-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RhWeVWulQe5DD8Ye1nKTytPl5LlxzFpl3b9KMuvWjLII29vTuE/FEPbHNY2cSlFj rZwigkpg4yemjHwHzRPJWQ== /in/edgar/work/20000804/0000950129-00-003942/0000950129-00-003942.txt : 20000921 0000950129-00-003942.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950129-00-003942 CONFORMED SUBMISSION TYPE: SC TO-T PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20000804 GROUP MEMBERS: CRI ACQUISITION INC GROUP MEMBERS: RINEY RODGER O SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: COMPUTER RESEARCH INC CENTRAL INDEX KEY: 0000201511 STANDARD INDUSTRIAL CLASSIFICATION: [7374 ] IRS NUMBER: 251201499 STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC TO-T SEC ACT: SEC FILE NUMBER: 005-59221 FILM NUMBER: 685962 BUSINESS ADDRESS: STREET 1: 400 SOUTHPOINTE BLVD STREET 2: STE 300 CITY: CANONSBURG STATE: PA ZIP: 15317-8539 BUSINESS PHONE: 4122624430 MAIL ADDRESS: STREET 1: SOUTHPOINT PLZ I STREET 2: 400 SOUTHPOINTE BLVD STE 300 CITY: CANONSBURGH STATE: PA ZIP: 15317-8539 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RINEY RODGER O CENTRAL INDEX KEY: 0001119490 STANDARD INDUSTRIAL CLASSIFICATION: [ ] FILING VALUES: FORM TYPE: SC TO-T BUSINESS ADDRESS: STREET 1: 12855 FLUSHING MEADOW DRIVE CITY: ST LOUIS STATE: MO ZIP: 63131 BUSINESS PHONE: 8008881980 MAIL ADDRESS: STREET 1: 12855 FLUSHING MEADOW DRIVE CITY: ST LOUIS STATE: MO ZIP: 63131 SC TO-T 1 scto-t.txt RODGER O. RINEY FOR COMPUTER RESEARCH, INC. 1 ---------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ SCHEDULE TO (Rule 14d-100) TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Computer Research, Inc. (Name of Subject Company (Issuer)) CRI Acquisition, Inc. Rodger O. Riney (Name of Filing Persons (Offeror)) Common Stock, No Par Value (Title of Class of Securities) 205327109 (CUSIP Number of Class of Securities) Rodger O. Riney CRI Acquisition, Inc. 12855 Flushing Meadows Drive St. Louis, Missouri 63131 (800) 888-1980, ext. 1101 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Person) Copy to: Bryan W. Baker Gardere Wynne Sewell & Riggs, L.L.P. 1000 Louisiana, Suite 3400 Houston, Texas 77002-5007 (713) 276-5754 2 CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- Transaction Valuation* Amount of Filing Fee $6,374,106 $1,275 - -------------------------------------------------------------------------------- * For purposes of calculating the amount of the filing fee only. This amount assumes the purchase of 2,633,928 shares of common stock of Computer Research, Inc. at the offer price of $2.42 per share. The amount of the filing fee, calculated in accordance with Rule 0-11 of the Securities and Exchange Act of 1934, as amended, equals 1/50 of 1% of the transaction value. [ ] Check the box if any part of the filing fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Filing Party: --------------------- ------------- Form or Registration No.: Date Filed: ------------------- --------------- [ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transaction to which the statement relates: [X] third-party tender offer subject to Rule 14d-1. [ ] issuer tender offer subject to Rule 13e-4. [ ] going-private transaction subject to Rule 13e-3. [X] amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer: [ ] 3 SCHEDULE 13D
- -------------------------- ------------------------------ CUSIP NO. 205327 10 9 - -------------------------- ------------------------------ - -------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CRI Acquisition, Inc. - -------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP * (a) [ ] 2 (b) [ ] - -------------------------------------------------------------------------------- SEC USE ONLY 3 - -------------------------------------------------------------------------------- SOURCE OF FUNDS * 4 AF - -------------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 5 - -------------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 Delaware - -------------------------------------------------------------------------------- SOLE VOTING POWER NUMBER OF 7 --------------------------------------------------------- SHARES SHARED VOTING POWER BENEFICIALLY 1,403,495 8 OWNED BY --------------------------------------------------------- SOLE DISPOSITIVE POWER EACH 9 REPORTING --------------------------------------------------------- SHARED DISPOSITIVE POWER PERSON 1,403,495 WITH 10 - -------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,403,495 - -------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES * [ ] 12 - -------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 34.8% - -------------------------------------------------------------------------------- TYPE OF REPORTING PERSON * 14 CO - --------------------------------------------------------------------------------
4 SCHEDULE 13D - -------------------------- ------------------------------ CUSIP NO. 205327 10 9 - -------------------------- ------------------------------ - -------------------------------------------------------------------------------- NAME OF REPORTING PERSON 1 SS. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Rodger O. Riney - -------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP * (a) [ ] 2 (b) [ ] - -------------------------------------------------------------------------------- SEC USE ONLY 3 - -------------------------------------------------------------------------------- SOURCE OF FUNDS * 4 PF - -------------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] 5 - -------------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States of America - -------------------------------------------------------------------------------- SOLE VOTING POWER NUMBER OF 7 SHARES --------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 1,403,495 OWNED BY --------------------------------------------------------- SOLE DISPOSITIVE POWER EACH 9 REPORTING --------------------------------------------------------- SHARED DISPOSITIVE POWER PERSON 10 WITH 1,403,495 - -------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 1,403,495 - -------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES * [ ] 12 - -------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 34.8% - -------------------------------------------------------------------------------- TYPE OF REPORTING PERSON * 14 IN - --------------------------------------------------------------------------------
5 SCHEDULE TO TENDER OFFER STATEMENT/AMENDMENT NO. 1 TO SCHEDULE 13D This statement constitutes (i) a Tender Offer Statement on Schedule TO of CRI Acquisition, Inc., a Delaware corporation (the "Purchaser"), and Rodger O. Riney, the President, Treasurer, Secretary, sole director and sole shareholder of the Purchaser, and (ii) an Amendment No. 1 to the Schedule 13D filed by the Purchaser and Rodger O. Riney. This Schedule TO relates to the offer by the Purchaser to purchase all of the outstanding shares of common stock, no par value, of Computer Research, Inc., a Pennsylvania corporation ("Computer Research"), at $2.42 per share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated August 4, 2000 (the "Offer to Purchase"), and in the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1)(A) and (a)(1)(B), respectively (which together with any amendments or supplements thereto, collectively constitute the "Offer"). The item numbers and responses thereto are set forth below in accordance with the requirements of Schedule TO. The information in the Offer to Purchase and the related Letter of Transmittal is incorporated by reference in answer to all of the items in this Schedule TO except those items as to which information is specifically provided herein. ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON. Neither the Purchaser nor Riney has during the last five years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws or, except as setforth in the Offer to Purchase, finding any violation of such laws. ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED. The Purchaser and Riney have retained MacKenzie Partners, Inc. to act as the information agent in connection with the Offer. The Purchaser and Riney have agreed to pay MacKenzie Partners a fee of $5,000, and to reimburse MacKenzie Partners for out-of-pocket expenses, in connection with its services as information agent. ITEM 10. FINANCIAL STATEMENTS. Not applicable. ITEM 12. EXHIBITS. EXHIBIT (a)(1)(A) Offer to Purchase dated August 4, 2000. (a)(1)(B) Form of Letter of Transmittal. 6 (a)(1)(C) Form of Notice of Guaranteed Delivery. (a)(1)(D) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(1)(E) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(1)(F) Text of Press Release issued by Computer Research, Inc. and CRI Acquisition, Inc. on August 4, 2000. (a)(1)(G) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(1)(H) Text of Press Release issued by Computer Research, Inc. on July 7, 2000 (incorporated by reference to the Schedule TO filed by CRI Acquisition, Inc. on July 7, 2000.) (b) Not applicable. (d)(1) Purchase Agreement, dated as of July 7, 2000, among James L. Schultz, James L. Schultz and Helen D. Schultz, as Tenants by the Entireties and as Joint Tenants, David J. Vagnoni, Computer Research, Inc. and CRI Acquisition, Inc. (d)(2) First Amendment to Purchase Agreement, dated as of August 1, 2000, among James L. Schultz, James L. Schultz and Helen D. Schultz, as Tenants by the Entireties and as Joint Tenants, David J. Vagnoni, Computer Research, Inc. and CRI Acquisition, Inc. (d)(3) Financial Advisory Agreement between CRI Acquisition, Inc. and Sanders Morris Harris Inc. dated June 30, 2000 (incorporated by reference to Exhibit 3 to the Schedule 13D filed on July 17, 2000 by CRI Acquisition, Inc. and Rodger O. Riney). (d)(4) First Amendment to Financial Advisory Agreement between CRI Acquisition, Inc. and Sanders Morris Harris Inc. dated August 1, 2000. (g) Not applicable. (h) Not applicable. 7 SIGNATURE After due inquiry and to the best of their knowledge and belief, the undersigned hereby certify that the information set forth in this amendment and this statement is true, complete and correct. Date: August 4, 2000 ------------------------------------ CRI ACQUISITION, INC. By: /s/ RODGER O. RINEY -------------------------------------- Rodger O. Riney President, Treasurer and Secretary /s/ RODGER O. RINEY -------------------------------------- Rodger O. Riney 8 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ----------- ----------- (a)(1)(A) Offer to Purchase dated August 4, 2000. (a)(1)(B) Form of Letter of Transmittal. (a)(1)(C) Form of Notice of Guaranteed Delivery. (a)(1)(D) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(1)(E) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(1)(F) Text of Press Release issued by Computer Research, Inc. and CRI Acquisition, Inc. on August 4, 2000. (a)(1)(G) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(1)(H) Text of Press Release issued by Computer Research, Inc. on July 7, 2000 (incorporated by reference to the Schedule TO filed by CRI Acquisition, Inc. on July 7, 2000). (d)(1) Purchase Agreement, dated as of July 7, 2000, among James L. Schultz, James L. Schultz and Helen D. Schultz, as Tenants by the Entireties and as Joint Tenants, David J. Vagnoni, Computer Research, Inc. and CRI Acquisition, Inc. (d)(2) First Amendment to Purchase Agreement, dated as of August 1, 2000, among James L. Schultz, James L. Schultz and Helen D. Schultz, as Tenants by the Entireties and as Joint Tenants, David J. Vagnoni, Computer Research, Inc. and CRI Acquisition, Inc. (d)(3) Financial Advisory Agreement between CRI Acquisition, Inc. and Sanders Morris Harris Inc. dated June 30, 2000 (incorporated by reference to Exhibit 3 to the Schedule 13D filed on July 17, 2000 by CRI Acquisition, Inc. and Rodger O. Riney). (d)(4) First Amendment to Financial Advisory Agreement between CRI Acquisition, Inc. and Sanders Morris Harris Inc. dated August 1, 2000. EX-99.A1.A 2 ex99-a1_a.txt OFFER TO PURCHASE - DATED AUGUST 4, 2000 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF COMPUTER RESEARCH, INC. AT $2.42 NET PER SHARE BY CRI ACQUISITION, INC., A NEWLY FORMED CORPORATION WHOLLY-OWNED BY RODGER O. RINEY - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 1, 2000, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- We are making this offer pursuant to a Purchase Agreement dated July 7, 2000 among James L. Schultz, James L. Schultz and Helen D. Schultz, as Tenants by the Entireties and as Joint Tenants, David J. Vagnoni, Computer Research, Inc. and CRI Acquisition, Inc. Upon execution of the Purchase Agreement, CRI Acquisition purchased 1,403,495 shares of common stock of Computer Research from Mr. Schultz and his wife and Mr. Vagnoni, representing 34.8% of the outstanding shares of common stock. Mr. Schultz and Mr. Vagnoni are executive officers and directors of Computer Research. The Purchase Agreement required us to commence this offer to buy your shares at the same price per share as was paid to Mr. Schultz and Mr. Vagnoni. The board of directors of Computer Research has approved the Purchase Agreement and this offer and determined that the terms of this offer are fair to you, the shareholders of Computer Research. The board of directors of Computer Research recommends that you accept the offer and tender your shares. Our offer is conditioned upon there being validly tendered and not withdrawn prior to the expiration of the offer 1,288,121 shares of common stock which, when combined with the 1,403,495 shares we purchased from Mr. Schultz and his wife and Mr. Vagnoni, will result in CRI Acquisition owning two-thirds of the shares of common stock of Computer Research currently outstanding on a fully diluted basis. In addition, there are other material conditions to our offer that are described in Section 14 of this Offer to Purchase. To tender shares, you must deliver the certificate(s) representing your shares, together with a completed Letter of Transmittal and any other documents required by the Letter of Transmittal, to Registrar and Transfer Company, the depositary for the offer, not later than the time the tender offer expires. If your shares are held in street name, the shares can be tendered by your nominee through The Depository Trust Company. If you are unable to deliver any required document or instrument to the depositary by the expiration of the tender offer, you may gain some extra time by having a broker, bank or other fiduciary that is an eligible institution guarantee that the missing items will be received by the depositary within three New York Stock Exchange trading days. For the tender to be valid, however, the depositary must receive the missing items within that three trading day period. See Section 3 of this Offer to Purchase. Questions and requests for assistance may be directed to MacKenzie Partners, Inc., the information agent for this offer, at the location and telephone numbers on the back cover of this Offer to Purchase. Requests for additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the information agent or to brokers, dealers, commercial banks or trust companies. If your shares are held through a broker, dealer, commercial bank or trust company, you may also contact them for assistance concerning the offer. 1 2 SUMMARY TERM SHEET We are offering to purchase all of the outstanding shares of common stock of Computer Research that we do not already own for $2.42 per share in cash. The following are some of the questions you, as a stockholder of Computer Research, may have and answers to those questions. We urge you to read carefully the remainder of this Offer to Purchase and the Letter of Transmittal because the information in this summary term sheet is not complete. Additional important information is contained in the remainder of this Offer to Purchase and the Letter of Transmittal. -- WHO IS OFFERING TO BUY MY SECURITIES? Our names are CRI Acquisition, Inc. and Rodger O. Riney. Mr. Riney is the founder, President and Chief Executive Officer of Scottrade, Inc., a securities brokerage firm. He is a resident of St. Louis, Missouri. CRI Acquisition is a Delaware corporation formed by Mr. Riney for the purpose of buying all of the common stock of Computer Research. Mr. Riney serves as CRI Acquisition's sole director and executive officer and owns all of its outstanding capital stock. CRI Acquisition has carried on no activities other than acquiring shares of Computer Research in accordance with the Purchase Agreement it entered with James L. Schultz, James L. Schultz and Helen D. Schultz, as Tenants by the Entireties and as Joint Tenants, David J. Vagnoni and Computer Research. See Section 1 of this Offer to Purchase. -- WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER? We are seeking to purchase all of the outstanding shares of common stock, no par value, of Computer Research that we do not already own. See Section 1 of this Offer to Purchase. -- HOW MUCH ARE YOU OFFERING TO PAY? WHAT IS THE FORM OF PAYMENT? WILL I HAVE TO PAY ANY FEES OR COMMISSIONS? We are offering to pay to you $2.42 in cash per share of Computer Research common stock. If you are the record owner of your shares and you tender your shares to us in the offer, you will not have to pay brokerage fees or similar expenses. If you own your shares through a broker or other nominee, and your broker tenders your shares on your behalf, your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine whether any charges will apply. See Sections 2 and 3 of this Offer to Purchase. -- IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER? We do not think our financial condition is relevant to your decision as to whether to tender in the offer because the form of payment consists solely of cash and the offer is for all of the Computer Research shares. Mr. Riney will provide CRI Acquisition the funds necessary to purchase all shares validly tendered and not withdrawn in the offer. Mr. Riney has adequate personal funds available for this purpose. There is no financing contingency to the offer. See Sections 9, 10 and 14 of this Offer to Purchase. -- HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER? You will have at least until 5:00 p.m., New York City time, on Friday, September 1, 2000, to tender your shares in the offer. If you cannot deliver everything that is required in order to make a valid tender by that time, you may be able to use a guaranteed delivery procedure, which is described later in this Offer to Purchase. See Sections 1 and 3 of this Offer to Purchase. 