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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
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Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: July 16, 1997
(Date of earliest event reported): July 16, 1997
HARBINGER CORPORATION
(Exact name of Company specified in its charter)
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<S> <C> <C>
GEORGIA 0-26298 58-1817306
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.)
incorporation or organization)
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1055 LENOX PARK BOULEVARD, ATLANTA, GEORGIA 30319
(Address of principal executive offices) (Zip Code)
(404) 467-3000
(Company's telephone number, including area code)
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ITEM 5. OTHER EVENTS
Filed herewith as Exhibit 99.1 is the Safe Harbor Compliance Statement
for Forward-Looking Statements of Harbinger Corporation, which supercedes the
Safe Harbor Compliance Statement for Forward-Looking Statements filed as
Exhibit 99.1 to the Harbinger Annual Report on Form 10-K for the year ended
December 31, 1996.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(c) Exhibits
99.1 Safe Harbor Compliance Statement for Forward-Looking Statements
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HARBINGER CORPORATION
/s/ Joel G. Katz
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JOEL G. KATZ
Chief Financial Officer
(Principal Financial Officer;
Principal Accounting Officer)
Date: July 16, 1997
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EXHIBIT INDEX
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Exhibit No. Description Page
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99.1 Safe Harbor Compliance Statement for Forward-Looking
Statements
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EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD-LOOKING STATEMENTS
In passing the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"), 15 U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996), Congress
encouraged public companies to make "forward-looking statements" by creating a
safe harbor to protect companies from securities law liability in connection
with forward-looking statements. Harbinger Corporation ("Harbinger" or the
"Company") intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe
harbor provisions.
"Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All
forward-looking statements are inherently uncertain as they are based on
various expectations and assumptions concerning future events and they are
subject to numerous known and unknown risks and uncertainties which could cause
actual events or results to differ materially from those projected. Due to
those uncertainties and risks, the investment community is urged not to place
undue reliance on written or oral forward-looking statements of Harbinger. The
Company undertakes no obligation to update or revise this Safe Harbor
Compliance Statement for Forward-Looking Statements (the "Safe Harbor
Statement") to reflect future developments. In addition, Harbinger undertakes
no obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes to future
operating results over time. This Safe Harbor Statement supersedes the Safe
Harbor Statement filed as Exhibit 99.1 to the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
Harbinger provides the following risk factor disclosure in connection
with its continuing effort to qualify its written and oral forward-looking
statements for the safe harbor protection of the Reform Act and any other
similar safe harbor provisions. Important factors currently known to management
that could cause actual results to differ materially from those in
forward-looking statements include the following:
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Integration of Recent Acquisitions. The Company has completed a number of
acquisitions since January 1, 1996, including the acquisitions of SupplyTech,
Inc. and its affiliates ("SupplyTech") and the minority interests of Harbinger
NET Services, LLC ("HNS"). SupplyTech and HNS have historically reported
significant operating losses. The Company's acquisitions present a number of
risks and challenges, including the historical operating losses of SupplyTech
and HNS, the integration of the SupplyTech software products into the Company's
current suite of products, the integration of the sales force of SupplyTech
into the Company's existing sales operations, the coordination of customer
support services, the integration of international operations of SupplyTech
with the Company's international affiliates, the development and
commercialization of HNS's Internet-related products and the integration of
those products with the Company's existing products, and the diversion of
management's attention from other business concerns. Several of the newly
acquired products address the same markets as, and may therefore be competitive
with, existing Company products. There can be no assurance that the Company can
successfully assimilate its operations and integrate its software products
with these recently acquired operations, software products and technologies, or
that the Company will be successful in repositioning its products on a timely
basis to achieve market acceptance. Any delay in such integration could have a
material adverse effect on the Company.
