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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 21, 2000
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(RULE 14D-101)
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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CONCENTREX INCORPORATED
(Name of Subject Company)
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CONCENTREX INCORPORATED
(Name of Person Filing Statement)
COMMON STOCK, NO PAR VALUE
(Title of Class of Securities)
20589S105
(CUSIP Number of Class of Securities)
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MATTHEW W. CHAPMAN
CHIEF EXECUTIVE OFFICER AND CHAIRMAN
400 SW SIXTH AVENUE, 2ND FLOOR
PORTLAND, OREGON 97204
(503) 274-7280
(Name, address and telephone number of person authorized to
receive notices and communications on behalf of the person filing this
Statement)
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Copy To:
RONALD L. GREENMAN
TONKON TORP LLP
1600 PIONEER TOWER
888 SW FIFTH AVENUE
PORTLAND, OREGON 97204
(503) 221-1440
[ ] CHECK THE BOX IF THE FILING RELATES SOLELY TO PRELIMINARY COMMUNICATIONS
MADE BEFORE THE
COMMENCEMENT OF A TENDER OFFER.
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Schedule 14D-9") relates to an offer by JH Acquisition Corp., an Oregon
corporation ("Buyer") and a wholly-owned subsidiary of John H. Harland Company,
a Georgia corporation ("Parent"), to purchase all of the Shares (as defined
below) of Concentrex Incorporated, an Oregon corporation (the "Company").
ITEM 1. SUBJECT COMPANY INFORMATION.
The name, address and telephone number of the principal executive offices
of the Company are Concentrex Incorporated; 400 SW Sixth Avenue, Portland,
Oregon 97204; and (503) 274-7280, respectively. This Schedule 14D-9 relates to
the 5,538,661 shares of the Company's common stock, no par value, outstanding as
of July 21, 2000 (the "Shares").
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
Name and address. The name, business address and telephone number of the
Company, which is the person filing this statement, are set forth in Item 1
above, which information is incorporated herein by reference. Unless the context
otherwise requires, references to the Company in this Schedule 14D-9 are to the
Company and its subsidiaries, viewed as a single entity.
Tender Offer. This Schedule 14D-9 relates to the tender offer made by John
H. Harland Company, disclosed in a Tender Offer Statement on Schedule TO dated
July 21, 2000 (as amended or supplemented from time to time, the "Schedule TO"),
to purchase all the outstanding Shares at a price of $7.00 per Share, net to the
seller in cash, but subject to withholding required by law, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated July 21, 2000
(as amended or supplemented from time to time, the "Offer to Purchase"), and the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), copies of which are
filed as Exhibits 1 and 2 hereto, respectively, and incorporated herein by
reference.
The Schedule TO states that the principal executive offices of Buyer and
Parent are located at 2939 Miller Road, Decatur, Georgia 30035.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
General. Certain contracts, agreements, arrangements and understandings
between the Company and certain of its executive officers are described in the
Information Statement dated July 21, 2000 included as Annex A to this Schedule
14D-9 and are incorporated herein by reference. The Information Statement will
be furnished to the Company's stockholders pursuant to Section 14(f) of the
Securities Exchange Act of 1934, as amended, and Rule 14f-1 promulgated
thereunder in connection with Buyer's right (after consummation of the Offer) to
designate persons to be appointed to the Board of Directors of the Company other
than at a meeting of the stockholders of the Company.
In connection with the Merger Agreement, Buyer and Parent entered into
Tender Agreements dated as of July 17, 2000 (the "Tender Agreements"), with each
of the following stockholders of the Company: Robert P. Chamness, Matthew W.
Chapman and Robert T. Jett (the "Tendering Stockholders"). Pursuant to the
Tender Agreements, the Tendering Stockholders have agreed to tender an aggregate
of 457,952 Shares owned of record by the Tendering Stockholders (the "Committed
Shares") and the Tendering Stockholders have agreed to vote their portion of the
Committed Shares in favor of the Merger and otherwise in the manner directed by
Buyer. The Tendering Stockholders have also agreed that, among other things,
unless the Merger Agreement is terminated in accordance with its terms, such
Tendering Stockholders will not transfer the Committed Shares. The Committed
Shares represent approximately 8.27% of the Shares that, as of July 21, 2000,
were issued and outstanding. The form of the Tender Agreement, a copy of which
is filed as Exhibit 4 hereto, is summarized in Section 11 of the Offer to
Purchase and incorporated by reference herein.
Indemnification and Insurance. The Merger Agreement provides that, for
five (5) years from and after the Effective Time, Parent will cause the
corporation surviving the Merger (the "Surviving Corporation") to
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indemnify and hold harmless all past and present officers and directors of the
Company and its subsidiaries for acts or omissions occurring at or prior to the
Effective Time to the same extent such persons are indemnified by the Company
pursuant to its Articles of Incorporation, Bylaws or agreements in effect on the
date of the Merger Agreement.
Parent has agreed to cause the Surviving Corporation to maintain, for five
(5) years from the Effective Time, if available, the Company's current directors
and officers liability insurance policies (provided that the Surviving
Corporation may buy a substitute for such policies, policies of at least the
same coverage containing terms and conditions which are not materially less
favorable) that provide coverage for events occurring prior to the Effective
Time; provided, however, that the Surviving Corporation shall not be required to
expend more than an amount per year equal to one hundred fifty percent (150%) of
current annual premiums paid by the Company for such insurance. If but for the
preceding sentence the Surviving Corporation shall be required to spend more
than 150% of current annual premiums, the Surviving Corporation shall obtain the
maximum amount of such insurance obtainable by payment of annual premiums equal
to 150% of current annual premiums.
Matters Disclosed in Proxy Statement. Certain contracts, agreements,
arrangements or understandings between the Company or its affiliates and certain
of its executive officers, directors or affiliates with respect to executive
compensation and stock option plans are described in the Company's Proxy
Statement dated April 17, 2000, relating to its May 19, 2000 Annual Meeting of
Stockholders (the "Proxy Statement"), under the headings "BOARD COMPENSATION,"
"EXECUTIVE COMPENSATION," "EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS," and "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS." A copy of such portions of the Proxy Statement has been filed as
Exhibit 5 to this Schedule 14D-9 and is incorporated herein by reference.
Stock Options. The Company has issued stock options under the 1995
Consolidated and Restated Stock Option Plan, the Nonqualified Stock Option Plan
dated October 15, 1993, the Amended and Restated Outside Director Restricted
Stock Plan, the 1994 Equity Incentive Plan of ULTRADATA Corporation, the
Restated Outside Director Compensation and Stock Option Plan, and Stock Option
Agreements dated January 21, 1999 and April 18, 2000. The Merger Agreement
provides that the Company will act to accelerate the vesting of all options
outstanding under the Company's various option plans. Accordingly, all options
outstanding under the plans will become immediately exercisable. Under the
Merger Agreement, at the Effective Time, each outstanding option to purchase
Shares granted under the plans will be cancelled and each holder of a cancelled
option will be entitled to receive upon execution and delivery of an option
termination agreement, in form and substance reasonably acceptable to Parent in
consideration for the cancellation of such option, an amount in cash equal to
(i) the number of Shares previously subject to such option that but for the
cancellation thereof would have been exercisable (after giving effect to any
acceleration of vesting pursuant to the terms of such option as a result of the
consummation of the Offer or the Merger), multiplied by (ii) the excess, if any,
of the Offer price over the exercise price per Share of the option.
With respect to the description of certain provisions of the Merger
Agreement contained in this Item 3, see Section 11 of the Offer to Purchase,
which is incorporated by reference herein.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Recommendation of the Board. At a meeting held on July 14, 2000, the Board
(1) approved and adopted the Offer and the Merger Agreement, (2) declared the
Merger to be advisable and determined that the terms of the Offer and the Merger
are fair to, and in the best interests of, holders of Shares and (3) determined
to recommend that holders of Shares accept the Offer and tender their Shares
pursuant to the Offer. Copies of the press releases of Parent and the Company
announcing the Merger Agreement and the transactions contemplated thereby and a
letter to the stockholders of the Company communicating the Board's
recommendation are filed as Exhibits 6 and 7 hereto, respectively, and are
incorporated herein by reference.
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Background of the Offer. On December 7 and 8, 1999, representatives of
Parent met representatives of the Company at a retail banking conference and
discussed the Company's recent acquisitions and upcoming product releases.
On January 20, 2000, at Parent's quarterly board of directors meeting,
members of Parent's management discussed the Company as a potential acquisition
candidate. Parent's board agreed that management should initiate contact with
the Company and explore a potential transaction between Parent and the Company.