2 3 -- CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES? We have agreed in the Purchase Agreement that, without the consent of Computer Research, we may extend the offer: - if all of the offer conditions have been satisfied other than the condition that we receive tenders of 1,288,121 shares of common stock of Computer Research (which is the number of shares that, combined with the shares we already own, will result in us owning at least two-thirds of the outstanding shares after the offer and which is the condition we call the "minimum condition" in this Offer to Purchase), for a period of not more than 10 business days following the initial expiration date, in order to allow the minimum condition to be satisfied; and - if any of the offer conditions has not been satisfied (other than the minimum condition), for the minimum period of time deemed appropriate by us to satisfy such condition, but in no event later than the 20th business day following the initial expiration date. See Section 1 of this Offer to Purchase for more details on our ability to extend the offer. -- WILL THERE BE A SUBSEQUENT OFFERING PERIOD? We may give shareholders who do not tender in the offer another opportunity to tender at the same price in a subsequent offering period. See Section 1 of this Offer to Purchase for further details. - The subsequent offering period, if any, will begin on the day we announce that we have purchased shares of common stock of Computer Research in the offer and last for three to 20 business days. We may extend the subsequent offering period, but it will not last more than 20 business days in total. See Section 1 of this Offer to Purchase for further details. - There will be no withdrawal rights in the subsequent offering period. See Section 1 of this Offer to Purchase for further details. -- HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED? If we extend the offer, we will inform Registrar and Transfer Company, the depositary for the offer, of the extension and will make a public announcement of the extension not later than 9:00 a.m., New York City time, on the next business day after the day on which the offer was scheduled to expire. See Section 1 of this Offer to Purchase. -- WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER? We are not required to accept for payment or pay for, and may delay the acceptance for payment of or payment for, any tendered shares or may terminate or amend the offer if the minimum condition is not met. We are also not required to accept for payment or pay for, and may delay the acceptance for payment of or payment for, or may terminate or amend the offer at or before the time of payment for any shares pursuant to the offer (whether or not any shares have been accepted for payment) if any of the following shall occur and be continuing: - there shall be in effect an injunction, order, decree, judgment, statute, rule, or regulation which - materially restricts or prohibits the making or consummation of the offer; - materially restricts or prohibits the ownership or operation by us of our or Computer Research's business or assets or compels us to dispose of or hold separate any material portion of our or Computer Research's business or assets; - imposes any material limitations on our ability effectively to acquire or to hold or to exercise full rights of ownership of the shares, including, without limitation, the right to vote the shares purchased by us on all matters properly presented to the shareholders of Computer Research; or 3 4 - imposes any limitations on the ability of us or any of our affiliates effectively to control in any material respect the business and operations of Computer Research; or - there shall be instituted, pending or threatened any suit, action, or proceeding that has a reasonable probability of resulting in - any of the consequences referred to above; - the assessment of material damages against Computer Research or us due to the transactions contemplated by the Purchase Agreement; or - a material adverse change in the business, financial condition or assets of Computer Research. The offer is also subject to a number of other conditions. We can waive any of the conditions to the offer except the minimum condition without Computer Research's consent. See Section 14 of this Offer to Purchase. -- HOW DO I TENDER MY SHARES? To tender shares, you must deliver the certificate(s) representing your shares, together with a completed Letter of Transmittal and any other documents required by the Letter of Transmittal, to Registrar and Transfer Company, the depositary for the offer, not later than the time the tender offer expires. If your shares are held in street name, the shares can be tendered by your nominee through The Depository Trust Company. If you are unable to deliver any required document or instrument to the depositary by the expiration of the tender offer, you may gain some extra time by having a broker, bank or other fiduciary that is an eligible institution guarantee that the missing items will be received by the depositary within three New York Stock Exchange trading days. For the tender to be valid, however, the depositary must receive the missing items within that three trading day period. See Section 3 of this Offer to Purchase. -- CAN I WITHDRAW PREVIOUSLY TENDERED SHARES? If, after tendering your shares in the offer, you decide that you do NOT want to accept the offer, you can withdraw your shares by so instructing the depositary before the offer expires. If you tendered by giving instructions to a broker or bank, you must instruct the broker or bank to arrange for the withdrawal of your shares. See Section 4 of this Offer to Purchase for further details. -- WHAT DOES THE COMPUTER RESEARCH BOARD OF DIRECTORS RECOMMEND REGARDING THE OFFER? We are making the offer pursuant to the Purchase Agreement, which has been approved by the board of directors of Computer Research. The board of directors of Computer Research (i) approved the offer subject to the terms and conditions set forth in the Purchase Agreement, (ii) resolved that the offer and the other transactions contemplated in the Purchase Agreement are fair to and in the best interests of Computer Research's shareholders after obtaining a fairness opinion from a financial advisor to that effect, and (iii) resolved to recommend acceptance of the offer by Computer Research's shareholders. See Section 11 of this Offer to Purchase. -- WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE COMPUTER RESEARCH SHARES ARE NOT TENDERED IN THE OFFER? Yes. Once we have purchased the shares that are tendered in the offer, we intend to merge CRI Acquisition or a new subsidiary of CRI Acquisition with and into Computer Research. In the merger, all of the shares of Computer Research common stock we do not own will be converted into $2.42 in cash. After the merger, Mr. Riney will own 100% of the surviving corporation, Computer Research. We call this merger the "second-step merger". See Section 12 of this Offer to Purchase. 4 5 -- IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES? If the second-step merger takes place, shareholders not tendering in the offer will receive the same amount of cash per share that they would have received had they tendered their shares in the offer, subject to any appraisal rights that are properly exercised under Pennsylvania law. Therefore, if the second-step merger takes place, the only difference to you between tendering your shares and not tendering your shares is that you will be paid earlier if you tender your shares. If the second-step merger does not take place, however, the number of shareholders and the number of shares of Computer Research that are still in the hands of the public may be so small that there no longer will be an active public trading market (or, possibly, there may not be any public trading market) for Computer Research's common stock. Also, in that instance, Computer Research may cease making filings with the SEC or otherwise may not be required to comply with the SEC rules relating to publicly held companies. See Section 7 of this Offer to Purchase. -- WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE? On July 6, 2000, the last trading day before we announced the acquisition, the last bid price of Computer Research common stock reported on the over-the-counter market was $1 13/16 per share. On August 3, 2000, the last trading day before we commenced the tender offer, the last bid price of Computer Research's common stock reported on the over-the-counter market was $2 5/16. We encourage you to obtain a recent quotation for shares of Computer Research common stock in deciding whether to tender your shares. For more information on the market value of the Computer Research common stock, see Section 6 of this Offer to Purchase. -- WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF TENDERING SHARES? The receipt of cash for shares pursuant to the tender offer will be a taxable transaction for United States federal income tax purposes and possibly for state, local and foreign income tax purposes as well. In general, a stockholder who sells shares pursuant to the tender offer will recognize gain or loss for United States federal income tax purposes equal to the difference, if any, between the amount of cash received and the stockholder's adjusted tax basis in the shares sold pursuant to the tender offer. If the shares exchanged constitute capital assets in the hands of the stockholder, such gain or loss will be capital gain or loss. In general, capital gains recognized by an individual will be subject to a maximum United States federal income tax rate of 20% if the shares were held for more than one year, and if held for one year or less they will be subject to tax at ordinary income tax rates. See Section 5 of this Offer to Purchase. -- WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER? You may call MacKenzie Partners, Inc. MacKenzie Partners is acting as the information agent for our tender offer. See the back cover of this Offer to Purchase. 5 6 To the Holders of Common Stock of Computer Research: THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. THE OFFER 1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the offer, CRI Acquisition, Inc. will accept for payment and pay for all shares of Computer Research common stock validly tendered prior to the expiration date and not withdrawn as described in Section 4 of this Offer to Purchase. The expiration date shall mean 5 p.m., New York City time, on Friday, September 1, 2000, unless and until CRI Acquisition, in accordance with the terms of the Purchase Agreement, shall have extended the period of time for which the offer is open, in which event the expiration date shall mean the latest time and date at which the offer, as so extended by CRI Acquisition, shall expire. The offer is conditioned upon, among other things, the satisfaction of the two-thirds minimum tender condition, the absence of a court or regulatory order or pending or threatened litigation seeking to restrict or prevent the tender offer, the absence of any competing offers result in Computer Research's board of directors withdrawing or adversely modifying its approval of the offer and the absence of a material adverse change in the business, financial condition or assets of Computer Research. For more information on conditions to the offer, see Section 14 of this Offer to Purchase. If the conditions are not satisfied prior to the expiration date, CRI Acquisition reserves the right, but shall not be obligated, to do any of the following: - decline to purchase any of the shares tendered and terminate the offer, subject to the terms of the Purchase Agreement; - waive any of the conditions to the offer, to the extent permitted by applicable law and the provisions of the Purchase Agreement, and, subject to complying with applicable rules and regulations of the SEC, purchase all shares validly tendered; or - subject to the terms of the Purchase Agreement, extend the offer and, subject to the right of shareholders to withdraw shares until the expiration date, retain the shares that will have been tendered during the period or periods for which the offer is extended. Subject to the terms of the Purchase Agreement as described below, CRI Acquisition expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the offer is open and thereby delay acceptance for payment of, and the payment for, any shares, by giving oral or written notice of such extension to Registrar and Transfer Company, as the depositary. In addition, CRI Acquisition may amend the offer in certain respects, including, without limitation, by increasing the consideration offered to holders of shares and/or by decreasing the number of shares being sought in the offer, by giving oral or written notice of such amendment to the depositary. The rights reserved by CRI Acquisition in this paragraph are in addition to CRI Acquisition's rights to terminate the offer as described in Section 14. Any extension, amendment or termination will be followed as promptly as practicable by public announcement thereof, the announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date in accordance with the public announcement requirements of Rule 14d-4(d) under the Exchange Act. Without limiting the obligation of CRI Acquisition under such rule or the manner in which CRI Acquisition may choose to make any public announcement, CRI Acquisition currently intends to make announcements by issuing a release through MacKenzie Partners, the information agent for this tender offer. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY CRI ACQUISITION FOR THE SHARES REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING PAYMENT. 6 7 The Purchase Agreement provides that CRI Acquisition will have the right to change the terms and conditions of the offer, so long as such changes do not, without the prior written approval of Computer Research - decrease the offer price or the number of shares sought; - amend the offer to modify or add any conditions; - change the form of consideration payable in the offer; or - otherwise amend the offer in any manner adverse to the holders of shares other than to extend the offer as permitted under the Purchase Agreement. The Purchase Agreement also provides that CRI Acquisition may, without the consent of Computer Research, extend the offer: - if all of the offer conditions have been satisfied other than the minimum condition that CRI Acquisition receives 1,288,121 shares of common stock of Computer Research, which is the number of shares that, combined with the shares we already own, will result in us owning at least two-thirds of the outstanding shares after the offer, for a period of not more than 10 business days following the initial expiration date, in order to allow the minimum condition to be satisfied; - if any of the offer conditions has not been satisfied (other than the minimum condition), for the minimum period of time deemed appropriate by CRI Acquisition to satisfy such condition, but in no event later than the 20th business day following the initial expiration date; and - for a subsequent offering period of three to 20 business days following the initial expiration date of the offer if all of the conditions to the offer have been satisfied or waived, provided that certain other conditions are met, including that CRI Acquisition accept and promptly pay for all shares tendered during the initial offering period and as they are tendered during the subsequent offering period. If all conditions to the offer have been satisfied or waived, CRI Acquisition will accept for payment and pay for all shares validly tendered and not withdrawn at such time (which shares may not thereafter be withdrawn). If CRI Acquisition extends the offer, or if CRI Acquisition is delayed in its purchase of or payment for shares, whether before or after its acceptance for payment of shares, or is unable to pay for shares pursuant to the offer for any reason, then, without prejudice to CRI Acquisition's rights under the offer, Registrar and Transfer Company may retain tendered shares on behalf of CRI Acquisition, and such shares may not be withdrawn except to the extent tendering shareholders are entitled to withdrawal rights as described in Section 4 of this Offer to Purchase. However, the ability of CRI Acquisition to delay the payment for shares that CRI Acquisition has accepted for payment is limited by Rule 14e-l(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of holders of securities promptly after the termination or withdrawal of the offer. If CRI Acquisition makes a material change in the terms of the offer or the information concerning the offer or waives a material condition of the offer, CRI Acquisition will disseminate additional tender offer materials and extend the offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The minimum period during which the offer must remain open following material changes in the terms of the offer or information concerning the offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances then existing, including the relative materiality of the changed terms or information. In a public release, the SEC has stated that in its view an offer must remain open for a minimum period of time following a material change in the terms of the offer and that waiver of a material condition, such as the minimum condition, is a material change in the terms of the offer. The release states than an offer should remain open for a minimum of five business days from the date a material change is first published, sent or given to security holders and that, if material changes are made with respect to information not materially less significant than the offer price and the number of shares 7 8 being sought, a minimum of ten business days may be required to allow adequate dissemination and investor response. The requirement to extend the offer will not apply to the extent that the number of business days remaining between the occurrence of the change and the then scheduled expiration date equals or exceeds the minimum extension period that would be required because of the amendment. Computer Research has provided CRI Acquisition with a stockholder list and security position listings for the purpose of disseminating the offer to holders of shares. This Offer to Purchase and the related Letter of Transmittal will be mailed by CRI Acquisition to record holders of shares and will be furnished by CRI Acquisition to brokers, dealers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder lists or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the conditions of the offer, CRI Acquisition will accept for payment and will pay, as soon as practicable after acceptance and payment is legally permitted, for all shares validly tendered prior to the expiration date and not properly withdrawn in accordance with Section 4 of this Offer to Purchase. All determinations concerning the satisfaction of such terms and conditions will be within CRI Acquisition's discretion, which determinations will be final and binding. For more information on the terms and conditions of the offer, see Sections 1 and 14 of this Offer to Purchase. CRI Acquisition expressly reserves the right, in its sole discretion, to delay acceptance for payment of or payment for shares in order to comply, in whole or in part, with any applicable law. Any such delays will be effected in compliance with Rule 14e-l(c) under the Exchange Act (relating to a bidder's obligation to pay the consideration offered or return the securities deposited by or on behalf of holders of securities promptly after the termination or withdrawal of such bidder's offer). In all cases, payment for shares accepted for payment pursuant to the offer will be made only after timely receipt by Registrar and Transfer Company, the depositary, of all of the following: - certificates for shares or a timely book-entry confirmation, as described below, with respect thereto; - a Letter of Transmittal or facsimile thereof, properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an agent's message, as described below; and - any other documents required by the Letter of Transmittal. The per share consideration paid to any stockholder pursuant to the offer will be the highest per share consideration paid to any other stockholder pursuant to the offer. For purposes of the offer, CRI Acquisition will be deemed to have accepted for payment, and thereby purchased, shares properly tendered to CRI Acquisition and not withdrawn as, if and when CRI Acquisition gives written notice to the depositary, of CRI Acquisition's acceptance for payment of such shares. Payment for shares accepted for payment pursuant to the offer will be made within two business days after acceptance thereof by delivering the purchase price for the shares to Registrar and Transfer Company, which will act as agent for tendering shareholders for the purpose of receiving payment from CRI Acquisition and transmitting payment to tendering shareholders. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY CRI ACQUISITION FOR THE SHARES REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING PAYMENT. If any tendered shares are not purchased pursuant to the offer for any reason, certificates for any such shares will be returned, without expense to the tendering stockholder. In the case of shares delivered by book-entry transfer of shares into the depositary's account at the book-entry transfer facility, as described below, pursuant to the procedures set forth in Section 3 of this Offer to Purchase, the shares will be credited to an account maintained at the book-entry transfer facility, as promptly as practicable after the expiration or termination of the offer. 8 9 3. PROCEDURE FOR TENDERING SHARES. VALID TENDER For shares to be validly tendered pursuant to the offer: - either a properly completed and duly executed Letter of Transmittal or facsimile thereof, together with any required signature guarantees, or, in the case of a book-entry transfer, an agent's message, as described below, and any other required documents, must be received by Registrar and Transfer Company, as depositary, at one of its addresses set forth on the back cover of this Offer to Purchase prior to the expiration date; and - either certificates for tendered shares must be received by the depositary at one of such addresses or the shares must be delivered pursuant to the procedures for book-entry transfer described below, and a book-entry confirmation received by the depositary, in each case, prior to the expiration date or the tendering stockholder must comply with the guaranteed delivery procedures set forth below. Registrar and Transfer Company will establish an account with respect to the shares at The Depository Trust Company, referred to as the book-entry transfer facility, for purposes of the offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the book-entry transfer facility's systems may make book-entry delivery of shares by causing the book-entry transfer facility to transfer such shares into the depositary's account in accordance with the book-entry transfer facility's procedure for such transfer. However, although delivery of shares may be effected through book-entry transfer into the depositary's account at the book-entry transfer facility, the Letter of Transmittal, or facsimile thereof, properly completed and duly executed, with any required signature guarantees, or an agent's message, and any other required documents must, in any case, be transmitted to, and received by, the depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the expiration date, or the tendering stockholder must comply with the guaranteed delivery procedures described below. The confirmation of a book-entry transfer of shares into the depositary's account at the book-entry transfer facility as described above is referred to herein as a book-entry confirmation. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. The term "agent's message" means a message transmitted by the book-entry transfer facility to, and received by, Registrar and Transfer Company, as depositary, and forming a part of a book-entry confirmation, which states that the book-entry transfer facility has received an express acknowledgment from the participant in the book-entry transfer facility tendering the shares that the participant has received and agrees to be bound by the terms of the Letter of Transmittal and that CRI Acquisition may enforce such agreement against the participant. THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. SIGNATURE GUARANTEES No signature guarantee is required on the Letter of Transmittal if the Letter of Transmittal is signed by the registered holder(s) (this term includes any participant in the book-entry transfer facility's systems whose name appears on a security position listing as the owner of the shares) of shares tendered therewith and the registered holder has not completed either the box entitled Special Delivery Instructions or the box entitled 9 10 Special Payment Instructions on the Letter of Transmittal. In addition, no signature guarantee is required if shares are tendered for the account of a financial institution, including most commercial banks, savings and loan associations and brokerage houses, that is a participant in the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program. Such institutions are referred to as eligible institutions. In all other cases, all signatures on Letters of Transmittal must be guaranteed by an eligible institution. See Instructions 1 and 5 to the Letter of Transmittal. If the certificates for shares are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or certificates for shares not tendered or not accepted for payment are to be returned, to a person other than the registered holder of the certificates surrendered, then the tendered certificates for such shares must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name or names of the registered holders or owners appear on the certificates, with the signatures on the certificates or stock powers guaranteed as described above. For more information on signature guarantees, see Instructions 1 and 5 to the Letter of Transmittal. GUARANTEED DELIVERY If a stockholder desires to tender shares pursuant to the offer and the stockholder's certificates for shares are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach Registrar and Transfer Company prior to the expiration date, the stockholder's tender may be effected if all the following conditions are met: - the tender is made by or through an eligible institution, as described below; - a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by CRI Acquisition, is received by the depositary, as provided below, prior to the expiration date; and - the certificates for, or a book-entry confirmation with respect to, the shares, together with a properly completed and duly executed Letter of Transmittal or facsimile thereof, with any required signature guarantees, or, in the case of a book-entry transfer, an agent's message, and any other required documents are received by the depositary within three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand to Registrar and Transfer Company, as the depositary, or transmitted by telegram, facsimile transmission or mail to the depositary and must include a guarantee by an eligible institution in the form set forth in such Notice of Guaranteed Delivery. Notwithstanding any other provision hereof, payment for shares accepted for payment pursuant to the offer will be made in all cases only after timely receipt by the depositary of all of the following: - certificates for, or a timely book-entry confirmation with respect to, the shares; - a Letter of Transmittal, or facsimile thereof, properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an agent's message; and - any other documents required by the Letter of Transmittal. Accordingly, tendering shareholders may be paid at different times depending upon when certificates for shares or book-entry confirmations with respect to shares are actually received by the depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY CRI ACQUISITION FOR THE SHARES REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING PAYMENT. The valid tender of shares pursuant to one of the procedures described above will constitute a binding agreement between the tendering stockholder and CRI Acquisition upon the terms and subject to the conditions of the offer. 10 11 APPOINTMENT By executing the Letter of Transmittal as set forth above, the tendering stockholder will irrevocably appoint designees of CRI Acquisition, and each of them, as the stockholder's attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of the stockholder's rights with respect to the shares tendered by the stockholder and accepted for payment by CRI Acquisition and with respect to any and all other shares or other securities or rights issued or issuable in respect of the shares. All proxies will be considered coupled with an interest in the tendered shares. The appointment will be effective when, and only to the extent that, CRI Acquisition accepts for payment shares tendered by the stockholder as provided herein. Upon the appointment, all prior powers of attorney, proxies and consents given by the stockholder with respect to the shares or other securities or rights will, without further action, be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given by the stockholder and, if given, will not be deemed effective. The designees of CRI Acquisition will thereby be empowered to exercise all voting and other rights with respect to the shares and other securities or rights, including, without limitation, in respect of any annual, special or adjourned meeting of Computer Research's shareholders, actions by written consent in lieu of any meeting or otherwise, as they in their sole discretion deem proper. CRI Acquisition reserves the right to require that, in order for shares to be deemed validly tendered, immediately upon CRI Acquisition's acceptance for payment of the shares, CRI Acquisition must be able to exercise full voting, consent and other rights with respect to the shares and other related securities or rights, including voting at any meeting of shareholders. Despite the existence of the proxies described above, in the Purchase Agreement CRI Acquisition and Mr. Riney have agreed not to seek to elect members of the board of directors of Computer Research or influence its management before the abandonment of this offer, or, following the purchase of the shares tendered under this offer, the consummation or abandonment of the second step merger. DETERMINATION OF VALIDITY All questions as to the validity, form, eligibility, including time of receipt, and acceptance of any tender of shares will be determined by CRI Acquisition, in its sole discretion, which determination will be final and binding. CRI Acquisition reserves the absolute right to reject any or all tenders of any shares determined by it not to be in proper form or the acceptance for payment of, or payment for which may, in the opinion of CRI Acquisition's counsel, be unlawful. CRI Acquisition also reserves the absolute right, in its sole discretion, subject to the provisions of the Purchase Agreement, to waive any of the conditions of the offer or any defect or irregularity in the tender of any shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other shareholders. No tender of shares will be deemed to have been validly made until all defects or irregularities relating thereto have been cured or waived. None of CRI Acquisition, Registrar and Transfer Company, as the depositary, MacKenzie Partners, as the information agent, or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. CRI Acquisition's interpretation of the terms and conditions of the offer including the Letter of Transmittal and the instructions thereto will be final and binding. BACKUP WITHHOLDING In order to avoid "backup withholding" of U.S. federal income tax on payments of cash pursuant to the offer, a stockholder surrendering shares in the offer must, unless an exemption applies, provide the depositary with the stockholder's correct taxpayer identification number on a Substitute Form W-9 and certify under penalties of perjury that the number is correct and that the stockholder is not subject to backup withholding. If a stockholder does not provide the stockholder's correct taxpayer identification number or fails to provide the certifications described above, the Internal Revenue Service may impose a penalty on the stockholder and payment of cash to the stockholder pursuant to the offer may be subject to backup withholding of 31%. All shareholders surrendering shares pursuant to the offer should complete and sign the main signature form and the Substitute Form W-9 included as part of the Letter of Transmittal to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proved in a 11 12 manner satisfactory to CRI Acquisition and the depositary). Certain shareholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Foreign shareholders, if exempt, should complete and sign the main signature form and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the depositary, in order to avoid backup withholding. See Instruction 9 to the Letter of Transmittal. 4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4, tenders of shares are irrevocable. Shares tendered pursuant to the offer may be withdrawn pursuant to the procedures described below at any time prior to the expiration date and, unless theretofore accepted for payment and paid for by CRI Acquisition pursuant to the offer, may also be withdrawn at any time after October 2, 2000. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by Registrar and Transfer Company, as the depositary, at one of its addresses set forth on the back cover of this Offer to Purchase and must specify the name of the person having tendered the shares to be withdrawn, the number of shares to be withdrawn and the name of the registered holder of the shares to be withdrawn, if different from the name of the person who tendered the shares. If certificates for shares have been delivered or otherwise identified to the depositary, then, prior to the physical release of the certificates, the serial numbers shown on the certificates must be submitted to the depositary and, unless the shares have been tendered by an eligible institution, the signatures on the notice of withdrawal must be guaranteed by an eligible institution. If shares have been delivered pursuant to the procedures for book-entry transfer as set forth in Section 3 of this Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the appropriate book-entry transfer facility to be credited with the withdrawn shares and otherwise comply with such book-entry transfer facility's procedures. Withdrawals of tenders of shares may not be rescinded, and any shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the offer. However, withdrawn shares may be retendered by again following one of the procedures described in Section 3 of this Offer to Purchase any time prior to the expiration date. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by CRI Acquisition, in its sole discretion, which determination will be final and binding. None of CRI Acquisition, the depositary, the information agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for shares pursuant to the offer will be a taxable transaction for U.S. federal income tax purposes and also may be a taxable transaction under state, local or foreign tax laws. In general, a stockholder who tenders shares in the offer will recognize gain or loss for federal income tax purposes equal to the difference, if any, between the amount of cash received and the stockholder's adjusted tax basis in the shares sold. Such gain or loss generally will be capital gain or loss if the shares disposed of were held as capital assets by the stockholder, and will be long-term capital gain or loss if the shares disposed of were held for more than one year at the date of sale. The foregoing summary constitutes a general description of certain U.S. federal income tax consequences of the offer without regard to the particular facts and circumstances of each stockholder of Computer Research and is based on the provisions of the Internal Revenue Code of 1986, as amended, Treasury Department Regulations issued pursuant thereto and published rulings and court decisions in effect as of the date hereof, all of which are subject to change, possibly with retroactive effect. Special tax consequences not described herein may be applicable to certain shareholders subject to special tax treatment (including, but not limited to, insurance companies, tax-exempt organizations, financial institutions or broker dealers, foreign shareholders and shareholders who have acquired their shares pursuant to the exercise of employee stock options or otherwise as compensation). ALL SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO SPECIFIC TAX EFFECTS OF THE OFFER APPLICABLE TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL AND FOREIGN TAX LAWS. 12 13 6. PRICE RANGE OF SHARES OF COMPUTER RESEARCH COMMON STOCK. Computer Research's common stock is traded on the OTC Bulletin Board under the symbol "CRIX." The following table sets forth, for each of the fiscal years indicated, the high and low reported last bid price per share on the OTC Bulletin Board as reported in Computer Research's Annual Report on Form 10-KSB for the fiscal years ended August 31, 1998 and 1999, and thereafter based on published financial sources.
