portable Computing Group at Lotus Development
Corporation and from June 1989 to October 1991, he served as Vice President of
Business Development at Lotus Development Corporation.
GARY L. BLOOM, 37, has been the Executive Vice President of the System
Products Division of Parent since May 1997 and has held various positions with
Parent, including Senior Vice President of the Worldwide Alliances and
Technologies Division from May 1997 to October 1997, Senior Vice President of
the Product and Platform Technologies Division from May 1996 to May 1997 and
Vice President of the Mainframe and Integration Technology Division and Vice
President of the Massively Parallel Computing Division from May 1992 to May
1996. Prior to joining Parent, Mr. Bloom worked at IBM Corporation and at
Chevron Corporation where he held various technical positions in their
mainframe system areas.
DANIEL COOPERMAN, 47, has been Senior Vice President, General Counsel and
Secretary of Parent since February 1997. Prior to joining Parent, Mr.
Cooperman had been associated with the law firm of McCutchen, Doyle, Brown &
Enersen since October 1977, and had served there as a partner since June 1983.
From September 1995 until February 1997, Mr. Cooperman was Chair of the law
firm's Business & Transactions Group, and from April 1989 through September
1995, he served as the Managing Partner of the law firm's San Jose office.
None of the Parent Designees (i) is currently a director of, or holds any
position with, the Company, (ii) has a familial relationship with any of the
directors or executive officers of the Company or (iii) to Parent's knowledge,
beneficially owns any securities (or rights to acquire any securities) of the
Company. The Company has been advised by Parent that, to Parent's knowledge;
none of the Parent Designees has been involved in any transaction with the
Company or any of its directors, executive officers or affiliates which is
required to be disclosed pursuant to the rules and regulations of the
Commission, except as may be disclosed herein or in the Schedule 14D-1.
26
<PAGE>
INFORMATION WITH RESPECT TO THE COMPANY
As of November 6, 1998, there were 6,103,944 shares of Common Stock, par
value $.00001 per share, of the Company issued and outstanding, all of which
shares are entitled to one vote per share. The Common Stock is the only class
of voting securities of the Company which are outstanding.
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth certain information as of November 9, 1998
with respect to the voting securities of the Company owned by (1) any person
(including any "group" as that term is defined in section 13(d)(3) of the
Securities Exchange Act of 1934) who is known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of a class of
voting securities of the Company, (2) each director of the Company, (3) each
of the executive officers named in the Summary Compensation Table (except for
Mr. Evans who resigned on June 1, 1998), and (4) all directors and executive
officers of the Company as a group.
In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a
person is deemed to be the beneficial owner, for purposes of this table, of
any voting securities of the Company if he or she has or shares voting power
or investment power with respect to such securities or has the right to
acquire beneficial ownership thereof at any time within 60 days of November 9,
1998. As used herein "voting power" is the power to vote or direct the voting
of shares, and "investment power" is the power to dispose of or direct the
disposition of shares. Except as indicated in the notes following the table
below, each person named has sole voting and investment power with respect to
the shares listed as being beneficially owned by such person.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED STOCK OUTSTANDING(1)
- ------------------------------------ ------------------ --------------------
<S> <C> <C>
San Giorgio S.A. ..................... 957,972 15.7%
100 Rue de Paris
91300 Massy, France
Special Situations Fund III, L.P.(2).. 660,789 10.8%
and affiliated entities
153 53rd Street
New York, NY 10022
Vincenzo Cannatelli(3)................ 16,591 *
Alberto de Benedictis(4).............. 970,018 15.9%
Lawrence W. Rosenfeld(5).............. 724,757 11.5%
c/o Concentra Corporation
21 North Avenue
Burlington, MA 01803
A. William Berkman Jr.(6)............. 253,172 3.8%
Peter T. Lanell(7).................... 93,491 1.5%
David I. Lemont(8).................... 76,863 1.2%
Stephen J. Cucchiaro(9)............... 73,249 1.2%
Robert E. Phillips(10)................ 43,475 *
William E. Kelly(11).................. 12,046 *
David M. Greenhouse(12)............... 660,789 10.8%
All directors and executive officers
as a group (15 persons)(13).......... 3,020,851 44.7%
</TABLE>
- --------
* Less than one percent (1%)
27
<PAGE>
(1) Shares of Common Stock issuable pursuant to options currently exercisable
or exercisable on, before or within 60 days of November 9, 1998
("Currently Exercisable Options") are deemed outstanding for the purpose
of computing the percentage of the class owned by the person holding such
options, but are not deemed outstanding for purposes of computing the
percentage owned by any other person.
(2) Derived from a Schedule 13G filed on October 13, 1998. The Schedule 13G
reported the following aggregate amounts beneficially owned by the
following entities: 253,400 shares by Special Situations Fund L.P.;
210,200 shares by Special Situations Private Equity Fund, L.P.; 90,200
shares by Special Situations Cayman Fund, L.P.; and 106,989 shares by
Special Situations Technology Fund, L.P. The Schedule 13G reports that
Austin W. Marxe and David M. Greenhouse have sole voting power and sole
disposition power of the 660,789 shares.
(3) All such shares are issuable pursuant to Currently Exercisable Options.
(4) Includes shares held by San Giorgio S.A., as to which shares Mr. de
Benedictis disclaims beneficial ownership. Includes 12,046 shares
issuable pursuant to Currently Exercisable Options.
(5) Includes (i) 249,752 shares issuable pursuant to Currently Exercisable
Options, and (ii) 14,546 shares held by trusts for the benefit of Mr.
Rosenfeld's children. Mr. Rosenfeld disclaims beneficial ownership of the
shares held by such trusts.
(6) Includes shares held by Toyo Corporation, as to which shares Mr. Berkman
disclaims beneficial ownership. Includes 21,137 shares issuable pursuant
to Currently Exercisable Options.
(7) Includes 86,184 shares issuable pursuant to Currently Exercisable
Options.
(8) Includes 74,245 shares issuable pursuant to Currently Exercisable
Options.
(9) Includes 25,682 shares issuable pursuant to Currently Exercisable
Options.
(10) Includes 40,661 shares issuable pursuant to Currently Exercisable
Options.