In late January, 2000, Parent's Chief Executive Officer, Timothy C. Tuff,
had a conversation with the Company's Chairman and Chief Executive Officer,
Matthew W. Chapman. They discussed the business direction of the two companies,
potential synergies, and the possibility of a transaction between Parent and the
Company. At the conclusion of the conversation, Mr. Chapman stated that the
Company was committed to an independent path but that he would consider the
discussion.
In late January, 2000, Mr. Chapman, through his assistant, advised Mr. Tuff
that the Company was committed to an independent path, and that no further
discussions would be appropriate.
On April 27, 2000, Mr. Tuff and other members of Parent's management had a
discussion with certain members of Parent's board regarding growth aspirations
and transaction possibilities for Parent, including the Company.
On April 28, 2000, at Parent's quarterly board of directors meeting, Mr.
Tuff updated the board on the consideration of a transaction with Concentrex.
On May 15, 2000, Daniel Chu of UBS Warburg LLC, Parent's investment
advisor, contacted Eran Ashany of Allen & Company, the Company's investment
advisor, who is also a member of the Company's board of directors, and requested
a meeting regarding possible strategic alternatives for the Company. At that
time, UBS Warburg LLC was not formally retained by Parent, but was aware of
Parent's interest in the Company.
On May 18, 2000, Mr. Tuff and other members of Parent's management again
had a discussion with a member of Parent's board of directors regarding growth
aspirations and transaction possibilities for Parent, including the Company.
On May 23, 2000, Mr. Chu met with Mr. Ashany and discussed the potential of
a transaction between Parent and the Company. Mr. Ashany stated that the Company
was investigating potential alternatives for the business and would get back
with Mr. Chu within two to three weeks to let him know if further discussions
were appropriate.
On June 1, 2000, Mr. Ashany communicated to Mr. Chu that the Company was
still investigating alternatives and that it might take longer than the
originally communicated two to three weeks.
On June 5, 2000, Mr. Tuff sent Mr. Chapman a letter expressing Parent's
interest in a potential transaction with the Company.
On June 9, 2000, Parent retained UBS Warburg LLC as its investment advisor
with respect to the potential acquisition by Parent of the Company.
On June 14, 2000, Mr. Ashany called Mr. Chu to communicate that the
Company's board of directors was aware of the letter, and that it was well
received.
On June 16, 2000, Mr. Ashany called Mr. Chu and stated that the Company was
interested in meeting with Parent to discuss the potential acquisition of the
Company by Parent.
On June 21, 2000, management team members from Parent and representatives
from UBS Warburg LLC met with management team members from the Company and Mr.
Ashany, who was now representing the Company as an investment advisor. The two
groups discussed business direction, potential synergies, and the possible
acquisition of the Company by Parent. The two teams agreed to an accelerated
diligence process to begin the following week and to last two to three weeks.
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On June 23, 2000, Parent and the Company signed a mutual confidentiality
agreement, and on June 26, 2000, Parent commenced diligence on the Company.
Active diligence continued from that date through July 14, 2000.
On June 30, 2000, Mr. Ashany spoke with Mr. Chu to discuss the progress on
the diligence process. Mr. Ashany expressed an increasing urgency to the timing
of the discussions. After multiple conversations over the weekend, the two
agreed that diligence should continue, but that pricing discussions and
preliminary drafting of the definitive agreement should begin during the
diligence time period.
On July 6, 2000, Parent submitted a non-binding proposal letter to the
Company regarding the potential acquisition of the Company by Parent at a tender
price of $5.50 per Share. The letter also contained a request for a 21-day
exclusivity period in order to complete due diligence and execute a definitive
agreement. On July 7, 2000, Mr. Ashany contacted Mr. Chu and told him that the
Company rejected the $5.50 per Share offer and countered with a proposal of
$12.00 per Share. Mr. Ashany also told Mr. Chu that the Company would not agree
to a 21-day exclusivity period. Mr. Chu withdrew the request for exclusivity.
Over the next several days, representatives of the Company and Parent clarified
various details regarding the Company's financial structure.
On July 10, 2000, Parent's board of directors discussed the potential
acquisition of the Company with management team members and approved negotiation
of a definitive agreement, subject to certain limits and final board approval.
On July 12 through July 14, 2000, representatives of Parent and the Company
met to negotiate the definitive terms of the transaction, including the purchase
price. On July 14, 2000, Parent's board of directors formally approved the
proposed acquisition, at a tender offer price of $7.00 per Share, subject to
finalization of the definitive agreement. Also on July 14, 2000, the board of
directors of the Company met and (i) determined that the Merger Agreement, the
Tender Agreements and the transactions contemplated thereby, including the Offer
and the Merger, are advisable and are fair to, and in the best interests of, the
stockholders of the Company, (ii) approved the Offer and the Merger and (iii)
recommended that stockholders of the Company accept the Offer and tender their
Shares to the Offeror. On the evening of July 16, 2000, Parent and the Company
signed a definitive agreement for the purchase by Parent of the Company at a
tender price of $7.00 per share.
On July 17, 2000, Parent and the Company announced the definitive agreement
prior to the opening of trading on the New York Stock Exchange and Nasdaq.
On July 21, 2000, Parent and the Offeror commenced the Offer.
Reasons for Recommendation. In making the determinations and
recommendations set forth in subparagraph (a) above, the Board considered a
number of factors, including, without limitation, the following:
(1) The historical market prices and recent trading activity of the
Company's Common Stock, including the fact that the Offer represents (i) a
premium of 75% over the closing price of the Company's Common Stock on July 13,
2000, and (ii) a premium of 59.9% over the trailing two-month average closing
price of the Company's Common Stock.
(2) The concern of the Company's Board that trading activity in the Common
Stock has, for the most part, been limited.
(3) The extensive arms-length negotiations between the Company and Parent
that resulted in the $7.00 per share price for the Common Stock.
(4) The opinion of Allen & Company that the $7.00 per share cash
consideration to be received in the Offer and the Merger by the holders of
shares of Common Stock was fair, from a financial point of view, to such
holders.
(5) The fact that the Offer and the Merger provide for a prompt cash tender
offer for all shares of Common Stock to be followed by a second step merger for
the same consideration, thereby enabling the Company's stockholders to obtain
the benefits of the transaction at the earliest possible time.
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(6) The fact that, while the consummation of the Offer and the Merger would
eliminate the opportunity for the Company's stockholders to participate in any
future growth in the profits and equity valuation of the Company, the Offer
gives stockholders the opportunity to realize a significant premium over the
price at which shares of Common Stock traded during the two-month period prior
to the public announcement of the execution of the Merger Agreement.
(7) The fact that Parent's obligations under the Offer are not subject to
any financing condition and the financial ability of Parent to consummate the
acquisition.
(8) The limited rights of Parent to terminate the Offer or the Merger
Agreement.
(9) The fact that the Merger Agreement permits the Company's Board of
Directors to, or to authorize the Company, its subsidiaries and their respective
officers, directors, employees, agents and representatives to, in response to an
Acquisition Proposal that the Company's Board concludes in good faith is a
Superior Proposal (as defined in the Merger Agreement), (x) furnish information
with respect to the Company and its subsidiaries to any person making such
Acquisition Proposal pursuant to a customary confidentiality agreement and (y)
participate in discussions or negotiations regarding such Acquisition Proposal,
provided that, prior to taking any such action, the Company provides reasonable
advance notice to Parent that it is taking such action.
(10) The fact that the Merger Agreement permits the Company's Board to, in
response to a Superior Proposal, (i) withdraw, modify or change or propose
publicly to withdraw, modify or change its recommendation of the Offer, the
Merger or the Merger Agreement, (ii) approve or recommend, or propose publicly
to approve or recommend, a Superior Proposal, and (iii) terminate the Merger
Agreement, after providing written notice advising Parent that the Company's
Board is prepared to accept a Superior Proposal.
(11) The limited circumstances in which the Company would be required to
pay a break-up fee if the transaction does not close.
(12) The fact that the transaction provides a solution to the Company's
need for additional capital to meet its commitments to customers and lenders
during the third and fourth quarters.
(13) The reasonable likelihood of the consummation of the transactions
contemplated by the Merger Agreement.
The Board did not assign relative weights to the above factors or determine
that any factor was of special importance. Rather, the Board viewed its position
and recommendations as being based on the totality of the information presented
to and considered by it. In addition, it is possible that different members of
the Board assigned different weights to the various factors described above.
Intent to Tender. To the best of the Company's knowledge, its executive
officers, directors and affiliates currently intend to tender their Shares to
Buyer pursuant to the Offer.