Factors Affecting Operating Results; Potential Fluctuations in Quarterly
Results. The Company's quarterly operating results have in the past and may in
the future vary or decrease significantly depending on factors such as revenue
from software sales, the timing of new product and service announcements,
changes in pricing policies by the Company and its competitors, market
acceptance of new and enhanced versions of the Company's products, the size and
timing of significant orders, changes in operating expenses, changes in Company
strategy, personnel changes, government regulation, the introduction of
alternative technologies, the effect of acquisitions and general economic
factors. The Company has limited or no control over many of these factors. The
Company has experienced losses in the past, and at March 31, 1997, the Company
had an accumulated deficit of approximately $36.6 million. The Company operates
with virtually no software product order backlog because its software products
typically are shipped shortly after orders are received. As a result, revenues
in any quarter are substantially dependent on the quantity of purchases of
services requested and product orders received in that quarter. Quarterly
revenues also are difficult to forecast because the market for electronic
commerce and electronic data interchange ("EDI") software products is rapidly
evolving and the Company's revenues in any period may be significantly affected
by the announcements and product offerings of the Company's competitors as well
as alternative technologies. The Company's Internet value-added servers
("IVAS") product is more complex and expensive compared to the Company's other
electronic commerce and Internet products introduced to date, and will
generally involve significant investment decisions by prospective customers.
Accordingly, the Company expects that in selling its IVAS product it will
encounter risks typical of companies that rely on large dollar purchase
decisions, including the reluctance of purchasers to commit to major
investments in new products and protracted sales cycles, both of which add to
the difficulty of predicting future revenues and may result in quarterly
fluctuations. The Company's expense levels are based, in part, on its
expectations as to future revenues. If revenue levels are below expectations,
the Company may be unable or unwilling to reduce expenses proportionately and
operating results are likely to be adversely affected. As a result, the Company
believes that period-to-period comparisons of its results of operations are not
necessarily meaningful and should not be relied upon as indications of future
performance. Due to all of the foregoing factors, it is likely that in some
future quarter or quarters the Company's operating results will be below the
expectations of public market analysts and investors. In such event, the price
of the Company's Common Stock will likely be adversely affected.
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The Company recognizes revenues for software license fees upon shipment,
net of estimated returns. Customers using the Company's PC products are
permitted to return products after delivery for a specified period, generally 60
days. The Company generally has experienced returns of approximately 20% of the
PC product license fees, and the Company records revenues after a deduction for
estimated returns. Any material increase in the Company's return experience
could have an adverse effect on its operating results.
Acquisition-Related Charges; Loss in 1997 First Quarter and Expected Loss
in Year Ended December 31, 1997. In January 1997, the Company completed the
merger with SupplyTech, accounted for as a pooling of interests, and incurred a
$7.1 million first quarter 1997 charge related to merger related expenses.
Additionally, the Company incurred integration costs related to the merger of
$4.8 million during the first quarter of 1997. In January 1997, the Company
completed the purchase of the $3.0 million Subordinated Convertible Debenture of
HNS (the "Debenture") from BellSouth Telecommunications, Inc. and the remaining
equity in HNS from other shareholders for an aggregate of approximately $9.8
million in consideration. The Company incurred integration costs related to
the HNS transaction of $1.6 million during the first quarter of 1997.
Additionally, the Company incurred a $2.4 million loss on extinguishment of the
Debenture related to its purchase and a $2.7 million charge for in-process
product development related to the acquisition of the minority interest of HNS
in the first quarter of 1997. As a result of these charges, the Company
incurred a net loss for the first quarter of 1997 and expects to incur a net
loss for the year ending December 31, 1997. The costs and expenses incurred in
connection with the SupplyTech and HNS integration activities included certain
internal expense allocations which may recur in other expense categories in the
future and may result in an increase in some expense categories as a percentage
of total revenues.