(11) All such shares are issuable pursuant to Currently Exercisable Options.
(12) Includes shares held by Special Situations Fund III, L.P. and its
affiliates.
(13) Includes 607,954 shares issuable pursuant to Currently Exercisable
Options. Also includes (i) shares held by Toyo Corporation (of which Mr.
Berkman is an affiliate), (ii) shares held by San Giorgio S.A. (of which
Mr. de Benedictis is an affiliate) and (iii) shares held by Special
Situations Fund III, L.P. and its affiliates (of which Mr. Greenhouse is
an affiliate). Mr. Berkman disclaims beneficial ownership of shares held
by Toyo Corporation. Mr. de Benedictis disclaims beneficial ownership of
shares held by San Giorgio S.A.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and persons who own more than 10% of the outstanding Common
Stock of the Company to file with the Securities and Exchange Commission
("SEC") and the Nasdaq Stock Market reports of ownership and changes in
ownership of voting securities of the Company and to furnish copies of such
reports to the Company. To the Company's knowledge, the Company believes that
all Section 16(a) filing requirements were satisfied through November 10,
1998, except that through inadvertence, Messrs. Braverman, Lamont, Lanell and
Phillips failed to timely make filings for purchases pursuant to the Company's
employee stock purchase plan in September, 1998. Appropriate filings have been
made.
28
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information concerning executive
officers and directors of the Company, as of November 10, 1998:
<TABLE>
<CAPTION>
NAME POSITION(S)
---- -----------
<S> <C>
Lawrence W. Rosenfeld... Chief Executive Officer--Director (Chairman)
David I. Lemont......... Senior Vice President and Chief Operating Officer
Alex N. Braverman....... Vice President, Chief Financial Officer, and Treasurer
Noreen H. Henrich....... Vice President, Worldwide Client Services
Peter T. Lanell......... Vice President, Worldwide Field Operations
Robert E. Phillips...... Vice President, Product Definition and Chief Technology Officer
Marvin Mishkin.......... Vice President, OEM Business Unit
Richard Buck............ Vice President, Selling Point Engineering
Karen Mehegan........... Director of Human Resources
Alberto de Benedictis... Director
A. William Berkman,
Jr..................... Director
William E. Kelly........ Director
Stephen J. Cucchiaro.... Director
David M. Greenhouse..... Director
Vincenzo Cannatelli..... Director
</TABLE>
LAWRENCE W. ROSENFELD, 46, a founder of the Company, has been Chief
Executive Officer and a director since the Company's inception in 1984,
Chairman of the Board of Directors since March 1993 and President from
inception through March 1993 and again since July 1994. From 1982 to 1984, Mr.
Rosenfeld was an independent CAD/CAM consultant. From 1974 to 1981, Mr.
Rosenfeld was employed in various positions at Hood Sailmakers, Inc.
DAVID I. LEMONT, 40, joined the Company in June 1994 as Senior Vice
President and Chief Operating Officer. From February 1992 to May 1994, Mr.
Lemont held several Vice President positions in the sales organization at
Computervision Corporation. From January 1981 to February 1992, he held
various sales and sales management positions with the Unigraphics Division of
McDonnell Douglas.
ALEX N. BRAVERMAN, 38, has been Vice President, Chief Financial Officer and
Treasurer since November 1996. From July 1994 to November 1996, he was
Corporate Controller. Mr. Braverman was Controller of Artel Communications
Corporation, a manufacturer of computer networking and video products, from
1988 until it was merged with Chipcom Corporation in February 1994, and was
employed thereafter by Chipcom Corporation until July 1994. From 1982 to 1988,
he held various financial and managerial positions with BTU Engineering and
the William Carter Company.
NOREEN H. HENRICH, 43, has been Vice President, Worldwide Client Services
since June 1995. From June 1993 to June 1995, she was Director of Technical
Services. Ms. Henrich joined the Company in 1988 and held the position of
Director of Technical Sales Support until June 1993. Prior to joining the
Company, Ms. Henrich was employed by Computervision in various positions. Her
final position was as the director of their applied technology center. She was
employed by Computervision from 1979 to 1988.
PETER T. LANELL, 46, has been Vice President of Worldwide Field Operations
since 1997. From April 1993 to April 1996, he was Vice President, North
American Field Operations. From April 1992 to April 1993, he was the Company's
Vice President, North American Sales. Mr. Lanell joined the Company in 1988
and has held various positions within North American Sales since that time.
Prior to joining the Company, Mr. Lanell was a salesman for Intellicorp, Inc.
from 1986 to 1988. From 1982 to 1986, he held positions in sales and technical
sales support at Calma, a division of General Electric.
ROBERT E. PHILLIPS, 42, has been Chief Technology Officer and Vice
President, Product Definition since November 1997. He was one of the original
employees of Concentra (then known as ICAD), from 1985-1987.
29
<PAGE>
Dr. Phillips spent six years at General Electric Aircraft Engines and was
responsible for Engineering Automation activities in that Division. He
returned to Concentra in 1993 as Director, New Product Development then became
Vice President of Engineering before taking his current position. He has 20
years of advanced computer system research, development and deployment.
MARVIN MISHKIN, 42, has been Vice President of the OEM Business Unit since
September 1998. From 1986 through August 1998, he held various positions with
the Company which included Director of the OEM Business Unit, Director of
Consulting Services and Director of Worldwide Services. Prior to joining the
Company, he held various management positions at Computervision in the Applied
Technology Center.
RICHARD BUCK, 39, has been Vice President of Selling Point Engineering since
September 1998. From March 1997 to August 1998, he was Director of Selling
Point Engineering for the Company. Prior to joining the Company, he was Vice
President of Software Development for MarketMAX from 1993 to 1996. From 1990
to 1993 he was Director of Research and Development of the new Sales Force
Automation business unit of Epsilon Data Management.
KAREN MEHEGAN, 47, has been Director of Human Resources since joining the
Company in February 1997. Prior to joining the Company, she was employed in a
number of human resource management and consulting roles including Senior
Consultant for SystemSoft from 1996 to 1997, Director of Human Resources and
Administration from 1985 to 1996 for Encryption Technology and Human Resources
Manager for Financial and Insurance Times from 1982 to 1985.