ITEM 5. PERSONS/ASSETS, RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company retained Allen & Company as its financial advisor in connection
with the Offer and the Merger. Pursuant to the terms of Allen & Company's
engagement, the Company agreed to pay Allen & Company a fee equal to two percent
(2%) of the Company's enterprise value as determined by the Merger transaction
for its services. The Company also has agreed to reimburse Allen & Company for
reasonable out-of-pocket expenses, including fees and disbursements of counsel,
and to indemnify Allen & Company and certain related parties against certain
liabilities, including liabilities under the federal securities laws, arising
out of Allen & Company's engagement. Allen & Company has provided investment
banking services to the Company in the past unrelated to the Offer and the
Merger, for which services Allen & Company has received compensation. In the
ordinary course of business, Allen & Company and its affiliates may hold the
securities of the Company for the accounts of its customers and, accordingly,
may at any time hold a long or short position in such securities. Mr. Eran
Ashany, a director of the Company, is also a director of Allen & Company.
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Neither the Company nor any person acting on its behalf currently intends
to employ, retain or compensate any person to make solicitations or
recommendations to stockholders on its behalf concerning the Offer.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
During the past 60 days, neither the Company nor any subsidiary of the
Company nor, to the best of the Company's knowledge, any executive officer,
director or affiliate of the Company has effected a transaction in Shares,
except as disclosed in Item 2 above, which information is incorporated herein by
reference.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 17, 2000, among the Company, Buyer and Parent (the "Merger
Agreement"), which provides for the making of the Offer by Buyer, subject to the
conditions and upon the terms of the Merger Agreement and for the merger of
Buyer with and into the Company (the "Merger"). In the Merger, each Share issued
and outstanding immediately prior to the effective time of the Merger (the
"Effective Time") (other than Shares held by Parent or Buyer, or Shares and
Company Preferred Stock owned by the Company or by a Subsidiary of the Company
(as defined in the Merger Agreement) and Shares held by stockholders validly
exercising dissenters' rights pursuant to the Oregon Business Corporation Act
("OBCA")) will, upon approval by stockholder vote, if required, be converted
into the right to receive, without interest, an amount in cash equal to $7.00
(or any higher price Buyer determines in its sole discretion to pay in the
Offer) per Share (the "Merger Consideration"). If Buyer obtains more than 50% of
all outstanding Shares on a fully diluted basis, approval is guaranteed. If
Buyer obtains more than 90% of all outstanding Shares, no vote of the Company's
stockholders will be required under the OBCA to approve the Merger. The Merger
Agreement, a copy of which is filed as Exhibit 3 hereto, is summarized in
Section 11 of the Offer to Purchase and incorporated herein by reference.
Promptly following the acceptance of, and payment by Buyer for, the Shares
pursuant to the Offer, (i) the Company will, if requested to do so by Parent,
redeem all of the outstanding shares of Class A Preferred Stock in accordance
with its terms and will irrevocably deposit funds sufficient to redeem such
shares in an account to pay for such redemption, and (ii) Parent will wire
transfer immediately available funds to an account designated by the Company in
an amount equal to the amount necessary to redeem all outstanding shares of
Class A Preferred Stock.
Other than as set forth above, no negotiation is being undertaken or is
underway by the Company in response to the Offer which relates to or would
result in:
(1) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any subsidiary of the Company;
(2) a purchase, sale or transfer of a material amount of assets by the
Company or any subsidiary of the Company;
(3) a tender offer for or other acquisition of securities by or of the
Company; or
(4) any material change in the present capitalization or dividend
policy of the Company.
Except as described in this Schedule 14D-9, there are no transactions,
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 matters referred
to in Item 7.
ITEM 8. ADDITIONAL INFORMATION.
The Information Statement pursuant to Section 14(f) of the Securities
Exchange Act of 1934 attached hereto as Annex A is being furnished to the
Company's stockholders in connection with the contemplated designation by
Parent, pursuant to the Merger Agreement, of certain persons to be appointed to
the Board of Directors of the Company other than at a meeting of the Company's
stockholders as described in Item 3 above, and is incorporated herein by
reference.
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The information contained in all of the Exhibits referred to in Item 9
below is incorporated herein by reference.
Oregon Takeover Legislation. The OBCA contains provisions in Sections
60.801 to 60.813 (the "Oregon Control Share Act") that a person (the "Acquiror")
who acquires voting stock of an Oregon corporation in a transaction which
results in the Acquiror holding more than each of 20%, 33 1/3% or 50% of the
total voting power of the corporation (a "Control Share Acquisition") cannot
vote the shares it acquires in the Control Share Acquisition ("Control Shares")
unless voting rights are accorded to the Control Shares by: (a) a majority of
each voting group entitled to vote; and (b) the holders of a majority of the
outstanding voting shares, excluding the Control Shares held by the Acquiror and
shares held by the corporation's officers and inside directors. The term
"Acquiror" is broadly defined to include persons acting as a group.
The Company has amended its bylaws to provide that the Company, Parent and
Buyer and the Offer, the Merger and the related transactions are not subject to
the Oregon Control Share Act.
The OBCA also contains provisions in Sections 60.825 to 60.845 (the "Oregon
Business Combination Statute") that purport to regulate certain business
combinations of a corporation organized under Oregon law whose stock is publicly
traded, such as the Company, with a stockholder beneficially owning 15% or more
of the outstanding voting stock of such corporation (an "Interested
Shareholder"). Section 60.835 provides, in relevant part, that the corporation
shall not engage in any business combination for a period of three years
following the date such stockholder first becomes an Interested Shareholder
unless (i) prior to the date the stockholder first becomes an Interested
Shareholder, the board of directors of the corporation approved either the
business combination or the transaction which resulted in the stockholder
becoming an Interested Shareholder, (ii) upon becoming an Interested
Shareholder, the Interested Shareholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced, or (iii)
on or subsequent to the date the stockholder becomes an Interested Shareholder,
the business combination is approved by the board of directors and authorized at
an annual or special meeting of stockholders by the affirmative vote of at least
two-thirds of the outstanding voting stock which is not owned by the Interested
Shareholder.
The Board of Directors has approved the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger and the
effect of the Tendering Stockholders entering into the Tender Agreements with
Parent, for the purposes of the Oregon Business Combination Statute; therefore
the restrictions of the Oregon Business Combination Statute are inapplicable to
the Offer, the Merger and the related transactions.
The Company's Articles of Incorporation. Article VI of the Company's
Articles of Incorporation provides that the approval of 75% of all outstanding
Shares, voting as one class, is required for the approval or authorization of
certain business combinations involving the Company. However, Article VI does
not apply to the Offer, the Merger and the related transactions because the
Company's Board of Directors has approved them.
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ITEM 9. MATERIALS TO BE FILED AS EXHIBITS.
*+1 -- Offer to Purchase dated July 17, 2000.
*+2 -- Form of Letter of Transmittal.
+3 -- Agreement and Plan of Merger, dated as of July 17, 2000,
among Parent, Buyer and the Company.
+4 -- Form of Tender Agreement, dated as of July 17, 2000, between
each of the Tendering Stockholders, Buyer and Parent.
5 -- The sections under the headings "EXECUTIVE COMPENSATION,"
"EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS," AND "CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS" from the Company's Proxy Statement
dated April 17, 2000.
+6 -- Text of press releases issued by Parent and the Company
dated July 17, 2000.
*7 -- Letter to Stockholders of the Company dated July 21, 2000.
*8 -- Information Statement dated July 21, 2000 (included as Annex
A hereto and incorporated herein by reference thereto).
*9 -- Opinion of Allen & Company (included as Annex B hereto and
incorporated herein by reference thereto).
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* Included in materials delivered to stockholders of the Company.
+ Filed as an exhibit to the Tender Offer Statement on Schedule TO dated July
21, 2000 of Buyer and Parent, and incorporated herein by reference.
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SIGNATURE
After due 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.
CONCENTREX INCORPORATED
/s/ Matthew W. Chapman
Name: Matthew W. Chapman
Title: Chairman and Chief Executive
Officer
Dated as of July 21, 2000.
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ANNEX A
CONCENTREX INCORPORATED
400 SW SIXTH, SECOND FLOOR
PORTLAND, OREGON 97204
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, AND RULE 14F-1 THEREUNDER
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NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND YOU ARE REQUESTED NOT TO
SEND THE COMPANY A PROXY.
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This Information Statement is being mailed on or about July 21, 2000, as a
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Concentrex Incorporated (the "Company") to the holders of
record of shares of Common Stock without par value (the "Shares"), of the
Company. You are receiving this Information Statement in connection with the
possible election or appointment of persons designated by John H. Harland
Company, a Georgia corporation ("Parent") to a majority of the seats on the
Board of Directors of the Company (the "Board"). Capitalized terms used herein
and not otherwise defined herein shall have the meaning set forth in the
Schedule 14D-9.