LAST BID PRICE ------------------ HIGH LOW ------- ------- 1998 First Quarter............................................. 1 1/2 7/8 Second Quarter............................................ 1 1/2 13/16 Third Quarter............................................. 1 7/16 15/16 Fourth Quarter............................................ 1 11/16 13/16 1999 First Quarter............................................. 1 1/8 7/8 Second Quarter............................................ 1 5/8 13/16 Third Quarter............................................. 2 9/16 15/16 Fourth Quarter............................................ 1 15/16 1 13/16 2000 First Quarter............................................. 1 5/16 7/8 Second Quarter............................................ 2 1 Third Quarter............................................. 2 3/4 1 1/8 Fourth Quarter through August 3, 2000..................... 2 3/8 1 3/8
On July 6, 2000, the last full trading day prior to the first public announcement of CRI Acquisition's intention to commence the offer, the last bid price of the shares on the OTC Bulletin Board was $1 13/16 per share. On August 3, 2000, the last full trading day prior to the commencement of the offer, the last bid, as reported in Computer Research's price of the shares on the OTC Bulletin Board was $2 5/16 per share. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. 7. EFFECT OF THE OFFER ON THE MARKET FOR COMPUTER RESEARCH'S COMMON STOCK; EXCHANGE ACT REGISTRATION; EFFECT ON MARKET The purchase of shares pursuant to the offer will reduce the number of holders of shares and the number of shares that might otherwise trade on the OTC Bulletin Board and could adversely effect the liquidity and market value of the remaining shares held by the public, as well as the availability of quotations for the value of the shares. EXCHANGE ACT REGISTRATION Computer Research's shares currently are registered under the Exchange Act. Registration of the shares under the Exchange Act may be terminated upon application of Computer Research to the SEC if the shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of the shares under the Exchange Act would substantially reduce the information required to be furnished by Computer Research to its shareholders and to the SEC and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with shareholders' meetings and the related requirement of furnishing an annual report to shareholders and the requirements of Rule 13e-3 under the Exchange Act with respect to going private transactions, no longer applicable to Computer Research. Furthermore, the ability of affiliates of Computer Research and persons holding restricted securities of Computer Research to dispose of those securities pursuant to Rule 144 or Rule 144A promulgated under the Securities Act of 1933, as amended, may be impaired or eliminated. If 13 14 registration of the shares under the Exchange Act were terminated, the shares would no longer be margin securities or be eligible for continued listing on any stock exchange. CRI Acquisition may seek to cause Computer Research to apply for termination of registration of the shares under the Exchange Act as soon after the completion of the offer as the requirements for such termination are met. 8. CERTAIN INFORMATION CONCERNING COMPUTER RESEARCH, INC. GENERAL The information concerning Computer Research contained in this Offer to Purchase has been furnished by Computer Research or has been taken from or based upon publicly available documents and records on file with the SEC and other public sources. CRI Acquisition assumes no responsibility for the accuracy or completeness of the information concerning Computer Research contained in such documents and records or for any failure by Computer Research to disclose events that may have occurred or may affect the significance or accuracy of the information but that are unknown to CRI Acquisition. Computer Research provides computerized accounting and record-keeping support services to more than 40 securities broker/dealers, banks and other financial institutions throughout the United States. Computer Research is a Pennsylvania corporation with its principal executive offices at Southpointe Plaza I, Suite 300, 400 Southpointe Boulevard, Canonsburg, Pennsylvania 15317. The telephone number of Computer Research at such offices is (724) 745-0600. AVAILABLE INFORMATION Computer Research is subject to the informational filing requirements of the Exchange Act and, in accordance therewith, is obligated to file reports, proxy statements and other information with the SEC relating to its business, financial condition and other matters. Information as of particular dates concerning Computer Research's directors and officers, their remuneration, options granted to them, the principal holders of Computer Research's securities and any material interests of those persons in transactions with Computer Research is required to be disclosed in proxy statements distributed to Computer Research's shareholders and filed with the SEC. Such reports, proxy statements and other information should be available for inspection at the public reference facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such information should be obtainable by mail, upon payment of the SEC's customary charges, by writing to the SEC's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also maintains a website at http://www.sec.gov that contains reports, proxy statements and other information. 9. CERTAIN INFORMATION CONCERNING CRI ACQUISITION, INC. AND RODGER O. RINEY. GENERAL CRI Acquisition, a Delaware corporation, was organized for the purpose of acquiring Computer Research and has conducted no activities unrelated to this purpose since its organization. All of the issued and outstanding shares of capital stock of CRI Acquisition are currently owned by Rodger O. Riney, the President, Treasurer, Secretary, sole director and sole stockholder of CRI Acquisition. The principal executive offices of CRI Acquisition are located at 12855 Flushing Meadows Drive, Suite 100, St. Louis, Missouri 63131. The telephone number of CRI Acquisition at such offices is (800) 888-1980, Ext. 1101. Mr. Riney is the founder, President and Chief Executive Officer of Scottrade, Inc., formerly Scottsdale Securities, Inc., a securities brokerage firm that is registered with the SEC and the NASD with its principal executive offices at 12855 Flushing Meadows Drive, Suite 100, St. Louis, Missouri 63131. Mr. Riney is also a director of Knight Trading Group, Inc., a securities market maker. CRI Acquisition is not registered under or subject to the provisions of the Exchange Act. 14 15 FINANCIAL CONDITION Mr. Riney and CRI Acquisition do not consider their financial condition to be material to a decision as to whether to tender shares in the offer because the form of payment consists solely of cash, the tender offer is for all of Computer Research's outstanding shares not already owned by CRI Acquisition and this offer is not subject to any financing condition. Mr. Riney will provide CRI Acquisition with the funds necessary to purchase all shares validly tendered and not withdrawn in the offer and to consummate the second step merger. Mr. Riney has adequate personal funds available for this purpose. CERTAIN INFORMATION The name, citizenship, business address, present principal occupation or employment and five-year employment history of Mr. Riney, the sole director and executive officer of CRI Acquisition, is set forth in Schedule I hereto. Except as set forth in this Offer to Purchase regarding the purchase on July 7, 2000 of 1,403,495 shares of Computer Research common stock, neither CRI Acquisition, Mr. Riney nor, to the best of their knowledge, any associate or majority-owned subsidiary of either of them beneficially owns or has a right to acquire any shares of Computer Research, and neither CRI Acquisition, Mr. Riney nor, to the best of their knowledge, any of the persons or entities referred to above, nor any of the respective executive officers, directors or subsidiaries of any of the foregoing, has effected any transaction in its shares during the past 60 days, other than transactions, if any, effected by Scottrade for customers in the ordinary course of Scottrade's business. Mr. Riney is an outside director of Knight Trading Group, a securities market maker which makes a market in approximately 2,600 over-the-counter bulletin board companies. Knight Trading Company makes a market in Computer Research stock. Mr. Riney is not an officer or employee of Knight Trading Group and exercises no direct or indirect control over its market making activities in Computer Research. Except as set forth in this Offer to Purchase, neither CRI Acquisition nor Mr. Riney has any contract, arrangement, understanding or relationship with any other person with respect to the securities of Computer Research, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of Computer Research, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, none of CRI Acquisition nor Mr. Riney, nor any of their respective affiliates has had, within the last two years, any business relationships or transactions with Computer Research or any of its executive officers, directors or affiliates that would require reporting under the rules of the SEC. Except as set forth in this Offer to Purchase, within the last two years, there have been no contacts, negotiations or transactions between CRI Acquisition, Mr. Riney or any of their affiliates and Computer Research or its affiliates concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, election of directors or sale or other transfer of a material amount of assets. Mr. Riney has entered into a Financial Advisory Agreement with Sanders Morris Harris Inc. dated June 30, 2000 and amended August 1, 2000, under which Mr. Riney and CRI Acquisition retain Sanders Morris Harris to act as financial advisor to Mr. Riney and CRI Acquisition, in connection with the acquisition of Computer Research and to serve as a licensed broker dealer in those jurisdictions where the securities, blue sky or other laws require this offer to be made by a licensed broker dealer. As compensation to Sanders Morris Harris, Mr. Riney and CRI Acquisition are obligated to pay a formula-based fee calculated upon the purchase price of Computer Research. Mr. Riney and CRI Acquisition have agreed to reimburse Sanders Morris Harris for its reasonable out-of-pocket expenses incurred in connection with the engagement, and to indemnify Sanders Morris Harris and certain related persons against certain liabilities and expenses in connection with the engagement. 10. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by CRI Acquisition to purchase all of the shares pursuant to the offer and to pay related fees and expenses is expected to be approximately $6.4 million. CRI Acquisition will obtain 15 16 all necessary funds to purchase all the Computer Research shares that might be tendered in the offer from a contribution by Mr. Riney out of his personal funds. CRI Acquisition does not currently have or require any alternative financing arrangements. 11. BACKGROUND OF THE OFFER, PURPOSE OF THE OFFER, THE PURCHASE AGREEMENT AND CERTAIN OTHER AGREEMENTS. The following description was prepared by CRI Acquisition, Mr. Riney and Computer Research. Information about Computer Research was provided by Computer Research and neither CRI Acquisition nor Mr. Riney takes any responsibility for the accuracy or completeness of any information regarding meetings or discussions in which Mr. Riney, CRI Acquisition or their representatives did not participate. BACKGROUND OF THE OFFER In late April, 2000, Mr. Riney, as President of Scottrade, began to seek trade processing software that Scottrade could purchase and run in-house. Scottrade hired a software consultant to begin searching for solutions. In May 2000, Scottrade's consultant identified Computer Research as a possible vendor, began his investigation of Computer Research's software as a possible solution for Scottrade's in-house trade processing requirements and began preliminary discussions with Computer Research through Rodney Malone, one of its salesmen. After attending a demonstration of the software's functionality, the consultant reported to Mr. Riney that it appeared to be a viable solution for Scottrade's needs. In late May, Mr. Riney scheduled a trip to Computer Research's Denver office to see a demonstration of the software. On May 23, 2000, Computer Research entered into a letter of intent terminable after June 30, 2000, to be acquired by SunGard Data Systems at $2.00 a share, which was publicly announced on June 7, 2000. On June 9, 2000, Mr. Riney, the consultant and members of Scottrade's operational staff visited Computer Research's Denver office to see a demonstration of the Computer Research software. Mr. Riney met with Mr. Malone concerning the possible licensing of Computer Research's software to Scottrade. Although Computer Research was not in the business of licensing its software, Mr. Malone indicated that senior management of Computer Research was open to the idea. In preliminary negotiations between Mr. Riney and Mr. Malone, a license fee of approximately $2 million for the software was discussed. Mr. Riney concluded that, in light of the SunGard offer to purchase Computer Research for approximately $8.1 million, he saw value in acquiring not only the software license but also the entire company, its people, assets and technologies. On the afternoon of June 9, 2000, Mr. Riney discussed with Mr. Malone the possibility of Scottrade purchasing Computer Research. Mr. Riney was referred by Mr. Malone to William Lerner, who is the corporate secretary of Computer Research, and was also hired by Computer Research to assist Computer Research with evaluating its strategic alternatives, including its possible sale. After his return from Denver, Mr. Riney determined that he should purchase the shares of Computer Research personally and not through Scottrade. He believed that if Computer Research became a subsidiary of Scottrade it would potentially hurt Computer Research's ability to market its services to securities brokers competing with Scottrade. Mr. Riney also discussed his desire to pursue the acquisition of Computer Research with other members of Scottrade's senior management, who were concerned with the impact the cost of the proposed acquisition would have on Scottrade's capital, and concluded that Mr. Riney should pursue Computer Research as a personal investment. There is no arrangement between Scottrade and Mr. Riney that obligates Mr. Riney, once he has acquired control of Computer Research, to license or make its software available to Scottrade; although it is expected that such an arrangement will be negotiated following the successful conclusion of the tender offer and second step merger described in this offer to purchase. Early in the week of June 18, 2000, Mr. Riney contacted Bruce McMaken of the investment banking firm of Sanders Morris Harris for assistance and advice in approaching Computer Research regarding a possible transaction. On June 30, 2000, Sanders Morris Harris was formally engaged by Mr. Riney to assist him in pursuing the acquisition. 16 17 On June 21, 2000, Mr. Schultz returned a call to him placed by Mr Riney. When Mr. Riney informed Mr. Schultz that he wanted to discuss a purchase of Computer Research, Mr. Schultz refused to discuss this with Mr. Riney and referred all inquires to Mr. Lerner. On June 21, 2000 and June 22, 2000, Mr. Riney and Mr. McMaken spoke to discuss possible transaction structures and alternatives. On Friday, June 23, 2000, Mr. Riney prepared and faxed to Computer Research a letter indicating his strong interest in acquiring Computer Research at a cash price of $2.25 or more per share, and requesting access to the company and its senior management in order to conduct due diligence. On Monday, June 26, 2000, Mr. Lerner contacted Mr. McMaken to acknowledge receipt of the offer and to ask for further information to determine if Mr. Riney's offer was bona fide. Mr. Lerner also provided background information on Computer Research's major customer relationships. On June 27, 2000, Mr. Lerner and Mr. McMaken had further discussions concerning the offer, and Mr. Lerner informed Mr. McMaken that SunGard Data Systems had been informed of the competing $2.25 per share offer received from Mr. Riney. Mr. Lerner and Mr. McMaken preliminarily scheduled a due diligence call for June 30, 2000, to be held after Computer Research's scheduled June 29, 2000 board of directors meeting. Mr. Lerner refused Mr. McMaken's offer to have Mr. Riney available to appear at the board of directors' meeting. Mr. Lerner sought to delay any additional due diligence until the week of July 3, 2000. On June 28, 2000, Mr. Lerner advised Mr. McMaken that SunGard Data Systems had indicated their intention to meet Mr. Riney's proposed price of $2.25 per share. A telephone discussion ensued between Mr. Lerner, Mr. McMaken and Mr. Riney regarding a possible higher offer by Mr. Riney and possible structures for the transaction. On Friday, June 30, 2000, Mr. Riney, Mr. McMaken, Mr. Schultz, Mr. Vagnoni and Mr. Lerner participated in due diligence telephone conference. During the call, Mr. Riney indicated he would offer up to $2.42 per share for all of Computer Research's shares and discussed acceptable employment contract terms for Mr. Schultz and Mr. Vagnoni. Mr. Riney also requested that acceptable break-up provisions be agreed to in order to cover his anticipated expenses incurred in connection with the transaction. Late in the evening of June 30, 2000, Mr. Riney submitted to the company a signed copy of a Purchase Agreement, which provided for the purchase of Mr. Vagnoni's and Mr. Schultz's shares at $2.42 per share, followed by a tender offer for the remaining shares of the Company at $2.42 per share. In most respects, the terms of this draft of the Purchase Agreement were the same as the Purchase Agreement eventually signed. The material changes made to the June 30, 2000 draft in order to arrive at the final executed Purchase Agreement included - the substitution of CRI Acquisition for Mr. Riney as purchaser; - the revision of the terms of the agreement so that it called for a contemporaneous execution and closing with respect to the shares of Mr. Vagnoni and Mr. Schultz; - the addition of Mr. Schultz's wife as a party; - the revision of the provisions allowing CRI Acquisition to obtain proportionate representation on Computer Research's board of directors to delay this right until after the consummation or abandonment of the offer and the second step merger; - the amendment of the "no shop" provision to allow Computer Research to respond to bona fide unsolicited offers; and - the addition of a provision requiring that the indemnification provisions in Computer Research's Articles of Incorporation and Bylaws be maintained for six years. On July 1, 2000, Computer Research formally terminated its letter of intent with SunGard Data Systems. 