ALBERTO DE BENEDICTIS, 46, has been a director of the Company since June
1993. He has been with Finmeccanica in various positions for over ten years.
He is currently Senior Vice President of Finmeccanica for Corporate
Development. Mr. de Benedictis serves on the Board of Directors of a number of
affiliates of Finmeccanica, including Elsag Bailey Process Automation N.V., a
company listed on the New York Stock Exchange, and Union Switch and Signal,
Inc., a company traded on the Nasdaq National Market.
A. WILLIAM BERKMAN, JR., 55, has been a director of the Company since August
1989. Mr. Berkman works as an independent consultant and, since 1986, has
served as a consultant to Toyo Corporation, a publicly-held Japanese trading
company. Mr. Berkman is also the Chief Executive Officer of Biomation
Corporation, a manufacturer of logic analysis systems, Chairman of the Board
of Embedded Performance, Inc., a manufacturer of emulators and software for
RISC microprocessors, and President of Toyo U.S. Holdings, Inc., a wholly
owned subsidiary of Toyo Corporation.
WILLIAM E. KELLY, 46, has been a director of the Company since June 1993. He
has served as Secretary from the Company's incorporation in 1984 (except for
the period from June 1993 to September 1993). Mr. Kelly was a partner in the
law firm of Cuddy Bixby in Boston from 1988 until December 1994. Since January
1995, Mr. Kelly has been a partner in the Boston law firm of Peabody & Arnold
LLP.
STEPHEN J. CUCCHIARO, 46, has been a director of the Company since March
1993 and is President of Windward Capital, Inc., an investment management
firm. From March 1993 until March 1994, Mr. Cucchiaro was President of the
Company and, following his resignation as President, he directed special
projects for the Company until he left in September 1994 to found Windward
Capital. From April 1992 to March 1993, he was the Company's Executive Vice
President, Chief Operating Officer and Chief Financial Officer. From October
1987 until December 1989, Mr. Cucchiaro was employed by Lotus Development
Corporation as General Manager of that company's Communications and Specialty
Software divisions. Mr. Cucchiaro was President of Datext, Inc., a company he
co-founded, from June 1984 until it was acquired by Lotus Development
Corporation in October 1987.
30
<PAGE>
DAVID M. GREENHOUSE, 38, has been a director of the Company since August
1998. Since 1992, Mr. Greenhouse has been a senior executive of the management
company that manages a number of investment funds (including Special
Situations Fund III, L.P.), several of which hold equity investments in the
Company. Prior to joining Special Situations Fund, Mr. Greenhouse was employed
by an international financial advisory firm.
VINCENZO CANNATELLI, 45, has been Vice Chairman of the Board of Directors of
the Company and Chairman of its Executive Committee since June 1993. Mr.
Cannatelli is the Managing Director and Chief Executive Officer of Elsag
Bailey Process Automation N.V., a company listed on the New York Stock
Exchange. He has been Group Executive Vice President of the Elsag Bailey Group
of companies, a division of Finmeccanica, since 1992. Elsag Bailey Process
Automation N.V. is owned in the majority by Finmeccanica. From 1989 to 1990,
Mr. Cannatelli was Executive Vice President of Elsag Bailey Inc. Prior to
1989, he served in several executive positions at STET and in the Elsag Bailey
Group.
Each director holds office until that director's successor has been elected
and qualified. The Company's Board of Directors is divided into three classes.
Messrs. Berkman and Kelly serve in the class whose term expires in 1999;
Messrs. Cucchiaro and Cannatelli serve in the class whose term expires in
2000: and Messrs. Rosenfeld, de Benedictis and Greenhouse serve in the class
whose term expires in 2001. Upon expiration of the term of each class of
directors, directors comprising such class will be elected for a three-year
term at the annual meeting of stockholders in the year in which such term
expires.
There are no family relationships among any of the executive officers or
directors of the Company.
The current directors of the Company were initially nominated and elected in
accordance with certain provisions of a shareholders' agreement which
terminated upon the closing of the Company's initial public offering in
February 1995.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES
DIRECTOR COMPENSATION
Directors of the Company do not receive compensation for their services as
directors, but non-employee directors are reimbursed for expenses incurred in
connection with attendance at Board of Directors and Committee meetings.
On June 18, 1993, in connection with their election to the Company's Board
of Directors, Messrs. Berkman, de Benedictis and Kelly were each granted non-
qualified options under the Company's 1987 Stock Plan to purchase 4,546 shares
of Common Stock and Mr. Cannatelli was granted a non-qualified option under
such plan to purchase 9,091 shares of Common Stock. The exercise price of all
such options is $4.13 per share.
Under the Company's 1994 Directors Stock Option Plan, each non-employee
director (excluding directors who decline the grant of options in writing) is
granted an option for the purchase of 2,500 shares of Common Stock on the
first day of the fiscal year following each fiscal year during which such a
person serves as a member of the Company's Board of Directors. The date of the
first grant of options under the 1994 Directors Stock Option Plan was April 1,
1996.
31
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation paid by the Company during
the fiscal year ended March 31, 1998 to those persons who were employed during
the fiscal year ended March 31, 1998 as (i) the Chief Executive Officer and
(ii) the four most highly paid executive officers, other than the Chief
Executive Officer, whose annual compensation exceeded $100,000 (collectively,
the "Named Executive Officers"):
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION(1)
------------------------------ --------------------------
COMMISSIONS AWARDS AND ALL OTHER
AND OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUSES($) OTHER(2) (# OF SHARES) $
- --------------------------- ---- --------- ----------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence W. Rosenfeld.... 1998 200,000 74,835 -- 50,000 --
Chairman of the Board,
President and 1997 200,000 156,692 -- 40,000 --
Chief Executive Officer 1996 200,000 27,500 -- 81,250 --
David I. Lemont.......... 1998 180,000 40,843 -- 28,000 --
Senior Vice President
and Chief 1997 180,000 77,152 -- 24,000 --
Operating Officer 1996 175,000 29,700 -- 34,063 --
Garreth P. Evans......... 1998 164,224 41,057 64,426(4) -- --
Senior Vice President,
Business Units 1997 160,650 71,989 69,899(4) 15,000 --
Aerospace and
Automotive(3) 1996 153,676 32,611 58,926(4) 19,000 --
Peter T. Lanell.......... 1998 145,000 62,396 -- 18,000 --
Vice President,
Worldwide 1997 145,000 121,778 -- 15,000 --
Field Operations 1996 132,000 51,810 -- 20,000 --
Robert E. Phillips....... 1998 110,000 21,811 -- 18,000 --
Vice President, Product
Definition and 1997 110,000 30,071 -- 12,500 --
Chief Technology Officer 1996 100,000 18,173 -- 15,000 --
</TABLE>
- --------
(1) The Company did not make any restricted stock awards, grant any stock
appreciation rights or make any long-term incentive plan payouts during
the fiscal year ended March 31, 1998.