On July 17, 2000, the Company, Parent and JH Acquisition Corp., an Oregon
corporation and a wholly-owned subsidiary of Parent ("Buyer"), entered into an
Agreement and Plan of Merger (the "Merger Agreement"), in accordance with the
terms and subject to the conditions of which the Buyer commenced the Offer. The
Offer is scheduled to expire on Friday, August 18, 2000, unless the Offer is
extended.
The Merger Agreement requires the Company to cause the directors designated
by Buyer to be elected to the Board under the circumstances described therein
following consummation of the Offer.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
promulgated thereunder. You are urged to read this Information Statement
carefully. You are not, however, required to take any action at this time.
The information contained in the Information Statement (including
information incorporated by reference) concerning Parent and Buyer and the
Parent Designees (as defined herein) has been furnished to the Company by Parent
and Buyer, and the Company assumes no responsibility for the accuracy or
completeness of such information.
GENERAL INFORMATION REGARDING THE COMPANY
As of July 17, 2000, there were 5,538,661 Shares outstanding. Each Share
has one vote. The nonvoting Class A Preferred Stock is the only other class of
securities of the Company outstanding, of which not more than 7,017 shares are
issued and outstanding. The Board currently consists of three classes, each with
three members. Each director serves a three-year term and until such director's
successor has been duly elected and qualified, or until such director's earlier
resignation or removal. At each annual meeting of stockholders, members are
elected to the class of directors whose terms are due to expire in the year in
which such meeting is held. The officers of the Company serve at the discretion
of the Board.
INFORMATION WITH RESPECT TO PARENT DESIGNEES
Pursuant to the Merger Agreement, promptly upon the purchase and payment
for Shares by Buyer pursuant to the Offer that represent at least a majority of
the outstanding Shares, Parent is entitled to designate a number of directors
(the "Parent Designees") on the Board equal to the product (rounded up to
A-1
12
the nearest whole number) of the total number of directors on the Board (after
giving effect to the Parent Designees) multiplied by the percentage that the
number of Shares owned by Buyer and its affiliates bears to the number of
outstanding Shares. The Company will use best efforts to enable such Parent
Designees to be appointed or elected to the Board including, if necessary,
increasing the size of the Board or securing the resignations of current
directors.
Following the appointment or election of Parent's Designees and prior to
the effective time of the Merger contemplated by the Merger Agreement, the
affirmative vote of a majority of the directors who are not Parent Designees
will be required for the Company to take action to amend or terminate the Merger
Agreement, exercise or waive the rights or remedies of the Company under the
Merger Agreement or extend the time allotted for Parent or Buyer to perform
their obligations under the Merger Agreement.
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
persons listed below has consented to act as a director, if so designated.
Biographical information concerning each of the potential Parent Designees is
presented below. All persons listed below are citizens of the United States of
America.
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND MATERIAL POSITIONS
NAME AGE HELD DURING PAST FIVE YEAR
---- --- ------------------------------------------------------
Charlie B. Carden.................... 55 Vice President and Director of the Buyer; Vice
President and Chief Financial Officer of Parent; Prior
to June 1999, he served as Executive Vice President
and Chief Financial Officer of Mariner Post-Accute
Network, a health care provider, and prior to 1996 he
was employed by Leaseway Transportation Corp., last
serving as Senior Vice President and Chief Financial
and Administrative Officer.
Timothy C. Tuff...................... 53 President and Director of the Buyer; Chairman,
President and Chief Executive Officer of Parent;
Director of Printpak, Inc.; Prior to October 1998 he
served as President and Chief Executive Officer of
Boral Industries, Inc., a world leader in building and
construction materials.
John C. Walters...................... 60 Vice President, Secretary and Director of the Buyer;
Vice President, Secretary and General Counsel of
Parent; Prior to 1996 he served as Executive Vice
President of First Financial Management Corporation, a
diversified information and financial services
company.
Parent has also advised the Company that, to the best of Parent's
knowledge, none of the potential Parent Designees (i) is currently a director
of, or holds any position with, the Company, (ii) beneficially owns any
securities (or rights to acquire any securities) of the Company, or (iii) 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 Securities and Exchange Commission (the "SEC"),
except as may be disclosed herein or in the Schedule 14D-9 or the Offer to
Purchase.
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DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
EXECUTIVE OFFICERS AND DIRECTORS
CLASS 1
(TERM ENDING 2003)
MATTHEW W. CHAPMAN
Chairman and Chief Executive Officer
Concentrex Incorporated
Portland, Oregon
Age: 49
Director Since: 1987
Mr. Chapman has served as the Company's Chief Executive Officer since
February 1988 and as its Chairman since February 1991. Mr. Chapman was President
of the Company from August 1987 to April 1992 and became a director in September
1987. Prior to joining the Company, Mr. Chapman was outside counsel to the
Company, and was a founding partner of the law firm of Farleigh, Wada & Witt,
P.C. Mr. Chapman has previously served as a faculty member of the American
Bankers Association National Graduate Compliance School and the Credit Union
National Association Regulatory Compliance School. Mr. Chapman is a director of
Microchip Technology, Incorporated, a Chandler, Arizona manufacturer and
supplier of programmable microchips. Mr. Chapman is also a Trustee of the
University of Portland.
FRANK E. BRAWNER
Retired
Neskowin, Oregon
Age: 66
Director Since: 1998
Mr. Brawner served as the Chief Executive Officer of the Oregon Bankers
Association and the Independent Community Banks of Oregon from 1975 until his
retirement in 1998. He became President of the Oregon Bankers Association in
1992. From 1991 through 1998, Mr. Brawner also served as Executive Vice
President of the Oregon Mortgage Bankers Association. Mr. Brawner has also
served as Secretary of the Northwest Intermediate Banking Schools and as a
member of the Board of Directors of the Pacific Coast Banking School and the
Oregon Society of Association Executives.
ROBERT B. WITT
Executive Vice President & Chief Information Officer
Medibuy.com, Inc.
La Mesa, CA
Age: 48
Director Since: 2000
Since May 1999, Mr. Witt has been employed as Vice President of Technology
and Chief Information Officer at Medibuy.com, Inc., a company providing
e-commerce solutions for the procurement of healthcare products such as medical
supplies and equipment. Prior to joining Medibuy, Mr. Witt served as Chief
Information Officer at Sequent Computer Systems from January 1995 until August
1998 and at Oracle Corporation from September 1998 until April 1999. Mr. Witt
also served as Chief Information Officer for British Petroleum and was the
President/Owner of Witt Enterprises, a Value Added Remarketer of IBM
mini-computers. Mr. Witt is also on the IS Advisory Council for Oregon State
University.
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MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS 2
(TERM ENDING 2001)
ERAN S. ASHANY
Director
Allen & Company Incorporated
New York, New York
Age: 37
Director Since: 1993
Mr. Ashany has been employed by Allen & Company Incorporated, an investment
banking company, since August 1988, and has been a Vice President and Director
of that firm since September 1990 and February 1995, respectively. Mr. Ashany is
also a director of Eco-Bat Technologies, plc, a lead smelter and battery
recycler with operations in the United Kingdom, Germany, France, Italy and
Austria.
ROBERT P. CHAMNESS
President and Chief Operating Officer
Concentrex Incorporated
Portland, Oregon
Age: 47
Director Since: 1993
Mr. Chamness has served as President and Chief Operating Officer of the
Company since July 1995 and previously served as Executive Vice President and
General Counsel of the Company from April 1993. From 1985 to March 1993, Mr.
Chamness was a partner with the law firm of McKenna & Fitting, Los Angeles,
California, and its predecessor. From 1990 to 1994, Mr. Chamness served as the
Chair of the Consumer Financial Services Committee of the American Bar
Association. Mr. Chamness has authored numerous compliance manuals for the
American Bankers Association, including manuals relating to the Truth in Savings
Act and consumer lending.
L. B. DAY
President and Director
L.B. Day & Company, Inc.
Portland, Oregon
Age: 55
Director Since: 1999
Since 1995, Mr. Day has been President and a director of L.B. Day &
Company, Inc., a consulting firm which provides organization development, design
and planning services to clients at senior and executive levels. From 1983 to
1994 he served as Vice President and then President of Day-Floren Associates,
Inc., a consulting firm specializing in strategic planning for high-technology
companies. Mr. Day is a director of Microchip Technology, Incorporated, a
Chandler, Arizona manufacturer and supplier of programmable microchips.
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CLASS 3
(TERM ENDING 2002)
J. KENNETH BRODY
Chairman
ComPix Incorporated
Portland, Oregon
Age: 77
Director Since: 1990
Mr. Brody has served as the Chairman of ComPix Incorporated, a manufacturer
of infrared thermal analysis devices since 1984. Mr. Brody is also a Director of
the U.S. Navy Memorial Foundation and a member of the Yale Development Board.