Intense Competition. The electronic commerce, EDI and network services and
products businesses are intensely competitive, and the Company has many
competitors with substantially greater financial, marketing, personnel and
technological resources than the Company. Other companies offer products and
services that may be considered by customers to be acceptable alternatives to
the Company's products and services. Certain companies also operate private
computer networks for transacting business with their trading partners. It is
expected that other companies may develop and implement similar
computer-to-computer networks, some of which may be "public" networks such as
the Company's and others may be "private," providing services only to a specific
group of trading partners, thereby reducing the Company's ability to increase
sales of its network services. In addition, several companies offer PC-based,
UNIX, midrange and mainframe and Internet computer software products which
compete with the Company's software products. Advanced operating systems and
applications software from Microsoft and other vendors also may offer electronic
commerce functions that limit the Company's ability to sell its software
products. The Company believes that the continuing acceptance of electronic
commerce and EDI will attract new competitors, including software applications
and operating systems companies that may bundle electronic commerce solutions
with their programs, and alternative technologies that may be more sophisticated
and cost effective than the Company's products and services. Competitive
companies may offer certain electronic commerce products or services, such as
communications software or network transactional services, at no charge or a
deeply discounted charge, in order to obtain the sale of other products or
services. Since the Company's agreements with its network subscribers are
terminable upon 30 days' notice, the Company does not have the contractual right
to prevent its customers from changing to a competing network. Competitors that
offer products and/or services that compete with various of the Company's
products and services include, among others, Advantis Systems, Inc.; AT&T;
Computer Associates International, Inc.; EDS; General Electric Information
Systems; Premenos Technology Corp.; QuickResponse Services, Inc.; Sterling
Commerce, Inc. and a joint venture between British
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Telecommunications Plc and MCI Communications Corporation; as well as the
internal programming staffs of various businesses engaging in electronic
commerce.
Emergence of Electronic Commerce Over the Internet. The Internet provides
a potential alternative means of providing electronic commerce to business
trading partners. The market for Internet software and services is both emerging
and highly competitive, ranging from small companies with limited resources to
large companies with substantially greater financial, technical and marketing
resources than the Company. In addition to the Company's Internet related
products and services, several existing competitors of the Company have
introduced their own Internet electronic commerce products and services.
Moreover, new competitors, which may include telephone companies and media
companies, are likely to increase the provision of business-to-business data
transmission services using the Internet. There is no assurance that the
Company's TrustedLink Guardian end user software and IVAS, which enable
electronic commerce over the Internet, will be accepted in the Internet market
or can be competitive with other products based on evolving technologies. If the
Internet becomes an accepted method of electronic commerce, the Company could
also lose network customers from its value-added network ("VAN") which would
reduce recurring revenue from network services and have a material adverse
effect on the Company.
The use of the Company's Internet electronic commerce products and services
will depend in large part upon the continued development of the infrastructure
for providing Internet access and services. Use of the Internet for
business-to-business electronic commerce services raises numerous issues that
greatly impact the development of this market. These issues include reliability,
data security and data integrity, timely transmission, and pricing of products
and services. Because global commerce and online exchange of information on the
Internet is new and evolving, it is difficult to predict with any assurance
whether the Internet will prove to be a viable commercial marketplace. The
Internet has experienced, and is expected to continue to experience, substantial
growth in the number of users and the amount of traffic. There can be no
assurance that the Internet will continue to be able to support the demands
placed on it by this continued growth. In addition, the Internet could lose its
viability due to delays in the adoption of new standards and protocols to handle
increased levels of Internet activity, or due to increased governmental
regulation. There can be no assurance that the infrastructure or complementary
services necessary to make the Internet a viable commercial marketplace will be
developed, or, if developed, that the Internet will become a viable commercial
marketplace for products and services such as those offered by the Company. If
the necessary infrastructure or complementary services or facilities are not
developed, or if the Internet does not become a viable commercial marketplace,
the Company's business, operating results or financial condition will be
materially adversely affected.
Risks of Potential Future Acquisitions. The Company's growth has been
significantly enhanced through acquisitions of other businesses, products and
licenses. Following this offering, the Company will have significant cash
resources, which may be used for acquisitions. There can be no assurance that in
the future the Company will be able to identify suitable acquisition candidates
available for sale at reasonable prices, consummate any acquisition or
successfully integrate any acquired business into the Company's operations.
Operational and software integration problems may arise if the Company
undertakes future acquisitions of complementary products, technologies or
businesses. Future acquisitions may also result in potentially dilutive
issuances of equity securities, the incurrence of additional debt, the write-off
of in-process product development and capitalized product costs, integration
costs, and the amortization of expenses related to goodwill and other intangible
assets, all of which could have a material adverse effect on the Company.