17 18 Over the weekend of July 1 and 2, 2000, various conversations occurred between the parties and their counsel regarding transaction structure and timing and a revised draft of the Purchase Agreement was prepared. Among the matters negotiated was whether the Purchase Agreement would be signed prior to the closing, and the scope of Mr. Schultz's and Mr. Vagnoni's post-closing indemnification obligation. During the weekend, Mr. Riney left the country on a previously scheduled vacation. Since he was not scheduled to return until July 5, 2000, on July 3, 2000, Computer Research and Mr. McMaken on behalf of Mr. Riney executed a "bridging" letter agreement. The letter agreement bound both parties to negotiate in good faith with a view to executing a legally binding purchase agreement on or before July 7, 2000. Computer Research agreed to pay the reasonable fees and expenses incurred by Mr. Riney (up to $75,000) in the event a binding purchase agreement was not signed on or before July 7, 2000 as a result of a higher offer being made for Computer Research. The letter also obligated Computer Research and its affiliates to cease attempts to solicit higher offers to purchase the company, although it did permit Computer Research's board to consider unsolicited written third party offers. Also on July 3, 2000, Mr. McMaken made a due diligence telephone call to an ex-customer of Computer Research. Further due diligence activities occurred on July 5 and 6, 2000, additional drafts of the Purchase Agreement were circulated and the definitive Purchase Agreement was finalized. In several telephone conversations on July 5 and 6, 2000, the board discussed the final terms of the purchase agreement and received an oral report on the fairness of the transaction from a representative of Valuation Professionals, Inc., which concluded that $2.42 per share to be paid in the transaction with Mr. Riney was fair from a financial point of view to the shareholders of the Company. The board adopted resolutions approving the Purchase Agreement and the transaction contemplated thereby, including the Offer and the Merger, on July 6, 2000. On July 7, 2000, the signature pages to the Purchase Agreement were delivered, the shares of Messrs. Schultz and Vagnoni were purchased and a press release announcing the transaction was released. PURPOSE OF THE OFFER The purpose of the offer and the Purchase Agreement is to enable CRI Acquisition to acquire Computer Research. Shareholders of Computer Research who sell their shares in the offer will cease to have any equity interest in Computer Research and to participate in its earnings and any future growth. If the offer is consummated, the shareholders who tender their shares will no longer have an equity interest in Computer Research and instead will have only the right to receive cash consideration pursuant to the Purchase Agreement and this Offer to Purchase. Similarly, the shareholders of Computer Research who tender their shares will not bear the risk of any decrease in the value of Computer Research after selling their shares in the offer. The primary benefit of the offer to the shareholders of Computer Research is that such shareholders are being afforded an opportunity to sell all of their shares for cash at a price that represents a premium of approximately 34% over the closing market price of the shares on the last full trading day prior to the initial public announcement of the offer. THE PURCHASE AGREEMENT The following is a summary of certain provisions of the Purchase Agreement dated as of July 7, 2000, as amended as of August 1, 2000. The summary is qualified in its entirety by reference to the Purchase Agreement and the First Amendment to Purchase Agreement, a copy of each of which has been filed with the SEC as an exhibit to the Schedule TO filed by CRI Acquisition and Mr. Riney. The Purchase Agreement and the First Amendment to Purchase Agreement may be examined and copies may be obtained at the places and in the manner set forth in Section 8 of this Offer to Purchase. 18 19 Initial Purchase. Pursuant to the terms of the Purchase Agreement, CRI Acquisition purchased 1,403,495 shares of common stock of Computer Research held by Mr. Schultz and his wife and Mr. Vagnoni at a purchase price of $2.42 in cash, representing 34.8% of the outstanding common stock of Computer Research. Mr. Schultz and Mr. Vagnoni are senior executive officers and directors of Computer Research. Recommendation of Computer Research. Pursuant to the terms of the Purchase Agreement, Computer Research and its board of directors approved the offer, resolved that the offer is fair and in the best interest of its shareholders and agreed to recommend acceptance of the offer to its shareholders. The Offer. The Purchase Agreement provides that on or before August 7, 2000, CRI Acquisition will commence the offer and that, upon the terms and subject to the prior satisfaction or waiver of the conditions of the offer, CRI Acquisition will purchase all shares validly tendered pursuant to the offer. The Purchase Agreement provides that, without Computer Research's consent, CRI Acquisition will not: - decrease the offer price; - modify or add any conditions to the offer; - change the form of consideration payable in the offer; or - amend the offer in a manner adverse to the holders of shares. Notwithstanding the foregoing, the Purchase Agreement provides that CRI Acquisition may, without Computer Research's consent, extend the offer from time to time under the following circumstances and for the following periods: - for no more than 10 business days following the initial expiration date of the offer if all of the conditions to the offer have been satisfied except the minimum condition of receiving two-thirds of the shares of Computer Research common stock (including the 1,403,495 shares previously purchased under the Purchase Agreement); - for no more than 20 business days following the initial expiration date of the offer, if any of the conditions to the offer have not been satisfied (other than the minimum condition); and - for a subsequent offering period of three to 20 business days following the initial expiration date of the offer if all of the conditions to the offer have been satisfied or waived, provided that certain other conditions are met, including that CRI Acquisition accepts and promptly pays for all shares tendered during the initial offering period and as they are tendered during the subsequent offering period. The Merger. Following the consummation of the offer, the Purchase Agreement provides that, subject to the terms and conditions thereof, at the request of CRI Acquisition and in accordance with applicable law, in the event that CRI Acquisition acquires at least 80% of the outstanding shares of Computer Research (including the initial purchase of shares from Mr. Schultz and his wife and Mr. Vagnoni), either CRI Acquisition or a wholly-owned subsidiary of CRI Acquisition shall be merged with and into Computer Research. Under Pennsylvania law, this can be accomplished without the vote of Computer Research's shareholders. As a result of this short-form merger, Computer Research, as the surviving corporation, shall exist as a wholly-owned subsidiary of CRI. At the effective time of the short-form merger, each issued and outstanding share (other than shares that are owned by CRI Acquisition) will be converted into the right to receive $2.42 in cash, the price per share paid pursuant to the offer. Each issued and outstanding share of the common stock of the wholly-owned subsidiary of CRI Acquisition will be canceled and cease to be outstanding. The Purchase Agreement also provides that, subject to the terms and conditions thereof, and in accordance with applicable law, in the event that CRI Acquisition acquires less than 80% but more than 66 2/3% (including the initial purchase of shares from Mr. Schultz and his wife and Mr. Vagnoni) of the outstanding shares of Computer Research, either CRI Acquisition or a wholly-owned subsidiary of CRI Acquisition shall be merged with and into Computer Research, and, as a result of this merger Computer Research will be the surviving corporation. In contrast to the short-form merger described above, in this instance Computer 19 20 Research shall, if required by applicable laws, hold a meeting of its shareholders for the purpose of voting on the merger. See Section 12 of this Offer to Purchase. Control of Computer Research. The Purchase Agreement provides that, until the conclusion of the merger described above, CRI Acquisition and its affiliates shall not elect any directors on Computer Research's board of directors or seek to change the management or policies of Computer Research in any way. If the offer is not consummated, then CRI Acquisition shall be entitled to designate such number of directors, rounded up to the next whole number, as is equal to the product of the total number of directors on Computer Research's board of directors multiplied by the percentage that the number of shares of capital stock beneficially owned by CRI Acquisition bears to the total number of shares of capital stock then outstanding. Computer Research will take all actions necessary to cause CRI Acquisition's designees to be elected as directors of Computer Research, including securing the resignations of such number of its incumbent directors. Non-Competition Covenants. Mr. Vagnoni and Mr. Schultz agreed not to compete with Computer Research, directly or indirectly, for a period of five years following July 7, 2000. Employment Agreements. Mr. Schultz agreed to enter into an employment agreement having a term of one year and a salary of $200,000 per year, which may be extended by mutual agreement of the parties. Mr. Schultz further agreed to enter into a consulting agreement with Computer Research to begin upon termination of his employment agreement and extend for two years thereafter at a fee of $100,000 per year. Mr. Vagnoni agreed to enter into a two-year consulting agreement with Computer Research at a fee of $50,000 in the first year and $25,000 in the second year. Articles of Incorporation and Bylaws. Except as required by applicable law, the articles of incorporation and bylaws of Computer Research will not be amended for a period of six years following July 7, 2000 in any manner that would adversely affect the indemnification or litigation expense reimbursement rights thereunder of any persons who were directors, officers, employees or agents of Computer Research on or prior to July 7, 2000. No Solicitation. Computer Research has agreed that neither Computer Research nor any of its affiliates will, directly or indirectly, initiate, solicit or knowingly encourage any acquisition proposal or engage in discussions or negotiations with any person that is considering making or has made an acquisition proposal. If at any time prior to the commencement of the offer, Computer Research received an unsolicited, written, bona fide acquisition proposal from a third party, Computer Research's board of directors was allowed to proceed with discussions and negotiate any such acquisition proposal provided that, in the good faith judgment of the board based on the advice of legal counsel, the board determined that its failure to do so would be inconsistent with its fiduciary duties to Computer Research's shareholders under applicable law. In the event of such an acquisition proposal, Computer Research was obligated to immediately advise CRI Acquisition of the terms and conditions thereof and the identity of the person making such proposal. Indemnification. Pursuant to the Purchase Agreement: - CRI Acquisition agreed to protect, indemnify and hold harmless Computer Research, Mr. Schultz and his wife and Mr. Vagnoni against all liabilities arising out of a breach by CRI Acquisition of any of its representations, warranties, covenants or agreements in the Purchase Agreement. - Prior to the consummation of the offer, Mr. Schultz, Mr. Vagnoni and Computer Research have an obligation to jointly and severally protect, indemnify and hold harmless CRI Acquisition, its affiliates and their officers, directors, employees, representatives and agents against all liabilities arising out of a breach of any of the representations, warranties, covenants or agreements made by any of them in the Purchase Agreement. Following the consummation of the offer, only Mr. Vagnoni and Mr. Schultz have this joint and several indemnification obligation, which extends until July 7, 2002. Representations and Warranties. Computer Research, Mr. Schultz and Mr. Vagnoni made customary representations and warranties to CRI Acquisition with respect to, among other things, Computer Research's organization, capitalization, financial statements, public filings, conduct of business, intellectual property, 20 21 compliance with laws, litigation and undisclosed liabilities. Additionally, Computer Research, Mr. Schultz and Mr. Vagnoni represented and warranted to CRI Acquisition that certain anti-takeover laws of Pennsylvania do not apply to Computer Research. As a condition to the consummation of the offer, the representations and warranties must be true unless CRI Acquisition waives them or they would not, in the aggregate, result in a material adverse change in the business, condition, assets or prospects of Computer Research. Fees and Expenses. All costs and expenses incurred in connection with the Purchase Agreement and the offer are to be paid by the party incurring such expenses, whether or not the offer is consummated, except that Computer Research agreed to pay all of CRI Acquisition's reasonable fees and expenses incurred in connection with the Purchase Agreement and the offer if Computer Research's board of directors: (a) withdraws or adversely modifies its approval or recommendation in favor of the offer, (b) after receiving an acquisition proposal from another party, fails to publicly reconfirm its recommendation in favor of CRI Acquisition's offer within five business days after receiving CRI Acquisition's written request for such reconfirmation, or (c) recommends acceptance of an acquisition proposal from a third party. Guaranty. Mr. Riney guarantees in favor of Computer Research, Mr. Schultz and his wife and Mr. Vagnoni the truth and accuracy of the representations and warranties made by CRI Acquisition in the Purchase Agreement and the full performance by CRI Acquisition of its covenants and agreements under the Purchase Agreement. 