From 1992 until December 1996, he served as a consultant to First Portland
Corporation and as a member of the management committee of Intercoastal
Manufacturing, Co., a golf cart parts sales and services company. Mr. Brody has
served as a consultant to the Company since 1998.
ROBERT T. JETT
Executive Vice President, Product Development Division and Secretary
Concentrex Incorporated
Portland, Oregon
Age: 55
Director Since: 1987
Mr. Jett has served as Executive Vice President and Secretary of the
Company since April 1984. Mr. Jett is responsible for managing the Product
Development Division. Prior to joining the Company, he managed the legal
department of Evans Products Company, a diversified manufacturing company.
LORRAINE O. LEGG
President and Chief Executive Officer
TIS Financial Services, Inc.
San Francisco, California
Age: 60
Director Since: 1995
Ms. Legg has served as President and Chief Executive Officer of TIS
Financial Services, Inc., an asset securitization and management company, since
its formation in 1984. Ms. Legg also serves as President, Chief Executive
Officer and a director of TIS Mortgage Investment Company, a real estate
investment trust. Prior to her involvement with TIS, Ms. Legg served as Vice
President and Treasurer of Boise Cascade Corp, a Fortune 500 forest products
manufacturer, and in various management roles with affiliates of Boise Cascade
Corp. From 1967 through 1970, Ms. Legg was Vice President of the Federal
National Mortgage Association, and was a principal architect of the GNMA
mortgage-backed security. Ms. Legg also serves as Chairman of The Planned Giving
Foundation, Inc., a charitable organization.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held three regular meetings, seven special meetings
and took action pursuant to two unanimous written consents during the year ended
December 31, 1999. There are five standing committees of the Board: the Audit,
Compensation, Nominating, Executive and Proxy Committees. During the 1999 fiscal
year, all of the directors attended at least 75% of the total number of meetings
of the Board of Directors and committees on which they served.
During 1999, the Audit Committee of the Board was comprised of Eran S.
Ashany (Chair), L. B. Day and Frank Brawner, none of whom was otherwise employed
by the Company. The Audit Committee reviews the results and scope of the audit
and other services provided by the Company's independent auditors, and reports
regularly to the Board. The Audit Committee held three meetings during 1999.
A-5
16
During 1999, the Compensation Committee was comprised of Eran S. Ashany, J.
Kenneth Brody (Chair), L. B. Day and Lorraine O. Legg, none of whom was
otherwise employed by the Company. This Committee reviews the performance of the
executive officers and considers executive compensation data in making
recommendations to the Board relating to salaries and incentive compensation for
executives. The Compensation Committee also administers the Company's Stock
Option Plans and approves stock option grants and contributions to the Company's
401(k) profit sharing plan. The Compensation Committee held no meetings during
1999, but took action pursuant to two unanimous written consents. See "Executive
Compensation -- Compensation Committee Interlocks and Insider Participation."
During 1999, the Nominating Committee was comprised of J. Kenneth Brody,
Robert P. Chamness, Matthew W. Chapman and Lorraine O. Legg (Chair). This
Committee recommends to the Board of Directors nominees for election as
directors. Shareholders' suggestions for director nominees may be submitted to
the Secretary of the Company for consideration by the Nominating Committee. The
Nominating Committee held one meeting during 1999.
During 1999, the Executive Committee was comprised of J. Kenneth Brody,
Matthew W. Chapman (Chair), Lorraine O. Legg, Robert P. Chamness and Frank
Brawner. This Committee is empowered to exercise all of the authority of the
Board in the management of the Company except as otherwise may be provided by
law. The Executive Committee held no meetings during 1999, but took action
pursuant to two unanimous written consents.
During 1999, the Proxy Committee was comprised of Robert P. Chamness,
Matthew W. Chapman (Chair) and Robert T. Jett. This Committee votes shareholder
proxies at the annual meeting and at any special meetings if appointed by
shareholders in a written proxy. The Proxy Committee held no meetings during
1999.
BOARD COMPENSATION
In accordance with the terms of the Outside Directors Compensation and
Stock Option Plan, all outside directors receive an annual retainer of $7,000
for serving as members of the Board of Directors and $1,000 for each Board of
Directors meeting attended, as well as a stock option to purchase 4,000 shares,
granted on the first business day following the annual meeting of shareholders,
with an exercise price equal to the fair market value of the Company's Common
Stock at the close of trading on the last trading day prior to the issuance of
the option, in each case pro rated for service during a partial year. All
options granted under the Outside Directors Compensation and Stock Option Plan
are fully vested upon grant.
During 1999, the Company paid J. Kenneth Brody the sum of $12,000 for
services as a consultant. Mr. Brody has served the Company as a consultant since
1988. The Company expects to retain Mr. Brody's services as a consultant in 2000
at approximately the same level of business for the same level of compensation.
NON-DIRECTOR EXECUTIVE OFFICERS
KATHLEEN M. BROMAGE
Vice President, e-Commerce Group
Age: 42
Ms. Bromage joined the Company as Vice President of its newly formed
e-Commerce Group in connection with the Company's acquisition of MECA Software
L.L.C. ("MECA") in May 1999. Ms. Bromage served as Executive Vice President and
Chief Financial Officer of MECA with responsibility for day-to-day operations as
well as for the execution of MECA's business strategy and development
initiatives. For twelve years prior to joining MECA, Ms. Bromage held several
positions with Shawmut National Corporation, a financial institution and prior
to that she held positions with Price Waterhouse, an accounting firm.
A-6
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MICHAEL J. CLEMENT
Senior Vice President, Customer Services Division
Age: 52
Mr. Clement joined the Company in October 1984 and has served as Senior
Vice President, Customer Services Division since October 1999 and previously as
Senior Vice President, Customer Support & Quality Assurance Division. Mr.
Clement was Senior Vice President of the Standard Products Group from October
1995 until May 1996 and from June 1996 until January 1998 he served as Vice
President of the Electronic Products Delivery Group. Prior to joining the
Company, Mr. Clement was a Regional Vice President for Evans Financial Corp., a
mortgage banking company.
DANIEL C. LARLEE
Senior Vice President, Technology & Research Division and Chief Technology
Officer
Age: 48
Mr. Larlee joined the Company in April 1992 as its Director of Technology
and became a Vice President and Chief Technology Officer of the Company in
September 1994. In January 1998, Mr. Larlee was elected Vice President,
Technology & Research Division and Chief Technology Officer and was promoted to
Senior Vice President in January 1999. From May 1989 until he joined the
Company, Mr. Larlee was Director of Technology for World Trade Services, a
software and data processing services provider to businesses engaged in
international trade.
LOIS M. ROBERTS
Executive Vice President, Sales, Marketing & Customer Relations
Age: 54
Ms. Roberts joined the Company in May 1993 as its Operations Software
Product Manager and was elected Vice President of Marketing and Corporate
communications in October 1995. In January 1998, Ms. Roberts was elected Senior
Vice President, Sales, Marketing & Customer Services Division. In January 2000,
Ms. Roberts was elected Executive Vice President, Sales, Marketing & Customer
Relations. Prior to joining the Company in 1993, Ms. Roberts served as the
President of Quickor Net, Inc., a privately held data processing company located
in Portland, Oregon.
KURT W. RUTTUM
Vice President, Finance & Administration Division, Chief Financial Officer and
Treasurer
Age: 40
Mr. Ruttum joined the Company in November 1997 as Vice President, Finance &
Administration Division and Chief Financial Officer. In January 1999, Mr. Ruttum
was appointed Treasurer of the Company. From October 1996 until November 1997,
Mr. Ruttum was Vice President and General Counsel for Phoenix Gold
International, Inc., a manufacturer of car audio equipment. From February 1997
until November 1997, Mr. Ruttum also served as Secretary of Phoenix Gold
International, Inc. Mr. Ruttum was an attorney with the law firm Tonkon Torp LLP
in Portland, Oregon, where he emphasized corporate finance and securities
matters, from 1986 through August 1996
JEFFREY P. STRICKLER
Vice President, Legal, Risk Management & Corporate Development Division, General
Counsel and Assistant Secretary
Age: 42
Mr. Strickler joined the Company in August 1994 as Corporate Counsel. He
was elected General Counsel and Assistant Secretary in January 1996 and Vice
President, Legal, Risk Management and Corporate Development Division, General
Counsel and Assistant Secretary in January 1998. From January 1991 until joining
the Company, Mr. Strickler served as Corporate Counsel for Cadre Technologies,
Inc., a developer and manufacturer of software development automation products
formerly located in Beaverton, Oregon. Mr. Strickler was an attorney with the
law firm Perkins Coie in Portland, Oregon from 1985 to January 1991.