Acquisitions involve numerous additional risks, including difficulties in the
assimilation of the operations, products and personnel of the acquired company,
differing company cultures, the diversion of management's attention from other
business concerns, risks of entering markets in which the Company has little or
no direct prior experience, and the potential loss of key employees of the
acquired company. Customer satisfaction or performance problems at a single
acquired firm could have a material adverse impact on the reputation of the
Company as a whole. The Company
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expects to finance any future acquisitions with the proceeds of this offering as
well as with possible debt financing, the issuance of equity securities (common
or preferred stock) or a combination of the foregoing. There can be no assurance
that the Company will be able to arrange adequate financing on acceptable terms.
Dependence on New Products; Industry Standards. The electronic commerce
industry is characterized by rapid technological change, frequent new product
and service introductions and evolving industry standards. The Company's future
success will depend in significant part on its ability to anticipate industry
standards, continue to apply advances in electronic commerce product and service
technologies, enhance existing products and services and introduce and acquire
new products and services on a timely basis to keep pace with technological
developments. There can be no assurance that the Company will be successful in
developing, acquiring or marketing new or enhanced products or services that
respond to technological change or evolving industry standards, that the Company
will not experience difficulties that could delay or prevent the successful
development, acquisition or marketing of such products or services or that its
new or enhanced products and services will adequately meet the requirements of
the marketplace and achieve market acceptance. In the past, the Company has
experienced delays in the commencement of commercial shipments of new products
and enhancements, resulting in delays or losses of product revenues. Such delays
or failure in the introduction of new or enhanced products or services, or the
failure of such products or services to achieve market acceptance, could have a
material adverse effect on the business, results of operations and financial
condition of the Company.
Ability to Manage Growth. The Company has recently experienced significant
growth in revenue, operations and personnel as it has made strategic
acquisitions, added subscribers to the Harbinger VAN and IVAS and increased the
number of licensees of its software products. This growth could continue to
place a significant strain on the Company's management and operations, including
its sales, marketing, customer support, research and development, finance and
administrative operations. Achieving and maintaining profitability during a
period of expansion will depend, among other things, on the Company's ability to
successfully expand its products, services and markets and to manage its
operations and acquisitions effectively. Difficulties in managing growth,
including difficulties in obtaining and retaining talented management and
product development personnel, especially following an acquisition, could have a
material adverse effect on the Company.
Investment in International Subsidiaries; International Growth and
Operations. The Company believes that its continued growth and profitability
will require expansion of its international operations through its international
subsidiaries, including NTEX Holding, B.V. ("NTEX") and INOVIS GmbH & Co.
("INOVIS") in Germany as well as the international operations of SupplyTech in
the United Kingdom, Italy, Australia and Mexico (the "International
Subsidiaries"). This expansion will require financial resources and significant
management attention, particularly by certain members of the management of the
Company. The Company's ability to successfully expand its business
internationally will also depend upon its ability to attract and retain both
talented and qualified managerial, technical and sales personnel and electronic
commerce services customers outside the United States and its ability to
continue to effectively manage its domestic operations while focusing on
international expansion. Certain of the International Subsidiaries have
experienced operating losses in their recent histories and some have experienced
significant operating losses in their recent histories. To the extent that the
International Subsidiaries are unable to penetrate international markets in a
timely and profitable manner, the Company's growth, if any, in international
sales will be limited, and the Company could be materially adversely affected.
Moreover, the Company's ability to successfully implement its international
strategy may require installation and operation of a value-added network and
implementation of its IVAS software in other countries, as well as additional
improvements to its infrastructure and management information systems, including
its international customer support systems. In addition, there can be no
assurance that the Company will be able to maintain or increase international
market demand for the Company's products or services.
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International operations are subject to certain inherent risks, including
unexpected changes in regulatory requirements and tariffs, longer payment
cycles, increased difficulties in collecting accounts receivable and potentially
adverse tax consequences. To the extent international sales are denominated in
foreign currencies, gains and losses on the conversion to U.S. dollars of
revenues, operating expenses, accounts receivable and accounts payable arising
from international operations may contribute to fluctuations in the Company's
results of operations. The Company has not entered into any hedging or other
arrangements for the purpose of guarding against the risk of currency
fluctuation. In addition, sales in Europe and certain other parts of the world
typically are adversely affected in the third calendar quarter of each year
because many customers reduce their business activities in the summer months.