(2) In accordance with the rules of the SEC, other compensation in the form of
perquisites and other personal benefits has been omitted in those
instances where the aggregate amount of such perquisites and other
personal benefits constituted less than the lesser of $50,000 or 10% of
the total of annual salary and bonus for the executive officer for such
year.
(3) Mr. Evans resigned from the Company effective June 1, 1998.
(4) Mr. Evans' other compensation includes payments for an automobile,
benefits and pension arrangements.
32
<PAGE>
OPTION GRANTS
The following table sets forth certain information concerning grants of
stock options made during the fiscal year ended March 31, 1998 to the Named
Executive Officers:
OPTION GRANTS IN FISCAL 1998
INDIVIDUAL GRANTS(1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT VALUE AT ASSUMED
OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM(2)
OPTIONS IN FISCAL PRICE PER EXPIRATION ---------------------
NAME GRANTED 1998 SHARE($) DATE 5%($) 10%($)
- ---- ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lawrence W. Rosenfeld... 50,000(3) 12.2% 3.875 8/7/97 121,848 308,788
David I. Lemont......... 28,000(4) 6.8% 3.875 8/7/97 68,235 172,921
Peter T. Lanell......... 18,000(5) 4.4% 3.875 8/7/97 43,865 111,164
Robert E. Phillips...... 18,000(6) 4.4% 3.875 8/7/97 43,865 111,164
</TABLE>
- --------
(1) All options were granted at an exercise price equal to market value on the
date of grant. The market value of the Common Stock is determined by the
closing price of the Common Stock on the Nasdaq National Market.
(2) The 5% and 10% assumed annual compound rates of stock price appreciation
for a period of ten years are mandated by rules of the SEC and do not
represent the Company's estimate or projection of future Common Stock
prices.
(3) So long as Mr. Rosenfeld remains an employee of the Company, options for
the purchase of 12,500 shares of Common Stock will become exercisable on
each of August 8, 1998, 1999, 2000, and 2001.
(4) So long as Mr. Lemont remains an employee of the Company, options for the
purchase of 7,000 shares of Common Stock will become exercisable on each
of August 8, 1998, 1999, 2000, and 2001.
(5) So long as Mr. Lanell remains an employee of the Company, options for the
purchase of 4,500 shares of Common Stock will become exercisable on each
of August 8, 1998, 1999, 2000, and 2001.
(6) So long as Mr. Phillips remains an employee of the Company, options for
the purchase of 4,500 shares of Common Stock will become exercisable on
each of August 8, 1998, 1999, 2000 and 2001.
AGGREGATE OPTION EXERCISES IN THE LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning the number and
value of exercised and unexercised options held by each of the Named Executive
Officers on March 31, 1998.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS AT
SHARES OPTIONS AT MARCH 31, 1998(#) MARCH 31, 1998($)(1)
ACQUIRED VALUE -------------------------------- -------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence W. Rosenfeld... -- -- 161,251 60,000 $116,250 $11,250
David I. Lemont......... -- -- 42,518 70,545 2,250 6,750
Garreth P. Evans........ -- -- 31,351 57,195 1,406 4,219
Peter T. Lanell......... -- -- 65,752 32,340 59,091 4,219
Robert E. Phillips...... -- -- 25,490 24,738 13,446 6,584
</TABLE>
- --------
(1) Calculated on the basis of the stock price of the underlying securities at
March 31, 1998 of $6.13 per share, as determined by the Company's Board of
Directors, minus the per share exercise price.
33
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to July 6, 1994, the Company did not have a Compensation Committee and
decisions relating to executive compensation were made by the Company's Board
of Directors or the Executive Committee of the Company's Board of Directors.
Messrs. Rosenfeld and Cucchiaro, as members of the Company's Board of
Directors, participated in executive compensation decisions relating to
executive officers other than themselves. On July 6, 1994, the Company's Board
of Directors established a Compensation Committee, consisting of Messrs. de
Benedictis, Berkman and Kelly, and delegated to the Compensation Committee
responsibility for decisions concerning executive compensation.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this proxy statement, in whole or in part, the following
report and the stock performance graph contained elsewhere herein shall not be
incorporated by reference into any such filings nor shall they be deemed to be
soliciting material or deemed filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee (the "Committee") of the Company Board acts on
behalf of the Company Board to establish the general compensation policy of
the Company for all employees of the Company. In addition, the Committee (i)
recommends to the Company Board the base level and incentive compensation for
the Chief Executive Officer ("CEO"), (ii) establishes policies and programs
that determine the compensation of the Company's executive officers, (iii)
administers the 1987 and 1993 Stock Plans of the Company (the "Stock Plans"),
(iv) administers the 1995 Employee Stock Purchase Plan (the "Stock Purchase
Plan"), and (v) maintains the exclusive authority to grant stock options to
executive officers of the Company under its Stock Plans.
COMPOSITION AND ACTIVITIES OF THE COMMITTEE
The Committee is composed of three directors, none of whom is an employee or
officer of the Company. Currently, the Committee consists of A. William
Berkman, Jr. (who serves as Chairman), Alberto de Benedictis and William E.