A-7
18
ERIC T. WAGNER
Senior Vice President, Custom Products
Age: 50
Mr. Wagner joined the Company as Senior Vice President in November 1995 in
connection with the Company's acquisition of Culverin Corporation, a developer
and distributor of financial institution sales and service delivery software
products ("Culverin"). In January 1998, Mr. Wagner was elected Senior Vice
President, Product & Corporate Integration, with responsibility for managing the
Company's retail delivery products and integration of the Company's products and
corporate organization. Mr. Wagner joined Culverin in 1979, and served as its
President and Director until its acquisition by the Company.
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 29, 2000, certain
information furnished to the Company with respect to ownership of the Company's
Common Stock of (i) each director, (ii) the "Named Executive Officers" (as
defined under "Executive Compensation"), (iii) all persons known by the Company,
based upon review of Schedules 13D and 13G filed with the Securities and
Exchange Commission, TO BE BENEFICIAL OWNERS OF MORE THAN 5% OF ITS COMMON
STOCK, AND (IV) ALL CURRENT EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP. The
Company had 5,253,972 shares issued and outstanding on February 29, 2000.
COMMON STOCK (A)
-----------------------------
NUMBER OF PERCENT OF SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OUTSTANDING
------------------------------------ --------- -----------------
Brown Capital Management.................................... 969,000 18.4%
809 Cathedral Street
Baltimore, MD 21201(B)
Wellington Management Co.(C)................................ 515,200 9.8%
75 State Street
Boston, Massachusetts 02109
Becker Capital Management(D)................................ 407,000 7.7%
1211 SW 5TH Avenue, Suite 2185
Portland, Oregon 97204
Brinson Partners Inc.(E).................................... 276,534 5.3%
209 South Lasalle Street
Chicago, Illinois 60604
Matthew W. Chapman(F)(G).................................... 403,884 7.7%
Robert P. Chamness(H)....................................... 188,739 3.6%
Robert T. Jett(I)........................................... 182,629 3.5%
J. Kenneth Brody(J)......................................... 29,500 *
Lois M. Roberts(K).......................................... 24,368 *
Eran S. Ashany(L)........................................... 15,500 *
Lorraine O. Legg(M)......................................... 13,100 *
Frank E. Brawner(N)......................................... 5,293 *
L. B. Day(O)................................................ 4,663 *
Robert B. Witt(P)........................................... 3,151 *
Kathleen M. Bromage......................................... 1,400 *
All directors and executive officers as a group (17
persons)(Q)............................................... 1,079,996 20.6%
- ---------------
* Less than one percent
A-8
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A. Applicable percentage of ownership is based on 5,253,972 shares of Common
Stock outstanding as of February 29, 2000 together with applicable options for
such shareholders. Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission, and includes voting and
investment power with respect to shares. Shares of Common Stock subject to
options or warrants currently exercisable or exercisable within 60 days after
February 29, 2000 are deemed outstanding for computing the percentage ownership
of the person holding such options or warrants, but are not deemed outstanding
for computing the percentage of any other person.
B. Brown Capital Management ("Brown") is an investment adviser registered with
the Securities and Exchange Commission under the Investment Advisers Act of
1940, as amended. As of December 31, 1999, Brown, in its capacity as investment
adviser, may be deemed to have beneficial ownership of 969,000 shares of common
stock of Concentrex Incorporated that are owned by numerous investment advisory
clients, none of which is known to have such interest with respect to more than
five percent of the class. As of December 31, 1999, Brown had sole voting power
with respect to 879,900 shares and sole dispositive power with respect to all
969,000 shares.
C. Wellington Management Company, LLP, ("WMC") is an investment adviser
registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended. As of December 31, 1999, WMC, in its capacity
as investment adviser, may be deemed to have beneficial ownership of 515,200
shares of common stock of Concentrex Incorporated that are owned by numerous
investment advisory clients, none of which is known to have such interest with
respect to more than five percent of the class. As of December 31, 1999, WMC had
shared voting power with respect to 209,800 shares and shared dispositive power
with respect to all 515,200 shares.
D. Becker Capital Management ("Becker") is an investment adviser registered with
the Securities and Exchange Commission under the Investment Advisers Act of
1940, as amended. As of December 31, 1999, Becker, in its capacity as investment
adviser, may be deemed to have beneficial ownership of 407,000 shares of common
stock of Concentrex Incorporated that are owned by numerous investment advisory
clients, none of which is known to have such interest with respect to more than
five percent of the class. As of December 31, 1999, Becker had sole voting power
with respect to 369,400 shares and dispositive power with respect to all 407,000
shares.
E. Brinson Partners Inc. ("Brinson") is an investment adviser registered with
the Securities and Exchange Commission under the Investment Advisers Act of
1940, as amended. As of December 31, 1999, Brinson, in its capacity as
investment adviser, may be deemed to have beneficial ownership of 276,534 shares
of common stock of Concentrex Incorporated that are owned by numerous investment
advisory clients, none of which is known to have such interest with respect to
more than five percent of the class. As of December 31, 1999, Brinson had sole
voting and shared dispositive power with respect to all 276,534 shares.
F. The address for such person IS 400 S.W. 6TH Avenue, Portland, Oregon 97204.
G. Includes 96,000 shares issuable upon exercise of options exercisable within
60 days of February 29, 2000.
H. Includes 173,300 shares issuable upon exercise of options exercisable within
60 days of February 29, 2000.
I. Includes 48,000 shares issuable upon exercise of options exercisable within
60 days of February 29, 2000.
J. Includes 12,000 shares issuable upon exercise of options exercisable within
60 days of February 29, 2000.
K. Includes 21,824 shares issuable upon exercise of options exercisable within
60 days of February 29, 2000.
L. Includes 12,000 shares issuable upon exercise of options exercisable within
60 days of February 29, 2000.
M. Includes 12,000 shares issuable upon exercise of options exercisable within
60 days of February 29, 2000.
N. Includes 5,293 shares issuable upon exercise of options exercisable within 60
days of February 29, 2000.
O. Includes 4,663 shares issuable upon the exercise of options exercisable
within 60 days of February 29, 2000.
P. Includes 1,151 shares issuable upon the exercise of options exercisable
within 60 days of February 29, 2000.
Q. Includes 568,479 shares issuable upon the exercise of options exercisable
within 60 days of February 29, 2000.
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EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
Shown below is information concerning the annual and long-term compensation
for services in all capacities to the Company for the years ended December 31,
1999, 1998, and 1997, of the following persons: (i) the chief executive officer
of the Company as of December 31, 1999 and (ii) the other four most highly
compensated executive officers of the Company who were serving in that capacity
as of December 31, 1999. The individuals described in (i) and (ii) above are
referred to as the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES ALL OTHER
----------------------- STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) AWARD($)(2) OPTIONS(#) ($)(3)
--------------------------- ---- ------------ -------- ----------- ---------- ------------
Matthew W. Chapman............... 1999 255,000 100,000 5,500 20,000 7,680
Chairman and Chief 1998 226,000 226,000 -- 30,000 11,180
Executive Officer 1997 205,000 -- -- -- 11,180
Robert P. Chamness............... 1999 227,500 75,000 5,500 16,500 9,356
Director, President and 1998 203,150 192,993 -- 25,000 12,800
Chief Operating Officer 1997 184,500 -- -- -- 12,800
Robert T. Jett................... 1999 200,000 50,000 5,500 10,000 9,356
Director, Executive Vice 1998 180,000 108,000 -- 15,000 12,800
President and Secretary 1997 162,500 -- -- -- 12,800
Lois M. Roberts.................. 1999 175,000 50,000 5,500 5,000 2,156
Executive Vice President 1998 160,000 80,000 -- 16,000 12,800
1997 138,750 -- -- 5,000 3,915
Kathleen M. Bromage.............. 1999 109,375 118,292 -- -- 480
Vice President 1998 -- -- -- -- --
1997 -- -- -- -- --
- ---------------
(1) Includes amounts deferred by executive officers under the Company's 401(k)
profit sharing plan.
(2) Represents the dollar value of stock issued through the Company's Employee
Savings and Stock Ownership Plan. The Plan consists of two components: bonus
and 401(k) match. For the bonus, stock value was calculated at the average
stock price for the six months ended June 30, 1999. For the 401(k) match,
stock value was calculated at the average stock price per quarter.