Dependence on Key Management and Personnel; Ability to Attract and Retain
Qualified Personnel. The Company's success is largely dependent upon its
executive officers and key sales and technical personnel, the loss of one or
more of whom could have a material adverse effect on the Company. The future
success of the Company will depend in large part upon its ability to attract and
retain talented and qualified personnel. In particular, the Company believes
that it will be important for the Company to hire experienced product
development and sales personnel. Competition in the recruitment of
highly-qualified personnel in the computer software and electronic commerce
industries is intense. The inability of the Company to locate and retain such
personnel may have a material adverse effect on the Company. No assurance can be
given that the Company can retain its key employees or that it can attract
qualified personnel in the future. The Company currently carries key-person life
insurance policies on the lives of Messrs. Howle and Leach, and expects to
purchase such insurance on the lives of Messrs. Davis, Travers and Annis.
Dependence on Alliance Partners. The Company has various agreements with
alliance partners for the distribution and marketing of certain software
products of the Company. These alliance partners pay the Company royalties
representing a percentage of fees generated from the sale of software licensed
from the Company. For the years ended December 31, 1995 and 1996, revenues from
one of these alliance partners were approximately $1.4 million and $5.7 million,
respectively, which equaled the contractual minimum royalty during those years.
There is no minimum royalty obligation after 1996, the Company believes that
revenues from this alliance partner will substantially decline in 1997 as
compared to 1996. Further, based on recent amendments to the arrangement, the
Company believes that the average collection period related to cash flows
derived from royalty revenues earned from this alliance partner will lengthen
substantially.
Risks of Product Development. Software products as complex as those
offered by the Company may contain undetected errors or failures when first
introduced or when new versions are released. If software errors are discovered
after introduction, the Company could experience delays or lost revenues during
the period required to correct these errors. There can be no assurance that,
despite testing by the Company and by current and potential customers, errors
will not be found in new products or releases after commencement of commercial
shipments, resulting in loss of or delay in market acceptance, additional and
unexpected expenses to fund further product development or to add programming
personnel to complete a development project, and loss of revenue because of the
inability to sell the new product on a timely basis, any one or more of which
could have a material adverse effect on the Company.
Dependence on Data Centers. The network service operations of the Company
are dependent upon the ability to protect computer equipment and the information
stored in the Company's data centers against damage that may be caused by fire,
power loss, telecommunication failures, unauthorized intrusion, computer viruses
and disabling devices and other similar events. Notwithstanding precautions the
Company has taken, there can be no assurance that a fire or other natural
disaster, including national, regional or local telecommunications outages,
would not result in a prolonged outage of the Company's network services. In the
event of a disaster, and depending on the nature of the disaster, it may take
from several hours to several days before the Company's off-site computer system
can become operational for all of the Company's customers, and use of the
alternative off-site computer would result in substantial additional cost to the
Company. In the event
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that an outage of the Company's network extends for more than several hours, the
Company will experience a reduction in revenues by reason of such outage. In the
event that such outage extends for one or more days, the Company could
potentially lose many of its customers, which may have a material adverse effect
on the Company.
Dependence upon Certain Licenses. The Company relies on certain technology
that it licenses from third parties and other products that are integrated with
internally developed software and used in the Company's products to perform key
functions or to add important features. There can be no assurance that the
Company will be successful in negotiating third-party technology licenses on
suitable terms or that such licenses will not be terminated in the future.
Moreover, any delay or product problems experienced by such third party
suppliers could result in delays in introduction of the Company's products and
services until equivalent technology, if available, is identified, licensed and
integrated, which could have a material adverse effect on the Company's
business, operating results and financial condition.