Kelly. The Chairman of the Company Board and CEO, Lawrence W. Rosenfeld,
participates in the Committee's discussions, except those that relate to his
compensation. Mr. Rosenfeld provides compensation information, survey data and
other material requested by the Committee. In addition, he makes
recommendations to the Committee on the compensation methods and levels of the
other executive officers. Mr. Rosenfeld does not attend or participate in the
discussions regarding his own compensation, nor does he make any
recommendation with respect thereto. Mr. Rosenfeld does not vote on any matter
considered by the Committee, and he does not participate in administration of
the Stock Plans or the Stock Purchase Plan.
The Committee held four meetings in the fiscal year ended March 31, 1998,
and all voting members of the Committee attended those meetings.
COMPENSATION PHILOSOPHY AND POLICIES
The Company's objective is to develop compensation policies which will
assist in attracting, motivating, and retaining the high quality of executives
and managers capable of sustaining the Company's aggressive growth and profit
objectives. It is the opinion of the Committee that the implementation of this
philosophy is best accomplished by aligning each manager's compensation, and
therefore the manager's motivation, with that of the stockholders.
Compensation policies which support this philosophy include industry
competitive salaries, cash bonuses and equity incentives.
The Committee favors a compensation system which emphasizes performance
bonus compensation and equity incentives, the proportion of variable
compensation increasing to 50% of total target compensation for
34
<PAGE>
senior executives. Furthermore, the Committee believes that broad-based
employee equity ownership provides an important incentive to focus the efforts
and contributions of each participating employee on the Company's success.
ELEMENTS OF COMPENSATION
The components of officer and key manager compensation include salary, cash
bonus, stock options granted pursuant to the Stock Plans, purchase of stock
through participation in the Stock Purchase Plan, the right to participate in
the 401(k) plan (without matching employer contributions), supplemental life
insurance, and other standard benefits. There are no other officer or key
manager perquisites. Compensation of sales personnel include identical
components, except that sales commissions replace cash bonuses. All salaried
employees are compensated with a base salary, are entitled to participate in
the 401(k) plan (without matching employer contributions), and receive other
standard benefits. In addition, all salaried employees are granted options
under the Stock Plans as part of an offer of employment, and are encouraged to
accept slightly lower salaries in exchange for participation in variable
compensation programs.
Base salary is determined on the basis of the level of responsibility,
expertise and experience of the employee or officer, taking into consideration
competitive conditions in the industry and the percentage of total target cash
compensation that is variable. The Committee reviews and approves the salaries
of the Company's executives. The measures of individual performance considered
in setting executive salaries include, to the extent applicable to an
individual executive officer, a number of quantitative and qualitative
factors, including, the Company's historical and recent financial performance
in the principal area of responsibility, individual performance, experience
and overall contributions made to the Company's success. The Committee had not
found it practicable, nor has it attempted, to assign relative weights to the
specific factors used in determining base salary levels, and the specific
factors used may vary among individual officers. Payment of base salary is not
conditioned upon the achievement of any specific or predetermined performance
targets.
The Company's incentive compensation program seeks to motivate officers and
key managers to work effectively to achieve the Company's financial
performance objective and to reward the program participants when individuals
and corporate objectives are met. Cash bonuses awarded to officers and other
key employees are typically based on a target percentage of salary, adjusted
for achievement of revenue and profit goals by the Company and evaluations of
individual performance to predetermined objectives. Sales commissions are paid
to sales personnel during the fiscal year as a percentage of individual sales
production. The percentage of commission paid increases only after the
individual sales person exceeds a predetermined quota for the applicable
period.
Ownership of the Company's Common Stock is a significant element of
executive and key manager compensation, and is considered an important
motivational tool for all employees. All employees are eligible to participate
in the Stock Plans. The Stock Plans permit the Company Board or the Committee
to grant options to employees on such terms as the Company Board or the
Committee may determine. The Committee has sole authority to grant stock
options to officers of the Company. In determining the terms of a stock option
grant to an officer or other employee (including the number of shares subject
to an option), the Committee takes into account equity participation by
comparable employees within the Company, external competitive circumstances,
individual significant contributions, the dilutive effect of any such option
granted to earnings per share, and other factors that may, from time to time,
be relevant. This program is intended to permit broad-based equity ownership
throughout the Company.
The Committee has delegated the authority to recommend to the Committee the
grant of a small number of options as part of an offer of employment to
members of a management committee. This management committee consists of the
CEO, the Chief Operating Officer and the Chief Financial Officer. The
delegated authority limits the size of any such recommendation of grants to
the maximum in a range of options predetermined for the job classification of
the prospective employee.
35
<PAGE>
Options granted under the Stock Plans in fiscal 1998 generally vested
linearly over five years. The Committee may, from time to time, change the
vesting schedule of options, including options which have already been
granted. The Committee may also choose to grant options which do not vest
until the end of the option period, and wherein any future acceleration of
such vesting is at the sole discretion of the Committee.
CHIEF EXECUTIVE OFFICER COMPENSATION FOR FISCAL 1998
The Company's Chairman of the Board and CEO, Lawrence W. Rosenfeld, received
salary payments totaling $200,000 during the fiscal year ended March 31, 1998.
In addition, Mr. Rosenfeld was paid cash bonus compensation of $74,835 during
the 1998 fiscal year. Mr. Rosenfeld was granted an option to purchase 50,000
shares of the Company's Common Stock at an exercise price of $3.875 in the
fiscal year ended March 31, 1998.
DEDUCTIBILITY OF COMPENSATION EXPENSES
The Committee has reviewed Section 162(m) of the Code as amended by the
Omnibus Budget Reconciliation Act of 1993. The Committee has decided to take
no action at this time with respect to the Company's compensation program as a
result of this change in the tax law, but will continue to evaluate the
possible effects of the new provisions.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
A. William Berkman, Jr., Chairman
William E. Kelly
Alberto de Benedictis
36
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN*
AMONG CONCENTRA CORPORATION,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S&P COPMPUTERS (SOFTWARE & SERVICES) INDEX
<TABLE>
<CAPTION>
S&P
NASDAQ COMPUTERS
MEASUREMENT PERIOD CONCENTRA STOCK (SOFTWARE
(FISCAL YEAR COVERED) CORPORATION MARKET & SERVICES)
<S> <C> <C> <C>
2/7/95 .......................... 100.00 100.00 100.00
MAR-95 .......................... 108.91 108.41 113.41
MAR-96 .......................... 41.58 147.20 160.32
MAR-97 .......................... 41.58 163.60 225.01
MAR-98 .......................... 48.51 248.28 411.27
</TABLE>
- --------
*$100 invested on 2/07/95 in stock or index--including reinvestment of
dividends. Fiscal year ending March 31.