12. PLANS FOR COMPUTER RESEARCH; OTHER MATTERS. PLANS FOR COMPUTER RESEARCH CRI Acquisition is conducting a review of Computer Research and its assets, corporate structure, operations, properties, policies, management and personnel and will consider, subject to the terms of the Purchase Agreement, what, if any, changes would be desirable in light of the circumstances that exist upon completion of the offer and second step merger. Such changes could include changes in Computer Research's business, corporate structure, board of directors or management, although, except as disclosed in this Offer to Purchase, neither CRI Acquisition nor Mr. Riney has any current plans with respect to these matters. The Purchase Agreement provides that, promptly after the purchase by CRI Acquisition of the shares pursuant to the offer and the consummation of the second step merger, CRI Acquisition has the right to designate such number of directors, rounded up to the next whole number, on Computer Research's board of directors as is equal to the product of the total number of directors on Computer Research's board of directors (giving effect to the directors designated by CRI Acquisition) multiplied by the percentage that the number of shares beneficially owned by CRI Acquisition bears to the total number of shares of capital stock then outstanding. See Section 11 of this Offer to Purchase. Except as disclosed in this Offer to Purchase, neither Mr. Riney nor CRI Acquisition has any present plans or proposals that would result in an extraordinary corporate transaction, such as a merger, reorganization, liquidation, relocation of operations, or sale or transfer of assets, involving Computer Research or any of its subsidiaries, or any material changes in Computer Research's corporate structure, business or composition of its management or personnel. Mr. Riney and CRI Acquisition currently intend to operate Computer Research on an independent basis in substantially the same manner as it is currently operated. OTHER MATTERS Short-form Merger. Section 1924(b) of the Pennsylvania Business Corporation Law provides that, if a corporation owns at least 80% of the outstanding shares of each class of another corporation, the corporation holding such stock may merge itself into the subsidiary corporation without any action or vote on the part of the board of directors or the shareholders of the subsidiary corporation. This is known as a short-form merger. In the event that CRI Acquisition acquires in the aggregate at least 80% of the shares of Computer Research's voting capital stock, pursuant to the offer or otherwise, then, at the election of CRI Acquisition, a short-form merger will be effected without any approval of the board of directors or the shareholders of Computer 21 22 Research, subject to compliance with the provisions of Section 1924(b) of the Pennsylvania Business Corporation Law. Alternative Merger. Section 1924(a) of the Pennsylvania Business Corporation Law provides that the affirmative vote of a majority of the votes cast by all shareholders (of each of the domestic business corporations that is a party to the merger) entitled to vote on a plan of merger and approval by the board of directors is sufficient to adopt a plan of merger. In the event that CRI Acquisition or its affiliates do not obtain at least 80% of the outstanding shares of Computer Research pursuant to the offer or otherwise, then, CRI Acquisition or its affiliate could effect a long-form, or conventional, merger with the approval of the board of directors and a majority of the shareholders of Computer Research, subject to compliance with the provisions of Section 1924(a) of the Pennsylvania Business Corporation Law. Pursuant to the Purchase Agreement, CRI Acquisition agreed that a long form merger may be effected if CRI Acquisition obtained more than 66 2/3% but less than 80% of the shares of Computer Research. Appraisal Rights. Under the Pennsylvania Business Corporation Law, holders of shares tendered pursuant to the offer do not have appraisal rights as a result of the offer. In connection with the merger, however, shareholders of Computer Research may have the right to dissent from the merger and obtain payment of the fair value of their shares. Under the Pennsylvania Business Corporation Law, dissenting shareholders who comply with the applicable statutory procedures will be entitled to receive payment of the fair value of their shares (excluding any appreciation or depreciation in anticipation of the merger) in cash plus interest, if any. Shareholders should recognize that the fair value could be higher or lower than the price per share paid pursuant to the offer or the consideration per share to be paid in the merger. THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING SHAREHOLDERS DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY SHAREHOLDERS DESIRING TO EXERCISE ANY AVAILABLE DISSENTERS' RIGHTS. THE PRESERVATION AND EXERCISE OF DISSENTERS' RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE PENNSYLVANIA BUSINESS CORPORATION LAW. The foregoing description of the Pennsylvania Business Corporation Law is not necessarily complete and is qualified in its entirety by reference to the Pennsylvania Business Corporation Law. A copy of the Appraisal Rights section of the Pennsylvania Business Corporation Law has been filed as an exhibit to the Schedule 14D-9 filed by Computer Research on August 4, 2000. Rule 13e-3. The second-step merger would have to comply with any applicable Federal law operative at the time. Rule 13e-3 under the Exchange Act is applicable to certain going private transactions; however, CRI Acquisition believes that Rule 13e-3 will not be applicable to the second-step merger. If Rule 13e-3 were applicable to the second-step merger, it would require, among other things, that certain financial information concerning Computer Research, and certain information relating to the fairness of the proposed transaction and the consideration offered to minority shareholders in such a transaction, be filed with the SEC and disclosed to minority shareholders prior to consummation of the transaction. 13. DIVIDENDS AND DISTRIBUTIONS. The Purchase Agreement provides that, except as specifically required or contemplated by the Purchase Agreement or otherwise consented to or approved in writing by CRI Acquisition, Computer Research shall not, prior to consummation of the merger, split, combine or reclassify the outstanding common stock, declare, set aside or pay any dividend payable in cash, stock or property with respect to the common stock, or issue any additional shares of, securities convertible into shares of, or rights of any kind to acquire any shares of, its capital stock. 22 23 14. CONDITIONS OF OFFER. Notwithstanding any other provision of the offer, CRI Acquisition shall not be required to accept for payment or pay for, and may delay the acceptance for payment of or payment for, any tendered shares or may terminate or amend the offer, if - the number of shares validly tendered and not withdrawn immediately prior to the expiration of the offer plus the number of shares of Computer Research purchased from Mr. Schultz and his wife and Mr. Vagnoni under the Purchase Agreement shall be less than two-thirds of the outstanding common stock of Computer Research determined on a fully diluted basis. This condition is referred to as the "minimum condition". We are also not required to accept for payment or pay for, and may delay the acceptance for payment of or payment for, or may terminate or amend the offer on or after the date of the Purchase Agreement and at or before the time of payment for any shares of Computer Research (whether or not any shares have theretofore been accepted for payment) if any of the following shall occur and be continuing: - there shall be in effect an injunction, order, decree, judgment, statute, rule, or regulation which - materially restricts or prohibits the making or consummation of the offer; - materially restricts or prohibits the ownership or operation by CRI Acquisition of its or Computer Research's business or assets or compels CRI Acquisition to dispose of or hold separate any material portion of its or Computer Research's business or assets; - imposes any material limitations on the ability of CRI Acquisition effectively to acquire or to hold or to exercise full rights of ownership of the shares, including, without limitation, the right to vote the shares purchased by CRI Acquisition on all matters properly presented to the shareholders of Computer Research; or - imposes any limitations on the ability of CRI Acquisition or any of its affiliates effectively to control in any material respect the business and operations of Computer Research; or - there shall be instituted, pending or threatened any suit, action, or proceeding which has a reasonable probability of resulting in - any of the consequences referred to above; - the assessment of material damages against Computer Research or CRI Acquisition due to the transactions contemplated by the Purchase Agreement; or - a material adverse change in the business, financial condition or assets of Computer Research; - any general suspension of, or limitation on prices for, trading in securities on the OTC Bulletin Board; - the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States; - any limitation by any governmental authority or any other event which is reasonably likely to have a material adverse effect on the extension of credit by banks or other lending institutions of the United States; - a commencement of a war, armed hostilities or other national or international calamity or national emergency directly involving or directly affecting the United States; - in the case of any of the foregoing, except for the immediately preceding clause, existing at the date of execution of the Purchase Agreement, any material acceleration or worsening thereof; - Computer Research shall have breached or failed to perform any of its obligations, covenants or agreements under the Purchase Agreement, except where such breaches would not, in the aggregate, constitute a material adverse change in the business, financial condition or assets of Computer Research; 23 24 - any representation or warranty of Computer Research set forth in the Purchase Agreement shall have not been true when made, except where such failures to be true would not, in the aggregate, constitute a material adverse change in the business, financial condition or assets of Computer Research; - any representation or warranty of Computer Research set forth in the Purchase Agreement, if made again as of the date of the consummation of the offer, would not be true as of such date, except where such failures to be true would not, in the aggregate, constitute a material adverse change in the business, financial condition or assets of Computer Research; - the Purchase Agreement shall have been terminated pursuant to its terms; - Computer Research's board of directors shall have - withdrawn or adversely modified its approval or recommendation in favor of the offer; - after receipt of an acquisition proposal by Computer Research, failed to publicly reconfirm its recommendations within five business days after Computer Research's receipt of CRI Acquisition's written request for such reconfirmation; or - recommended acceptance, or shall have determined to recommend acceptance, of any acquisition proposal received by Computer Research after the date of the Purchase Agreement; or - CRI Acquisition and Computer Research shall have agreed that CRI Acquisition shall amend the offer to terminate the offer or postpone the payment for shares pursuant thereto; which in the reasonable judgment of CRI Acquisition, in any such case, and regardless of the circumstances giving rise to any such condition, other than circumstances caused by the breach by CRI Acquisition of its obligations under the Purchase Agreement, makes it inadvisable to proceed with the offer or with acceptance for payment or payment for shares. The foregoing conditions, other than the minimum condition, are for the sole benefit of CRI Acquisition, subject to the terms of the Purchase Agreement, and may be asserted or waived by CRI Acquisition in whole or in part, at any time and from time to time, in the sole discretion of CRI Acquisition. The failure by CRI Acquisition at any time to exercise its rights under any of the foregoing conditions shall not be deemed a waiver of any such rights and each such right shall be deemed an ongoing right which may be asserted at any time or from time to time. 15. CERTAIN LEGAL MATTERS. Mr. Riney, Scottrade, and a Scottrade branch manager were jointly named as defendants in an NASD arbitration proceeding filed in January 1999 (NASD Case #99-00028). The claimant in the proceedings was a Scottrade customer whose stock in Johnson & Johnson was sold by Scottrade because timely payment for the purchase of the stock was not received. Claimant alleged that when Scottrade liquidated his position because of nonpayment, Scottrade's failure to provide notice of the sale was misrepresentation. Claimant sought an award of $4,227. In January 2000, the arbitrator determined in full and final resolution of the issues submitted that the defendants were jointly and severally liable to claimant for $1,000. All other requested relief was denied. The award contained no specific findings of any violations of any law or rule or that a misrepresentation had occurred. Riney never had any direct dealings with the claimant and was apparently named in the proceeding solely as a result of being the President of Scottrade. Except as described in this Section 15, based on information provided by Computer Research, neither Computer Research nor CRI Acquisition is aware of any license or regulatory permit that appears to be material to the business of Computer Research, that might be adversely affected by CRI Acquisition's acquisition of shares as contemplated herein or of any approval or other action by a domestic or foreign governmental, administrative or regulatory agency or authority that would be required for the acquisition and ownership of the shares by CRI Acquisition as contemplated herein. Should any such approval or other action be required, CRI Acquisition presently contemplates that such approval or other action will be sought, except as described below under "State Takeover Laws." While, except as otherwise described in this Offer to 24 25 Purchase, CRI Acquisition does not presently intend to delay the acceptance for payment of or payment for shares tendered pursuant to the offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that failure to obtain any such approval or other action might not result in consequences adverse to Computer Research's business or that certain parts of Computer Research's business might not have to be disposed of or other substantial conditions complied with in the event that such approvals were not obtained or such other actions were not taken or in order to obtain any such approval or other action. If certain types of adverse action are taken with respect to the matters discussed below, CRI Acquisition could decline to accept for payment or pay for any shares tendered. See Section 14 for certain conditions to the offer, including conditions with respect to governmental actions. STATE TAKEOVER LAWS A number of states, including Pennsylvania where Computer Research is incorporated, have adopted laws that purport, to varying degrees, to apply to attempts to acquire corporations that are incorporated in, or that have substantial assets, shareholders, principal executive offices or principal places of business or whose business operations otherwise have substantial economic effects in, such states. Computer Research conducts business in a number of states throughout the United States, some of which have enacted such laws. Computer Research is incorporated under the laws of the State of Pennsylvania. Subchapters E-H of Chapter 25, Title 15 of the Pennsylvania Business Corporation Law include various anti-takeover provisions. Subchapter E seeks to protect the rights of existing shareholders of a corporation involved in a control transaction (defined as the acquisition by a person or group of the status of a controlling person or group, which generally has voting power over voting shares entitling the holders thereof to cast at least 20% of the votes that all shareholders would be entitled to cast in an election of directors) by providing them the right to demand fair value for their shares. Under Subchapter E, shareholders are entitled to notice of the attempt to purchase control shares, of their rights under the statute and of the price they may demand for those shares. Subchapter E also provides that shareholders objecting to the transaction are entitled to dissenters' rights and other remedies. Subchapter F provides that a Pennsylvania corporation shall not engage at any time in any business combination (defined to include mergers and certain other actions) with any interested stockholder of the corporation (including the beneficial owner of shares entitling that person to cast at least 20% of the votes that all shareholders would be entitled to cast in an election of directors), with certain exceptions for business combinations approved by the board of directors and/or shareholders of the corporation and meeting certain financial conditions. Subchapter G requires the approval of shareholders (first holders of disinterested shares and then holders of all voting shares) before anyone who either has acquired or seeks to acquire a certain percentage of ownership (generally, 20% or more) in a publicly-traded corporation can vote the control shares so acquired. Subchapter H provides that any profits received from the sale of equity securities by a controlling person or group can be recovered by the corporation with respect to dispositions made within 18 months after the person or group obtained controlling person or group status if the equity security had been acquired within 24 months before or 18 months after the person or group obtained controlling group status. Computer Research's board of directors approved the Purchase Agreement and the consummation of the transactions contemplated thereby and has taken all appropriate action, including the adoption of bylaws within the proper time period that specifically provide that the Pennsylvania anti-takeover provisions do not apply to Computer Research, so that the above-described anti-takeover provisions of the Pennsylvania Business Corporation Law, with respect to Computer Research, will not be applicable to CRI Acquisition and its affiliates. If any government official or third party should seek to apply any state takeover law to the offer or the merger or other business combination between CRI Acquisition or any of its affiliates and Computer Research, CRI Acquisition will take such action as then appears desirable, which action may include challenging the applicability or validity of such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover statutes is applicable to the offer or the merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the offer or the merger, CRI Acquisition might be required to file certain information with, or to receive approvals from, the relevant state 25 26 authorities or holders of shares of Computer Research's common stock, and CRI Acquisition might be unable to accept for payment or pay for shares tendered pursuant to the offer, or be delayed in continuing or consummating the offer or the merger. In such case, CRI Acquisition may not be obligated to accept for payment or pay for any tendered shares of Computer Research's common stock. Additional information about this Offer to Purchase has been filed with the Pennsylvania Securities Commission pursuant to the Pennsylvania Takeover Disclosure Law and is available for inspection at the Pennsylvania Securities Commission's office at Eastgate Office Building, 2nd Floor, 1010 North 7th Street, Harrisburg, PA 17102-1410, during business hours. MARGIN REQUIREMENTS Shares of Computer Research, Inc. common stock are not "margin securities" under the regulations of the Board of Governors of the Federal Reserve System and, accordingly, such regulations are not applicable to our offer. 