A-10
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(3) Stated amounts include Company contributions to the Company's 401(k) profit
sharing plan, life insurance premiums, and parking and automobile allowance
as follows:
DESCRIPTION OF "ALL OTHER COMPENSATION" AMOUNTS
1999 1998 1997 DESCRIPTION
------ ------ ------ --------------------------------
Matthew W. Chapman.............. $ -- $3,200 $3,200 401(k) Plan contribution
480 780 780 Life insurance premium
7,200 7,200 7,200 Parking and automobile allowance
Robert P. Chamness.............. -- 3,200 3,200 401(k) Plan contribution
480 780 780 Life insurance premium
8,876 8,820 8,820 Parking and automobile allowance
Robert T. Jett.................. -- 3,200 3,200 401(k) Plan contribution
480 780 780 Life insurance premium
8,876 8,820 8,820 Parking and automobile allowance
Lois M. Roberts................. -- 3,200 3,200 401(k) Plan contribution
Kathleen M. Bromage............. 480 780 715 Life Insurance premium
1,676 8,820 -- Parking and automobile allowance
480 -- -- Life Insurance premium
STOCK OPTIONS GRANTED
The following table contains information concerning the grant of stock
options under the Company's 1995 Consolidated Stock Option Plan (the "1995
Plan") to the Named Executive Officers in 1999.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
-------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED(1) FISCAL YEAR ($/SH.) DATE 5% ($) 10% ($)
---- ----------- ------------ -------- ---------- --------- ---------
Matthew W. Chapman................ 20,000 8.2% $12.25 1/21/09 $154,077 $390,466
Robert P. Chamness................ 16,500 6.8% $12.25 1/21/09 $127,114 $322,134
Robert T. Jett.................... 10,000 4.1% $12.25 1/21/09 $ 77,038 $195,232
Lois M. Roberts................... 5,000 2.0% $12.25 1/21/09 $ 38,518 $ 97,615
Kathleen M. Bromage............... -- -- -- -- -- --
- ---------------
(1) The option grants listed above all vest 20 percent per year on each of the
five anniversary dates following the date of grant.
(2) These calculations are based on certain assumed annual rates of appreciation
as required by rules adopted by the Securities and Exchange Commission
requiring additional disclosure regarding executive compensation. Under
these rules, an assumption is made that the shares underlying the stock
options shown in this table could appreciate at rates of 5% and 10% per
annum on a compounded basis over the ten-year term of the stock options.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the Company's Common Stock and overall stock market
conditions. There can be no assurance that amounts reflected in this table
will be achieved.
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OPTION EXERCISES AND HOLDINGS
The following table provides information concerning the exercise of options
during 1999 and unexercised options held as of December 31, 1999, with respect
to the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS
SHARES ACQUIRED VALUE AT FY-END (#) AT FY-END ($)(1)
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------- --------------------- --------------------
Matthew W. Chapman................... -- -- 66,000/84,000 --/--
Robert P. Chamness................... -- -- 155,000/66,500 $102,250/--
Robert T. Jett....................... -- -- 33,000/42,000 --/--
Lois M. Roberts...................... -- -- 14,625/25,600 $ 1,150/--
Kathleen M. Bromage.................. -- -- --/-- --/--
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(1) Market value of the underlying securities at December 31, 1999, $8.0625 per
share, minus the exercise price of the unexercised options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, the Compensation Committee was comprised of Eran S. Ashany, J.
Kenneth Brody (Chair), L.B. Day and Lorraine O. Legg, none of whom was otherwise
employed by the Company.
In 1997, the Company formed Lori Mae, L.L.C., an Oregon limited liability
company ("Lori Mae"), with Pacific Securitization, Inc., a California
corporation involved in asset securitization. The Company and Pacific
Securitization, Inc. each own 50 percent of Lori Mae. Lori Mae was formed to
acquire and securitize standardized small business loans and credit lines
originated by the Company's client banks and other regulated financial
institutions. Lorraine Legg, a member of the Company's Board of Directors, owns
a 39.25 percent interest in Pacific Securitization, Inc.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company entered into an Employment Agreement (the "Agreement") with
Eric T. Wagner on November 21, 1995 when it acquired Culverin Corporation. The
Agreement expires on November 20, 2000. The Agreement provided Mr. Wagner with
an initial annual base salary of $120,000, with adjustments made annually as
determined by the Company's President, and incentive compensation based upon the
achievement of certain performance objectives. In the event that the Agreement
is terminated by the Company for convenience or by Mr. Wagner for good reason,
then Mr. Wagner is entitled to severance in an amount not more than the amount
he would have received during the remaining term of the Agreement, but not less
than the lesser of (i) the amount he received during the twelve month period
immediately preceding the termination or (ii) the amount he would have received
during the remaining term of the Agreement.
The Company has entered into Executive Retention Agreements, currently with
nine executive officers of the Company, including four of the Named Executive
Officers. The Executive Retention Agreements provide favorable severance
benefits for the executive officers should their positions be diminished or
terminated due to a change in control. Specifically, they authorize, upon the
occurrence of a change-in-control, a severance payment to the executive officer
of a single payment in cash equal to three times the officer's annual
compensation, including base, bonus and incentive compensation, at the rate in
effect immediately prior to termination or at the rate in effect immediately
prior to the change in control of the Company, whichever is
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greater. The executive officers may also receive certain other benefits in the
event of a change in control, all of which are described in the Executive
Retention Agreement.
In connection with our acquisition of MECA, we assumed the obligations
under an employment agreement between Kathleen Bromage and MECA. Ms. Bromage is
Vice President of our E-commerce Group. Her employment agreement provides that,
among other things, Ms. Bromage is entitled to receive one-year continuation of
salary, short-term incentive awards and benefits if she is terminated without
cause.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company engaged the services of Michaels Printing, Inc. for purposes of
printing and related services, for which the Company paid an aggregate of
approximately $69,900 during 1999. Robert T. Jett, Executive Vice President,
Secretary and a member of the Board of Directors of the Company, is the brother
of Michael Jett, an equity owner of Michaels Printing, Inc. The Company believes
that the terms and conditions under which printing orders have been made with
Michaels Printing, Inc. have been based on competitive prices for similar
services available within the Portland metropolitan area. The Company expects to
continue this business relationship in 2000.
In 1997, the Company formed Lori Mae, L.L.C., an Oregon limited liability
company ("Lori Mae"), with Pacific Securitization, Inc., a California
corporation involved in asset securitization. The Company and Pacific
Securitization, Inc. each own 50 percent of Lori Mae. Lori Mae was formed to
acquire and securitize standardized small business loans and credit lines
originated by the Company's client banks and other regulated financial
institutions. Lorraine Legg, a member of the Company's Board of Directors, owns
a 39.25 percent interest in Pacific Securitization, Inc.
Pursuant to a Stock Sale and Purchase Agreement (the "Agreement") entered
into by the Company in connection with its acquisition of all of the issued and
outstanding common stock of Culverin Corporation in November 1995, Eric Wagner,
a former Culverin shareholder and an executive officer of the Company, received
$1,177,877 cash paid in installments through December 31, 1999, and 10,704
shares of the Company's Common Stock on January 1, 1998.
Certain other contingent payments to Mr. Wagner will be made on an annual
basis through September 30, 2001. The contingent payments will be equal to
specified percentages of the Company's revenues (as such term is defined in the
Agreement) attributable to the licensing of certain products in each fiscal year
during such period. Contingent payments made through December 31, 1999 total
$1,090,822 and were made in cash. Contingent payments earned in 2000 may be
made, at the Company's option, either in cash or in combination of cash and the
Company's Common Stock. The aggregate payments to be made by the Company
pursuant to the Agreement to all former Culverin shareholders, including Mr.
Wagner, cannot exceed $10 million, but accelerate upon a change of control.
The Company has pledged a certificate of deposit in the amount of $200,000
with a bank, securing a loan by the bank to Robert P. Chamness in connection
with construction of Mr. Chamness' principal residence. The loan is scheduled to
be repaid upon the sale of Mr. Chamness' current residence.
On August 13, 1999 the Company and its subsidiaries entered into a
financing agreement (the "Financing Agreement") with Foothill Capital
Corporation ("Foothill") and certain other parties (collectively, the "Lenders")
for three credit facilities aggregating $80 million. The credit facilities
provided under the Financing Agreement terminate on August 13, 2002. One of the
Lenders, Levine Leichtman Capital Partner II, L.P., is the beneficial owner of
more than 5% of the Company's capital stock (as defined in Rule 13d-3 of the
Exchange Act) by virtue of its ownership of a Lender Warrant and a Subordinated
Note.
The first credit facility under the Financing Agreement is a revolving
credit facility (the "Foothill Revolver") for up to $15 million, subject to
borrowing base restrictions related to accounts receivable of the Company and
its subsidiaries. The Foothill Revolver bears interest at an annual rate equal
to the prime rate plus 1.0%. On August 13, 1999 the Company drew $1.7 million
under the Foothill Revolver in connection with the ULTRADATA acquisition. The
interest rate on the Foothill Revolver was 9.5% at December 31, 1999.