37
<PAGE>
EXECUTIVE AGREEMENTS
NONCOMPETITION AND TERMINATION AGREEMENTS
The Company has entered into a Noncompetition and Termination Agreement with
Mr. Rosenfeld under which he has agreed not to compete with the Company for a
period of one year following termination of his employment and the Company has
agreed to pay to him, in the event his employment is terminated by the Company
without cause, a termination payment equal to his then current base salary
plus 80% of his then current-year maximum variable compensation amount (the
"Termination Payment"). The Termination Payment is payable in twelve equal
monthly installments. In addition, in the event Mr. Rosenfeld's employment is
terminated by the Company without cause, all options held by him at the time
his employment is terminated will continue to vest during the period when the
Company is obligated to make installments of the Termination Payment and will
vest fully on the first anniversary of termination so long as he has not
breached his noncompetition agreement.
The Company has entered into an Employee Noncompetition, Nondisclosure and
Developments Agreements with Mr. Lemont which provides, in part, for continued
payment of his base salary ("Severance Pay") in the event his employment is
terminated by the Company without cause. Mr. Lemont, whose current base salary
is $15,000 per month, is entitled to Severance Pay for up to six months in the
event his employment is terminated by the Company without cause. Mr. Lemont
has each agreed not to compete with the Company for a period of one year
following the termination of his employment unless his employment is
terminated by the Company without cause, in which case his noncompetition
obligation will terminate six months following final payment of the Severance
Pay.
EMPLOYEE STOCK OPTION PLANS
The 1987 and 1993 Stock Plans of the Company (the "Stock Plans") enable the
Company to grant incentive stock options to employees and to make awards of
restricted Common Stock and to grant non-qualified options to purchase Common
Stock to employees, officers and directors of and consultants to the Company.
Restricted stock awards entitle the recipient to purchase Common Stock from
the Company under terms which provide for vesting over a period of time and a
right of repurchase in favor of the Company of the unvested portion of the
Common Stock, subject to the award upon the termination of recipient's
employment or other relationship with the Company. Stock options entitle the
optionee to purchase Common Stock from the Company, for a specified exercise
price during a period specified in the applicable option agreement. The Stock
Plans are administered by the Compensation Committee of the Board of Directors
which selects the persons to whom restricted stock awards and stock options
are granted and determines the number of shares of Common Stock covered by the
award or option, its purchase price or exercise price, its vesting schedule
and (in the case of stock options) its expiration date. No grants of
restricted stock have been made under either plan. On March 4, 1998, the Board
of Directors authorized that certain stock options under the 1987 and 1993
Stock Plans at exercise prices ranging from $4.13 to $11.25 would be eligible
to be exchanged for options with an exercise price at the then fair market
value of $3.875. This cancellation and reissuance of stock options affected
1,057.067 options. As of March 31, 1998, under the 1987 Plan, 310,491 shares
of Common Stock had been issued upon exercise of options, options to purchase
567,221 shares of Common Stock were outstanding, and no shares remained
available for future issuance. As of the same date, under the 1993 Plan,
26,514 shares of Common Stock had been issued upon exercise of options,
options to purchase 787,004 shares of Common Stock were outstanding and
595,573 shares remained available for future issuance.
EMPLOYEE STOCK PURCHASE PLAN
The Company's 1995 Employee Stock Purchase Plan (the "Stock Purchase Plan")
was adopted by the Board of Directors on July 27, 1995, which is intended to
qualify as an "employee stock purchase plan" under Section 423 of the Code.
The Stock Purchase Plan is administered by the Compensation Committee. The
Stock Purchase Plan covers up to 440,000 shares of the Company's Common Stock
(subject to adjustment for any dividend, stock split or other relevant changes
in the Company's capitalization). With certain exceptions, all
38
<PAGE>
employees (including officers) who are employed for at least 20 hours a week
and at least five months or more per calendar year and who have completed
ninety days of continuous employment are eligible to participate in the Stock
Purchase Plan. The Stock Purchase Plan has a term of ten years and consists of
eleven offerings of 40,000 shares each, each of which offerings shall be six
months in duration. The first offering under the Stock Purchase Plan commenced
on October 1, 1995 and subsequent offerings will commence on the day following
termination of the prior offering. The number of shares available for an
offering may be increased at the election of the Company Board by the number
of shares of Common Stock, if any, which were made available but not purchased
during an earlier offering. Participation in one offering under the Stock
Purchase Plan neither limits nor requires participation in any other offering.
To participate in the Stock Purchase Plan, an eligible employee must
complete, sign and deliver a subscription agreement before the first day of an
offering. Participating employees are permitted to purchase shares of Common
Stock through payroll deductions at a purchase price equal to 85% of the lower
of the fair market value of the Common Stock on the first or last day of the
offering period. On each offering date, a participant may elect to purchase up
to the number of whole shares of Company stock determined by dividing (i) 10%
of such participant's compensation in the preceding 12 calendar months by (ii)
85% of the fair market value of a share of the Common Stock on the offering
date. Employees may terminate their participation in an offering at any time
during the offering period, and participation ends automatically upon
termination of employment (except that the beneficiary of a deceased employee
who dies while participating in the plan may elect to use the amount
previously withheld from the deceased employee to purchase shares under the
Stock Purchase Plan). Unless a participating employee cancels his option or
withdraws from the Stock Purchase Plan, his option for the purchase of shares
under the Stock Purchase Plan will be exercised automatically upon the date of
termination of an offering. The Stock Purchase Plan provides that the
Company's Board of Directors may terminate the Stock Purchase Plan at any
time; provided, however, that no such termination may affect any outstanding
options.