16. FEES AND EXPENSES. Sanders Morris Harris Inc. has acted as advisor to Mr. Riney and CRI Acquisition in connection with the proposed acquisition of Computer Research. Mr. Riney and CRI Acquisition have agreed to pay to Sanders Morris Harris a fee calculated upon a formula based on the purchase price of Computer Research. Mr. Riney and CRI Acquisition have also agreed to reimburse Sanders Morris Harris for its reasonable out-of-pocket expenses incurred in connection with the engagement and to indemnify Sanders Morris Harris and certain related persons against certain liabilities and expenses in connection with the engagement. CRI Acquisition has retained MacKenzie Partners to act as the information agent and Registrar and Transfer Company to act as the depositary in connection with the offer. Such firms each will receive reasonable and customary compensation for their services. CRI Acquisition has also agreed to indemnify each firm against certain liabilities in connection with their services, including certain liabilities under federal securities laws. Except as set forth above, CRI Acquisition and Mr. Riney will not pay any fees or commissions to any broker or dealer or other person for making solicitations or recommendations in connection with the offer. Brokers, dealers, banks and trust companies will be reimbursed by CRI Acquisition for customary mailing and handling expenses incurred by them in forwarding material to their customers. 17. MISCELLANEOUS. The offer is being made to all holders of shares of Computer Research common stock other than CRI Acquisition. CRI Acquisition is not aware of any jurisdiction in which the making of the offer or the tender of shares in connection therewith would not be in compliance with the laws of such jurisdiction. If CRI Acquisition becomes aware of any jurisdiction in which the making of the offer would not be in compliance with applicable law, CRI Acquisition will make a good faith effort to comply with any such law. If, after such good faith effort, CRI Acquisition cannot comply with any such law, the offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of shares residing in such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the offer to be made by a licensed broker or dealer, the offer shall be deemed to be made on behalf of CRI Acquisition by one or more registered brokers or dealers licensed under the laws of that jurisdiction. No person has been authorized to give any information or to make any representation on behalf of CRI Acquisition not contained herein or in the Letter of Transmittal and, if given or made, such information or representation must not be relied upon as having been authorized. CRI Acquisition and Mr. Riney have filed with the Commission the Schedule TO pursuant to Regulation M-A under the Exchange Act, furnishing certain additional information with respect to the offer. The Schedule TO and any amendments thereto, including exhibits, may be examined and copies may be obtained from the offices of the SEC in the manner set forth in Section 8 of this Offer to Purchase. 26 27 SCHEDULE I CRI ACQUISITION INC. SOLE DIRECTOR AND EXECUTIVE OFFICER OF CRI ACQUISITION The following table sets forth the name, business address and present principal occupation or employment, and material occupations, positions, offices or employment for the past five years, of Rodger O. Riney, the sole director, executive officer and stockholder of CRI Acquisition, Inc. Mr. Riney is a citizen of the United States of America.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL POSITIONS NAME AND ADDRESS HELD DURING THE PAST FIVE YEARS ---------------- -------------------------------------------------------------- Rodger O. Riney Mr. Riney is the President, Treasurer, Secretary, sole Scottrade, Inc. director and sole stockholder of CRI Acquisition. He is the 12855 Flushing Meadows Dr. founder, President and Chief Executive Officer of Scottrade, Suite 100 Inc., formerly Scottsdale Securities, Inc., a securities St. Louis, MO 63131 brokerage firm that is registered with the SEC and the NASD. Mr. Riney is also a director of Knight Trading Group, Inc., a securities market maker.
27 28 The Letter of Transmittal, certificates for shares, Notice of Guaranteed Delivery and any other required documents should be sent or delivered by each stockholder of Computer Research, Inc. or his broker, dealer, commercial bank, trust company or other nominee to the depository at the address set forth below: The Depositary for the Offer is: REGISTRAR AND TRANSFER COMPANY 10 COMMERCE DRIVE CRANFORD, NJ 07016 (908) 497-2300 Any questions or requests for assistance or additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent at the telephone numbers and location set forth below. THE INFORMATION AGENT FOR THE OFFER IS: [MACKENZIE LOGO] 156 Fifth Avenue New York, NY 10010 (212) 929-5500 (call collect) or CALL TOLL-FREE (800) 322-2885 EX-99.A1.B 3 ex99-a1_b.txt FORM OF LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF COMPUTER RESEARCH, INC. AT $2.42 NET PER SHARE PURSUANT TO THE OFFER TO PURCHASE DATED AUGUST 4, 2000 BY CRI ACQUISITION, INC., A NEWLY FORMED CORPORATION WHOLLY-OWNED BY RODGER O. RINEY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 1, 2000, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). THE DEPOSITARY FOR THE OFFER IS: REGISTRAR AND TRANSFER COMPANY By Mail: By Facsimile Transmission: By Hand Delivery: Registrar and Transfer Company (for Eligible Institutions only) c/o The Depository Trust Co. 10 Commerce Drive (908) 497-2310 Transfer Agent Drop Cranford, New Jersey 07016 Telephone Assistance: 55 Water Street, 1st Floor 1-800-368-5948 New York, NY 10041-0099
- ------------------------------------------------------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------------------------------------------------------- NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) TENDERED CERTIFICATE(S) ON SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY) - ------------------------------------------------------------------------------------------------------------------------------- TOTAL NUMBER OF SHARES REPRESENTED BY SHARE NUMBER OF SHARES CERTIFICATE NUMBER(S)* CERTIFICATE(S)* TENDERED** -------------------------------------------------------------------- -------------------------------------------------------------------- -------------------------------------------------------------------- TOTAL SHARES - ------------------------------------------------------------------------------------------------------------------------------- * Need not be completed by Book-Entry Shareholders. ** Unless otherwise indicated, it will be assumed that all Shares evidenced by any certificates delivered to the Depositary are being tendered. See Instruction 4. - -------------------------------------------------------------------------------------------------------------------------------
[ ] CHECK HERE IF YOU CANNOT LOCATE YOUR CERTIFICATE(S) AND REQUIRE ASSISTANCE IN REPLACING THEM. UPON RECEIPT OF NOTIFICATION BY THIS LETTER OF TRANSMITTAL, COMPUTER RESEARCH, INC.'S STOCK TRANSFER AGENT WILL CONTACT YOU DIRECTLY WITH REPLACEMENT INSTRUCTIONS. DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. 2 This Letter of Transmittal is to be used either if certificates are to be forwarded herewith or if delivery of Shares (as defined below) is to be made by book-entry transfer to an account maintained by the Depositary at The Depository Trust Company (hereinafter referred to as the "Book-Entry Transfer Facility") pursuant to the procedures set forth in Section 3 of the Offer to Purchase (as defined below). Shareholders who deliver shares by book-entry transfer are referred to herein as "Book-Entry Shareholders" and other shareholders are referred to herein as "Certificate Shareholders." Shareholders whose certificates are not immediately available or who cannot deliver their shares and all other documents required hereby to the depositary or complete the procedures for book-entry transfer prior to the Expiration Date must tender their Shares according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2 of this Letter of Transmittal. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. [ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY, AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution:_____________________________________________ Account Number:__________________ Transaction Code Number:_________________ [ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owners: _____________________________________________ Window Ticket Number (if any): ____________________________________________ Date of Execution of Notice of Guaranteed Delivery:________________________ Name of Institution that Guaranteed Delivery: _____________________________ Account Number:__________________ Transaction Code Number:_________________ (Boxes above for use by Eligible Institutions only) NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to CRI Acquisition, Inc., a Delaware corporation (the "Purchaser"), the above-described shares of Common Stock, no par value (the "Shares"), of Computer Research, Inc., a Pennsylvania corporation (the "Company"), pursuant to the Purchaser's offer to purchase all outstanding Shares at a price of $2.42 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 4, 2000 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Offer to Purchase and any amendments or supplements hereto or thereto, constitute the "Offer"). The undersigned understands that the Purchaser reserves the right to transfer or assign, in whole or in part from time to time, to one or more of its affiliates the right to purchase Shares tendered pursuant to the Offer. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), effective upon acceptance for payment of and payment for the Shares tendered herewith, the undersigned hereby sells, assigns and transfers all right, title and interest in and to all the Shares that are being tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof (collectively, "Distributions")), and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and all Distributions, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver certificates for such Shares and all Distributions, or transfer ownership of such Shares and all Distributions on the account books maintained by the Book-Entry Transfer Facility, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser, upon receipt by the Depositary, as the undersigned's agent, of the purchase price (adjusted, if appropriate, as provided in the Offer to Purchase), (ii) present such Shares and all Distributions for cancellation and transfer on the Company's books and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and all Distributions, all in accordance with the terms of the Offer. 3 The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the tendered Shares and all Distributions and that, when the same are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, claims, charges and encumbrances, and the same will not be subject to any adverse claims. The undersigned will, upon request, execute any signature guarantees or additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the tendered Shares and all Distributions. In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Purchaser any such Distributions issued to the undersigned, in respect of the tendered Shares, accompanied by documentation of transfer, and pending such remittance or appropriate assurance thereof, the Purchaser shall be entitled to all rights and privileges as owner of any such Distributions and, subject to the terms of the Purchase Agreement (as defined in the Offer to Purchase), may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Purchaser, in its sole discretion. All authority conferred or agreed to be conferred in this Letter of Transmittal shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned hereby irrevocably appoints designees of the Purchaser as agent, the attorneys and proxies of the undersigned, each with full power of substitution, to vote at any annual, special or adjourned meeting of the Company's shareholders or otherwise act (including pursuant to written consent) in such manner as each such attorney and proxy or his substitute shall in his or her sole discretion deem proper, to execute any written consent concerning any matter as each such attorney and proxy or his substitute shall in his or her sole discretion deem proper with respect to, and to otherwise act with respect to, all the Shares tendered hereby which have been accepted for payment by the Purchaser prior to the time any such vote or action is taken (and any and all Distributions issued or issuable in respect thereof) and with respect to which the undersigned is entitled to vote. This appointment is effective when, and only to the extent that, the Purchaser accepts for payment such Shares as provided in the Offer to Purchase. This power of attorney and proxy is coupled with an interest in the tendered Shares, is irrevocable and is granted in consideration of the acceptance for payment of such Shares in accordance with the terms of the Offer. Such acceptance for payment shall revoke all prior powers of attorney and proxies given by the undersigned at any time with respect to such Shares and no subsequent powers of attorney or proxies may be given by the undersigned (and, if given, will not be deemed effective). The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting and other rights with respect to such Shares, including voting at any shareholders meeting then scheduled. The undersigned understands that the valid tender of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, the Purchaser may not be required to accept for payment any of the tendered Shares. The Purchaser's acceptance for payment of Shares pursuant to the Offer will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price of any Shares purchased, and/or return any certificates for Shares not tendered or accepted for payment, in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price of any Shares purchased, and/or any certificates for Shares not tendered or accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered." In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price of any Shares purchased, and/or return any certificates for Shares not tendered or accepted for payment in the name(s) of, and mail said check and/or any certificates to, the person or persons so indicated. In the case of a book-entry delivery of Shares, please credit the account maintained at the Book-Entry Transfer Facility indicated above with any Shares not accepted for payment. The undersigned recognizes that the Purchaser has no obligation pursuant to the Special Payment Instructions to transfer any Shares from the name of the registered holder(s) thereof if the Purchaser does not accept for payment any of the Shares so tendered. 