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The second credit facility under the Financing Agreement is a term loan for
$35 million (the "Term A Loan") that bears interest at an annual rate equal to
the prime rate plus 2.0%. The Term A Loan has scheduled quarterly prepayments of
principal beginning in the second quarter of 2000 that are expected to aggregate
$19 million over the term of the loan; the expected remaining principal of $16
million is due on August 13, 2002. On August 13, 1999 the Company drew $35
million under the Term A Loan in connection with the ULTRADATA acquisition. The
interest rate on the Term A Loan was 10.5% at December 31, 1999.
The third credit facility under the Financing Agreement is a term loan for
$30 million (the "Term B Loan") that bears interest at an annual rate equal to
the prime rate plus 5.0%. The Term B Loan has no scheduled prepayments of
principal. The Term B Loan is due in full on August 13, 2002. On August 13, 1999
the Company drew $30 million under the Term B Loan in connection with the
ULTRADATA acquisition. The interest rate on the Term B Loan was 13.5% at
December 31, 1999.
In connection with the credit facilities provided under the Financing
Agreement, the Company issued to the Lenders warrants (the "Lender Warrants") to
purchase up to 381,822 shares of the common stock of the Company, which
represented 5.0% of the fully diluted common stock of the Company at the date of
issuance. The exercise price of the Lender Warrants is $10.00 per share. The
Company has registered for resale the shares of common stock issuable upon
exercise of the Lender Warrants. The Lender Warrants are exercisable through
August 13, 2004. The Company also issued warrants to purchase 58,000 shares of
common stock to the debt placement agent in connection with obtaining the credit
facilities under the Financing Agreement. The warrants issued to the debt
placement agent have the same terms as the Lender Warrants.
On August 13, 1999 the Company also issued 10% Convertible Subordinated
Discount Notes (the "Subordinated Notes") in the aggregate original face amount
of $7.4 million (with original issue discount of $1.9 million). The Subordinated
Notes are generally non-callable by the Company through August 13, 2002.
Interest at 10% per annum accretes on the Subordinated Notes through August 13,
2002 and then becomes payable in cash by the Company if the Subordinated Notes
are not redeemed or converted by that date. The Subordinated Notes are initially
convertible into a maximum of 743,754 shares of the Company's common stock at
the election of the holders. The actual number of shares into which the
Subordinated Notes are convertible depends upon the date of conversion and the
amount of interest accreted on the Subordinated Notes through the date of
conversion. The conversion price of the Subordinated Notes is $10.00 per share.
If the average closing price of the Company's common stock for the 10 trading
days ending on August 12, 2000 is less than $10.00 per share, the conversion
price will be reduced at that time to equal such average price. The Subordinated
Notes are due on August 13, 2004 if not previously converted by that date. The
Company received gross proceeds of $5.5 million upon issuance of the
Subordinated Notes, all of which was used in connection the ULTRADATA
acquisition.
During the fourth quarter of 1999, we amended our financing agreements with
the Lenders. In consideration for those amendments, we agreed to pay fees of 2%
of the total loan commitments (a total of $1.7 million) and agreed to decrease
the exercise and conversion prices of certain warrants and convertible notes
held by the Lenders from $12.34 per share to $10 per share. The new exercise and
conversion prices for the warrants were established at a 24% premium to the
market price of our common stock at December 31, 1999.
In connection with our acquisition of MECA in 1999, the Company assumed
certain obligations under an employment agreement between MECA and Kathleen
Bromage. Under the agreement Ms. Bromage is entitled to $175,000 a year base
salary and short term and long term incentive awards. If Ms. Bromage is
terminated other than for "cause" she is entitled to receive her base salary and
short-term incentive awards for 12 months after termination.
Also in connection with the MECA acquisition, we assumed certain
obligations under an employment agreement between Paul Harrison, MECA's former
President and MECA. Mr. Harrison served as a Vice President of Concentrex until
October 1, 1999 when his employment ended. The obligations assumed include
continuation through December 31, 2000 of Mr. Harrison's salary of $300,000 and
his benefits. He is also entitled to payments of $543,344 due on January 31,
2000 and $1,281,733 due on January 31, 2001.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Act") requires
the Company's directors and officers and persons owning more than 10% of the
Company's Common Stock to file reports of initial ownership and changes in
ownership of the Company's Common Stock with the Securities and Exchange
Commission. The Company is required to disclose in this proxy statement any late
filings of those reports made during the past fiscal year. To the Company's
knowledge, based solely on its review of the copies of such reports furnished to
the Company or otherwise in its files and on written representations from its
directors, executive officers and ten percent shareholders that no other reports
were required, the Company's officers, directors and ten percent shareholders
complied with all applicable Section 16(a) filing requirements during the fiscal
year ended December 31, 1999, except that Messrs. Chapman, Chamness, Jett and
Clement each filed a Form 5 for 1999 that reported one stock option grant from
the Company which should have been reported on an earlier Form 5 for 1998, and
Mr. Larlee and Ms. Roberts each filed a Form 5 for 1999 that reported two stock
option grants from the Company which should have been reported on two earlier
Form 5s, one for 1997 and one for 1998. The options reported in the above Form
5s were timely disclosed in all of the Company's other securities filings,
including its proxy statements.
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ANNEX B
(ALLEN & COMPANY INC. LETTERHEAD)
July 14, 2000
Board of Directors
CFI ProServices, Inc.
d/b/a Concentrex Incorporated
400 SW Sixth Avenue
Portland, OR 97204
Gentlemen:
We understand that CFI ProServices, Inc., d/b/a Concentrex Incorporated
("Concentrex") and John H. Harland Company ("Harland") are considering entering
into a Merger Agreement with terms substantially as set forth in the draft dated
July 14, 2000 (the "Merger Agreement") proposing to effect a transaction as
described in the Merger Agreement and related documentation (the "Transaction").
Pursuant to an engagement letter dated May 8, 2000, you have asked us to
render our opinion as to the fairness of the Transaction from a financial point
of view to the shareholders of Concentrex.
Allen & Company Incorporated ("Allen"), as part of its investment banking
business, is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, private placements and
related financings, bankruptcy reorganizations and similar recapitalizations,
negotiated underwritings, secondary distributions of listed and unlisted
securities, and valuations for corporate and other purposes.
As you know, Allen has been engaged by Concentrex since May 8, 2000, to
render certain financial advisory services in connection with a potential sale
of Concentrex. In connection with such engagement, Allen will receive a fee upon
consummation of the Transaction. Eran S. Ashany, who is an officer of Allen and
has participated in this engagement, also serves as a Director of Concentrex.
Our opinion as expressed herein reflects and gives effect to information
concerning Concentrex which we acquired during the course of this assignment,
including information provided by senior management in the course of a number of
discussions. We have not, however, conducted an independent appraisal of
Concentrex's assets, or independently verified the information concerning
Concentrex's operations or other data which we have considered in our review,
and for the purpose of expressing our opinion set forth herein, we have assumed
that all such information is accurate, complete and current.
In arriving at our conclusion, we have considered, among other factors we
deemed relevant, (i) the terms of the draft Merger Agreement and related
documentation (which prior to the delivery of this opinion has not been executed
by the parties); (ii) the nature of the operations and financial history of
Concentrex, including discussions with senior management of Concentrex regarding
the business and prospects of Concentrex relating to, among other things,
Concentrex's operating budget and financial outlook; (iii) certain material
contracts of Concentrex, including, but not limited to, the agreements related
to its debt financing; (iv) Concentrex's filings with the Securities and
Exchange Commission, including audited and unaudited financial statements for
Concentrex; (v) the historical trading information for the common stock of
Concentrex; (vi) certain financial and stock market information for certain
other companies in businesses related to those of Concentrex; (vii) certain
financial information relating to certain merger and acquisition transactions
involving companies in businesses related to those of Concentrex; and (viii)
certain publicly
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available information relating to premiums paid in certain selected merger and
acquisition transactions. In addition to our review and analyses of the specific
information set forth above, our opinion herein reflects and gives effect to our
assessment of general economic, monetary, market and industry conditions
existing as of the date hereof as they may affect the business and prospects of
Concentrex.
It is understood that this letter is for the information of the Board of
Directors of Concentrex and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any filing made by Concentrex or Harland with the Securities and Exchange
Commission with respect to the Transaction.
The opinion rendered herein does not constitute a recommendation to
shareholders of Concentrex as to whether to tender any or all of their shares in
connection with the Transaction.
Based upon and subject to the foregoing, it is our opinion as of the date
hereof that the consideration to be received by the shareholders of Concentrex
in connection with the Transaction is fair from a financial point of view.
Very truly yours,
ALLEN & COMPANY INCORPORATED
By: /s/ ROBERT H. COSGRIFF
------------------------------------
Managing Director
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