401(K) PLAN
In 1991, the Company's Board of Directors adopted the Company's 401(k) Plan,
(the "401(k) Plan"), which is intended to qualify under section 401(k) of the
Code. All employees who are at least 21 years of age and have been employed by
the Company for at least six months are eligible to participate in the 401(k)
Plan. Each eligible employee may elect to contribute to the 401(k) Plan,
through payroll deductions, up to 15% of his or her salary, subject to
statutory limitation. The Company may at its discretion make matching
contributions on behalf of each participating employee in an amount equal to
some uniform percentage fixed from time to time by the Company's Board of
Directors. The Company is not currently making matching contributions. If the
Company were to do so in the future, under the current terms of the 401(k)
Plan, employees would become vested in such Company contributions at the rate
of 25% per year of service.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Company's 1994 Directors Stock Option Plan (the "Directors Plan") was
adopted on November 18, 1994 and amended on March 29, 1996, and provides for
the granting of options to purchase up to an aggregate of 150,000 shares of
Common Stock to directors who are not employees of the Company. The Directors
Plan is administered by the Compensation Committee. The Directors Plan and the
options granted thereunder are intended to comply with Rule 16b-3 (Reg. sec,
240.16b-3) under the Securities Exchange Act of 1934, as amended. The exercise
price for options granted under the Directors Plan will be equal to the fair
market value of the Common Stock on the date of grant. Under the Directors
Plan, each eligible director (excluding directors who decline the grant of
options in writing) will be granted an option for the purchase of 2,500 shares
of Common Stock on the first day of each fiscal year during which such a
person serves as a member of the Company's Board of Directors. The current
non-employee members of the Company's Board of Directors, who received options
under the Company's 1987 Stock Plan, first received options under the
Directors Plan on April 1, 1996. Newly elected directors will become eligible
for grants under the Directors Plan on the first day of the fiscal year
following the year in which they are first elected and qualified as members of
the Company's Board
39
<PAGE>
of Directors and, so long as they remain on the Company's Board of Directors,
on the first day of each fiscal year thereafter. Options granted under the
Directors Plan will remain exercisable for a period of ten years from the date
of grant (so long as the optionee remains a director of the Company). If a
holder of options granted under the Directors Plan ceases to be a director of
the Company, his or her options will terminate on the earlier of the scheduled
termination date or three months after the effective date of termination of
his or her directorship. As of March 31, 1998, options for the purchase of
25,000 shares were outstanding under the Directors Plan.
40
<PAGE>
Exhibit 5(a)
CONCENTRA CORPORATION
Resolution Adopted at the
Meeting of the Compensation Committee
of the Board of Directors
May 23, 1997
RESOLVED: That, if within twelve months following a change in control of
this Corporation, an executive officer's employment by this
Corporation is terminated by this Corporation other than for
cause, then in addition to all other severance benefits to which
such executive officer may be entitled, such executive officer's
base salary be continued at its then prevailing rate for a period
of six months following the date of such termination, so long as
(and to the extent that) such salary continuation will not be
deemed an "excess parachute payment" within the meaning of the
Internal Revenue Code of 1986, as amended.
<PAGE>
Exhibit 5(b)
CONCENTRA CORPORATION
Resolution Adopoted at the
Meeting of the Compensation Committee
of the Board of Directors
May 14, 1996
RESOLVED: That all stock option agreements governing incentive stock options or
non-qualified stock options held by executive officers of this
Corporation be amended to provide that, if within twelve months
following a change in control of this Corporation, the optionee's
employment by this Corporation is terminated by this Corporation
other than for cause, or if such optionee resigns voluntarily for good
reason, then any and all options to purchase shares of the Common
Stock of this Corporation held by such optionee shall become fully
vested and exercisable, so long as such acceleration will not prohibit
this Corporation from accounting for a business combination as a
pooling of interest if the Board of Directors of this Corporation
determines that such accounting treatment is desired.
<PAGE>
Exhibit 6
November 10, 1998
The Board of Directors
Concentra Corporation
21 North Avenue
Burlington, MA 01803-3301
Members of the Board:
You have requested our opinion (the "Opinion") as to the fairness, from a
financial point of view, to the shareholders of Concentra Corporation
("Concentra" or the "Company") of the consideration to be received by such
shareholders pursuant to the Agreement and Plan of Merger (the "Agreement"),
dated November 10, 1998, by and among Concentra, Oracle Corporation ("Oracle")
and a wholly-owned subsidiary of Oracle (the "Purchaser").
The Agreement provides, in general, that the Purchaser will make a tender
offer (the "Offer") for all of the outstanding shares of Common Stock of
Concentra and the associated Series A Participating Cumulative Preferred Stock
purchase rights at a price per share of $7.00 (the "Acquisition Price") net to
the seller in cash. The obligation of the Purchaser to pay for the shares
tendered will be subject to, among others things, there being tendered such
number of shares as will, when added to any shares already owned by the
Purchaser or Oracle, constitute at least 51% of the shares of Concentra,
determined on a fully diluted basis. The Agreement further provides that, as
soon as practicable after the completion of the Offer, the Purchaser will be
merged into Concentra (the "Merger", and collectively with the Offer, the
"Acquisition") and each share of Common Stock of Concentra and the associated
purchase rights will be converted into the right to receive in cash an amount
equal to the highest price paid per share in the Offer.
The Agreement further provides that each holder of a Concentra stock option
will receive a cash payment equal to the excess of (a) the Acquisition Price
times the number of shares of Concentra Common Stock subject to such option
that is vested and exercisable (including those options that become vested and
exercisable as a result of the transaction) over (b) the aggregate exercise
price of such option.
It is our understanding that the parties intend that the transaction will be
accounted for as a purchase for financial reporting purposes.