Limited Protection of Proprietary Technology; Risks of Infringement. The
Company relies primarily on a combination of copyright, patent and trademark
laws, trade secrets, confidentiality procedures and contractual provisions to
protect its proprietary rights. The Company seeks to protect its software,
documentation and other written materials principally under trade secret and
copyright laws, which afford only limited protection. The Company presently has
one patent for an electronic document interchange test facility and a patent
application pending for an EDI communication system. Despite the Company's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy aspects of the Company's products or to obtain and use information that the
Company regards as proprietary. There can be no assurance that the Company's
means of protecting its proprietary rights will be adequate or that the
Company's competitors will not independently develop similar technology. In
distributing many of its products, the Company relies primarily on "shrink wrap"
licenses that are not signed by licensees and, therefore, may be unenforceable
under the laws of certain jurisdictions. In addition, the Company has licensed
it products to users and distributors in other countries, and the laws of some
foreign countries do not protect the Company's proprietary rights to as great an
extent as the laws of the United States. The Company does not believe that any
of its products infringe the proprietary rights of third parties. There can be
no assurance, however, that third parties will not claim infringement by the
Company with respect to current or future products, and the Company has agreed
to indemnify many of its customers against such claims. The Company expects that
software product developers will increasingly be subject to infringement claims
as the number of products and competitors in electronic commerce grows and the
functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment delays or require the Company to enter into
royalty or licensing agreements and indemnify its customers against resulting
liability, if any. Such royalty or licensing agreements, if required, may not be
available on terms acceptable to the Company or at all, which could have a
material adverse effect on the Company.
Government Regulatory and Industrial Policy Risks. The Company's network
services are transmitted to its customers over dedicated and public telephone
lines. These lines are governed by Federal and state regulations establishing
the rates, terms and conditions for their use. Changes in the legislative and
regulatory environment relating to online services, EDI or the Internet access
industry, including regulatory or legislative changes which directly or
indirectly affect telecommunication costs, restrict content or increase the
likelihood of competition from regional telephone companies or others, could
have an adverse effect on the Company's business. The Telecommunications Act of
1996 ("Act") amended the federal telecommunications laws by lifting restrictions
on regional telephone companies and others competing with the Company and
imposed certain restrictions regarding obscene and indecent content communicated
to minors over the Internet or through interactive computer services. The Act
set in motion certain events that will lead to the elimination of restrictions
on regional telephone companies providing transport between defined
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geographic boundaries associated with the provision of their own information
services. This will enable regional telephone companies to more readily compete
with the Company by packaging information service offerings with other services
and providing them on a wider geographic scale. While provisions of the Act
prohibiting the use of a telecommunications device or interactive computer
service to send or display indecent material to minors have been held by the
U.S. Supreme Court to be unconstitutional, there can be no assurance that future
legislative or regulatory efforts to limit use of the Internet in a manner
harmful to the Company will not be successful. The Clinton administration has
announced an initiative to establish a framework for global electronic commerce.
Also, some countries such as Germany have adopted laws regulating aspects of the
Internet, and there are a number of bills currently being considered in the
United States at the federal and state levels involving encryption and digital
signatures, all of which may impact the Company. The Company cannot predict the
impact, if any, that the Act and future court opinions, legislation, regulations
or regulatory changes in the United States or other countries may have on its
business. Management believes that the Company is in compliance with all
material applicable regulations.
Anti-Takeover Provisions. The Board of Directors has authority to issue up
to 20,000,000 shares of preferred stock and to fix the rights, preferences,
privileges and restrictions, including voting rights, of the preferred stock
without further vote or action by the Company's shareholders. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any preferred stock that may be issued in the
future. While the Company has no present intention to issue additional shares of
preferred stock, such issuance, while providing desired flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire a majority
of the outstanding voting stock of the Company. In addition, the Company's
Amended and Restated Articles of Incorporation and Bylaws contain provisions
that may discourage proposals or bids to acquire the Company. This could limit
the price that certain investors might be willing to pay in the future for
shares of Common Stock. The Company's Amended and Restated Articles of
Incorporation provide for a classified Board of Directors with three-year,
staggered terms for its members. The classification of the Board of Directors
could have the effect of making it more difficult for a third party to acquire
control of the Company.
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