For the purposes of rendering the Opinion, we have, among other things:
(i) reviewed a copy of the executed Agreement;
(ii) discussed the terms of the Agreement with Concentra management and the
Concentra Board of Directors;
(iii) interviewed management of Concentra concerning the business prospects,
financial outlook and operating plans of the Company;
(iv) reviewed certain historical and certain projected financial statements
and other relevant financial and operating data of Concentra prepared
by the management of the Company;
(v) assessed, in consultation with our associates in the Corporate Finance
department of Volpe Brown Whelan & Company, LLC ("VBW&Co."), the
positioning of the Acquisition, in an effort to evaluate Concentra's
alternatives and strategic options and the potential market reaction to
the Acquisition and the potential likelihood that the shareholders of
Concentra would accept the Offer;
<PAGE>
(vi) reviewed the valuation of selected publicly-traded companies we deemed
relevant for the valuation analysis;
(vii) reviewed the historical stock trading patterns of Concentra and
analyzed the premium of the Acquisition Price in relation to
historical Concentra stock trading ranges;
(viii) reviewed premiums paid in comparable merger and acquisition
transactions and merger and acquisition transaction generally in
relation to the premium represented by the Acquisition Price at
different times prior to the date of announcement;
(ix) reviewed, to the extent publicly available, the financial terms of
selected merger and acquisition transactions that we deemed relevant
for the valuation analysis;
(x) performed a discounted cash flow analysis of the SellingPoint business
and the ICAD cash flow stream based upon financial projections of
Concentra management;
(xi) performed a maximum price payable for no dilution valuation based on
the maximum non-dilutive price payable under purchase accounting
conventions;
(xii) performed a valuation analysis of LoanData based on a discount to the
valuation established by the last investment round made in LoanData;
and
(xiii) performed such other studies, analyses and inquiries and considered
such other information as we deemed relevant.
VBW&Co. relied without independent verification upon the accuracy and
completeness of all of the financial, accounting, legal, tax, operating and
other information provided to VBW&Co. by Concentra and has relied upon the
assurances of Concentra that all such information is complete and accurate in
all material respects and that there is no additional material information
known to it that would make any of the information made available to VBW&Co.
either incomplete or misleading.
Concentra has also retained outside legal, accounting, and tax advisors to
advise on matters relating to the Acquisition. Accordingly, VBW&Co. has
assumed the accuracy of such advice for purposes of its opinion and has not
independently verified or confirmed such advice and expresses no opinion on
such matters.
Although Concentra had discussions with third parties concerning possible
business combinations, for purposes of this opinion we were not requested to
consider, and we are expressing no opinion as to, the relative merits of the
Acquisition as compared to any other business combination or alternative
business strategies that might exist for Concentra or the effect of any other
business combination in which Concentra might engage.
With respect to the projected financial data of Concentra and its component
businesses, all of which has been provided by the management of Concentra,
VBW&Co. has relied upon assurances of Concentra that such data has been
prepared in good faith on a reasonable basis reflecting the best currently
available estimates and judgments of Concentra management as to the future
financial performance of Concentra and its component businesses. Our Opinion
is based, in large part, on these projected financial data and estimates.
VBW&Co. is relying upon the information provided to it by Concentra for the
purposes of rendering the Opinion. VBW&Co. expresses no opinion and has made
no investigation with respect to the validity, accuracy or completeness of the
information provided to it and does not warrant any projections included in
such information. Actual results that Concentra might achieve in the future
may vary materially from those used in VBW&Co.'s analysis.
<PAGE>
VBW&Co. has assumed that the Acquisition will be consummated in accordance
with the terms of the Agreement and that no subsequent material changes or
amendments will be made prior to completion of the Acquisition. Any material
changes could impact the VBW&Co. analysis and Opinion. VBW&Co. has,
furthermore, not made any independent appraisals or valuations of any assets
of Concentra or any of its component businesses, nor has VBW&Co. been
furnished with any such appraisals or valuations. VBW&Co. has performed no
investigations relating to the representations and warranties made by
Concentra, Oracle or the Purchaser, including representations with respect to
intellectual property rights and status of any litigation pending or
threatened against any company. While VBW&Co. believes that its review, as
described herein, is an adequate basis for the Opinion, the Opinion is
necessarily based upon market, economic and other conditions that exist and
can be evaluated as of the date of the Opinion, and any change in such
conditions would require a re-evaluation of the Opinion.
The Opinion addresses only the fairness, from a financial point of view, of
the Acquisition Price to Concentra and does not address the relative merits of
the Acquisition and any alternatives to the Acquisition, Concentra's decision
to proceed with or the effect of the Acquisition, or any other aspect of the
Acquisition.
The preparation of a fairness opinion involves various judgments as to
appropriate and relevant quantitative and qualitative methods of financial
analyses and the application of those methods to the particular circumstances
and, therefore, such an opinion is not readily susceptible to summary
description. Accordingly, we believe our analyses and the factors utilized in
such analysis must be considered as a whole and that considering any portion
of such analyses or factors, without considering all analyses and factors
could create a misleading or incomplete view of the process underlying the
Opinion. In our analyses, we made numerous assumptions with respect to
industry performance, general business and other conditions and matters, many
of which are beyond Concentra's control and are not susceptible to accurate
prediction.
No opinion is expressed herein as to the future trading price or range of
prices of any securities of Concentra issued prior to the Acquisition.
Furthermore, the Opinion does not constitute a recommendation as to the Board
of Director's decision on whether to support the Acquisition and recommend it
to Concentra's shareholders and does not constitute a recommendation to
shareholders as to whether to tender their shares in the Offer or vote in
favor of the merger. The Opinion and related materials have been prepared for
the use and benefit of the Board of Directors of Concentra and may not be used
for any other purpose, except that this opinion may be included in any filing
which Concentra makes with the Securities and Exchange Commission with respect
to, and distributed to the shareholders of Concentra in connection with, the
Acquisition. Although developments following the date of the Opinion may
affect the Opinion, VBW&Co. assumes no obligation to update, revise or
reaffirm the Opinion.
As a customary part of its investment banking business, VBW&Co. engages in
the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, secondary distributions of
securities, private placements and valuations for corporate and other
purposes. In the ordinary course of its business, VBW&Co. and its affiliates
may actively trade the equity securities of Concentra or Oracle and its
affiliates for their own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
VBW&Co. will receive a fee for rendering its Opinion, no portion of which is
conditioned upon the Opinion being favorable. In addition, VBW&Co. is to be
paid a fee upon the close of any combination transaction.
Based upon and subject to the foregoing limitations and restrictions and
after considering such other matters as we deem relevant, it is our opinion
that, as of the date hereof, the Acquisition Price is fair, from a financial
point of view, to the shareholders of Concentra.
Very truly yours,
VOLPE BROWN WHELAN & COMPANY, LLC
By: /s/ Steve Piper
-------------------------
Steve Piper
Compliance Officer