4 SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if a certificate for Shares not tendered or not purchased and/or the check for the purchase price of Shares purchased are to be ISSUED in the name of someone other than the undersigned. Issue: [ ] check: [ ] certificate(s) to: Name: _________________________________________________________________ (Please Print) Address: _____________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ (Include Zip Code) _______________________________________________________________________ (Taxpayer Identification or Social Security No.) [ ] Credit unpurchased Shares tendered by book-entry transfer to the Book-Entry Transfer Facility account set forth below: ________________________________________________________________________ (Account Number) SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if a certificate for Shares not tendered or not purchased and/or the check for the purchase price of Shares purchased are to be SENT to someone other than the undersigned. Send: [ ] check [ ] certificate(s) to: Name: _________________________________________________________________ (Please Print) Address: ______________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ (Include Zip Code) _______________________________________________________________________ (Taxpayer Identification or Social Security No.) 5 SHAREHOLDERS SIGN HERE (ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW) - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- (Signature(s) of Owner(s)) (Must be signed by the registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or any other person acting in a fiduciary or representative capacity, please set forth full title below. See Instruction 5.) Dated: ------------------------------------------------------------------------- Name(s): ----------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Please Print) Capacity (Full Title): --------------------------------------------------------- - -------------------------------------------------------------------------------- Address: ----------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone Number: ------------------------------------------------ Taxpayer Identification Number or Social Security Number: ---------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GUARANTEE OF SIGNATURE(S) (IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5) Authorized Signature: ---------------------------------------------------------- Name: Title: ------------------------------------ ------------------------------- (Please Print) Name of Firm: ------------------------------------------------------------------- Address: ------------------------------------------------------------------------ - -------------------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone Number: ------------------------------------------------- Dated: -------------------------------------------------------------------------- 6 INSTRUCTIONS TO LETTER OF TRANSMITTAL FORMING PART OF THE TERMS AND CONDITIONS FOR THE TENDER OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each an "Eligible Institution," and collectively, "Eligible Institutions"). No signature guarantee is required on this Letter of Transmittal (i) if this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this document, shall include any participant in a Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) of Shares tendered herewith, unless such holder(s) have completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" in this Letter of Transmittal or (ii) if such Shares are tendered for the account of an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by shareholders either if certificates for Shares are to be forwarded herewith or if a tender of Shares is to be made pursuant to the procedures for delivery by book-entry transfer set forth in Section 3 of the Offer to Purchase. For Shares to be validly tendered pursuant to the Offer, either (i) a properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), together with any required signature guarantees, or in the case of a book-entry transfer, an Agent's Message (as defined in the Offer to Purchase), and any other required documents, must be received by the Depositary at one of the Depositary's addresses set forth herein prior to the Expiration Date and either certificates for tendered Shares must be received by the Depositary at one of such addresses or such Shares must be delivered pursuant to the procedures for book-entry transfer (and a book-entry confirmation received by the Depositary), in each case, prior to the Expiration Date, or (ii) the tendering stockholder must comply with the guaranteed delivery procedure set forth below. Shareholders whose certificates for Shares are not immediately available, who cannot complete the procedures for book-entry transfer on a timely basis or who cannot deliver all required documents to the Depositary prior to the Expiration Date, may tender their Shares pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such procedures, (i) such tender must be made by or through an Eligible Institution, (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Purchaser (or a manually signed facsimile thereof), must be received by the Depositary prior to the Expiration Date, and (iii) the certificates for (or a book-entry confirmation with respect to) such Shares, together with this properly completed and duly executed Letter of Transmittal (or a manually signed facsimile thereof), with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other required documents are received by the Depositary within three trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase. A "trading day" is any day on which the New York Stock Exchange, Inc. is open for business. The Notice of Guaranteed Delivery may be delivered by hand to the Depositary or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. The method of delivery of Shares, this Letter of Transmittal and all other required documents, including delivery through the Book-Entry Transfer Facility, is at the election and risk of the tendering stockholder. Shares will be deemed delivered only when actually received by the Depositary (including, in the case of a book-entry transfer, by book-entry confirmation). If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering shareholders, by execution of this Letter of Transmittal (or a manually signed facsimile thereof), waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. 4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE SHAREHOLDERS ONLY). If fewer than all the Shares evidenced by any certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such case, new certificate(s) for the remainder of the Shares that were evidenced by the old certificate(s) will be sent to the registered holder(s), unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificate(s) without any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. 7 If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the Purchaser of their authority so to act must be submitted. When this Letter of Transmittal is signed by the registered owner(s) of the Shares listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment or certificates for Shares not tendered or accepted for payment are to be issued to a person other than the registered owner(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. If this Letter of Transmittal is signed by a person other than the registered owner(s) of the shares tendered hereby, the certificates evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered owner(s) appear(s) on the certificates for such Shares. Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. See Instruction 1. 6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the Purchaser will pay, or cause to be paid, any stock transfer taxes with respect to the transfer and sale of Shares to it or its assignee pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificates for Shares not tendered or accepted for payment are to be registered in the name of, any persons other than the registered holder(s), or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the certificates listed in this Letter of Transmittal. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in the name of and/or certificates for Shares not accepted for payment are to be returned to a person other than the signer of this Letter of Transmittal or if a check is to be sent and/or such certificates are to be returned to a person other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Any stockholder tendering Shares by book-entry transfer will have any Shares not accepted for payment returned by crediting the account maintained by such stockholder at the Book-Entry Transfer Facility from which such transfer was made. 8. WAIVER OF CONDITIONS. Except as otherwise provided in the Offer to Purchase, the Purchaser reserves the absolute right, in its sole discretion, to waive any of the conditions of the Offer or any defect or irregularity in the tender of any Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other shareholders. 9. SUBSTITUTE FORM W-9. The tendering stockholder (or other payee) is required, unless an exemption applies, to provide the Depositary with a correct Taxpayer Identification Number ("TIN"), generally the stockholder's social security or federal employer identification number, and with certain other information, on a Substitute Form W-9, which is provided under "Important Tax Information" below, and to certify under penalties of perjury that such number is correct and that the stockholder (or other payee) is not subject to backup withholding. If a tendering stockholder is subject to backup withholding, he or she must cross out item 2 of the Certification Box on Substitute Form W-9 before signing such Form. Failure to furnish the correct TIN on the Substitute Form W-9 may subject the tendering stockholder (or other payee) to a $50 penalty imposed by the Internal Revenue Service and payments of cash to the tendering stockholder (or other payee) pursuant to the Offer may be subject to backup withholding of 31%. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, he or she should write "Applied For" in the space provided for the TIN in Part 1, sign and date the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer Identification Number. If "Applied For" is written in Part 1 and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold 31% of all such payments for surrendered Shares thereafter until a TIN is provided to the Depositary. 10. LOST OR DESTROYED CERTIFICATES. If any certificate(s) representing Shares has been lost or destroyed, the stockholder should check the appropriate box on page 1 of the Letter of Transmittal. The Company's stock transfer agent will then instruct such stockholder as to the procedure to be followed in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until procedures for replacing lost or destroyed certificates have been followed. 11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance or additional copies of the Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 may be directed to the Information Agent at the location and telephone numbers set forth below. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE COPY THEREOF), TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND CERTIFICATES, OR A BOOK-ENTRY CONFIRMATION, FOR SHARES AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY (OR A MANUALLY SIGNED FACSIMILE COPY THEREOF) MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE. 8 IMPORTANT TAX INFORMATION Under federal income tax law, a stockholder surrendering Shares must, unless an exemption applies, provide the Depositary (as payor) with his or her correct TIN on the Substitute Form W-9 included in this Letter of Transmittal. If the stockholder is an individual, his or her TIN is his or her social security number. If the correct TIN is not provided, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service and payments of cash to the tendering stockholder (or other payee) pursuant to the Offer may be subject to backup withholding of 31%. Certain shareholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. In order for an exempt foreign stockholder to avoid backup withholding, that person should complete, sign and submit a Form W-8, Certificate of Foreign Status, signed under penalties of perjury, attesting to his or her exempt status. A Form W-8 can be obtained from the Depositary. Exempt shareholders, other than foreign shareholders, should furnish their TIN, write "Exempt" on the face of the Substitute Form W-9 and sign, date and return the Substitute Form W-9 to the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional instructions. If backup withholding applies, the Depositary is required to withhold 31% of any payment made to payee. Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If backup withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a stockholder with respect to Shares purchased pursuant to the Offer, the stockholder is required to notify the Depositary of his correct TIN (or the TIN of any other payee) by completing the Substitute Form W-9 included in this Letter of Transmittal certifying (i) that the TIN provided on the Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN), and (ii) that the stockholder is not subject to backup withholding because (a) the stockholder has not been notified by the Internal Revenue Service that the stockholder is subject to backup withholding as a result of a failure to report all interest and dividends or (b) the Internal Revenue Service has notified the stockholder that the stockholder is no longer subject to backup withholding. WHAT NUMBER TO GIVE THE DEPOSITARY The stockholder is required to give the Depositary the TIN, generally the social security number or employer identification number, of the record owner(s) of the Shares. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, he or she should write "Applied For" in the space provided for the TIN in Part 1, sign and date the Substitute Form W-9 and sign and date the Certificate of Awaiting Taxpayer Identification Number, which appears in a separate box below the Substitute Form W-9. If "Applied For" is written in Part 1 and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold 31% of all payments of the purchase price until a TIN is provided to the Depositary. 9
- ------------------------------------------------------------------------------------------------------------------------------------ PAYER'S NAME: - ------------------------------------------------------------------------------------------------------------------------------------ SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT THE -------------------------------- FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. Social Security Number(s) (SEE INSTRUCTION 9) OR Please fill in your name and -------------------------------- address below. Employer Identification Number(s) ---------------------------------------------------------------------------------------------- ------------------------------ PART 2 -- CERTIFICATION -- Under Penalties of Perjury, PART 3 -- Awaiting TIN [ ] Name I certify that: - ------------------------------- Address (number and street) (1) The number shown on the form is my correct Taxpayer ------------------------------------ Identification Number (or I am waiting for a number PART 4 -- For Payee - ------------------------------- to be issued to me) and Exempt from Backup Withholding City, State and Zip Code (2) I am not subject to backup withholding because (a) I am exempt from backup withholding, or (b) I have Exempt [ ] not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to back withholding. --------------------------------------------------------------------------------------------- CERTIFICATE INSTRUCTIONS -- You must cross out Item (2) in Part 2 above if you have been DEPARTMENT OF THE TREASURY notified by the IRS that you are currently subject to backup withholding because of under INTERNAL REVENUE SERVICE reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding, you received another notification from the PAYER'S REQUEST FOR TAXPAYER IRS stating that you are no longer subject to backup withholding, do not cross out Item (2). IDENTIFICATION NUMBER If you are exempt from backup withholding, check the box in Part 4 above. SIGNATURE ---------------------------------------- DATE--------------------- - ------------------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY IMPOSED BY THE INTERNAL REVENUE SERVICE AND IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON THE SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. 10 CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a Taxpayer Identification Number has not been issued to me, and either (i) I have mailed or delivered an application to receive a Taxpayer Identification Number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (ii) I intend to mail or deliver an application in the near future. I understand that if I do not provide a Taxpayer Identification Number by the time of payment, 31% of all reportable payments made to me thereafter will be withheld, until I provide a number. - ----------------------------------------------------------- ----------------------------------------------------------- Signature Date
Questions and requests for assistance or additional copies of the Offer to Purchase, Letter of Transmittal and other tender offer materials may be directed to the Information Agent at the location and telephone numbers set forth below: THE INFORMATION AGENT FOR THE OFFER IS: [MACKENZIE PARTNERS, INC. LOGO] 156 Fifth Avenue New York, NY 10010 (212) 929-5500 (call collect) or CALL TOLL-FREE (800) 322-2885 EX-99.A1.C 4 ex99-a1_c.txt FORM OF NOTICE OF GUARANTEED DELIVERY 1 NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF COMPUTER RESEARCH, INC. As set forth in Section 3 of the Offer to Purchase (as defined below), this form or one substantially equivalent hereto must be used to accept the Offer (as defined below) if certificates for shares of Common Stock, no par value (the "Shares"), of Computer Research, Inc., a Pennsylvania corporation (the "Company"), are not immediately available, or if the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary at the address set forth below on or prior to the Expiration Date (as defined in the Offer to Purchase). This form may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution (as defined in the Offer to Purchase). See Section 3 of the Offer to Purchase. THE DEPOSITARY FOR THE OFFER IS: REGISTRAR AND TRANSFER COMPANY By Mail: By Facsimile Transmission: By Hand Delivery: Registrar and Transfer Company (908) 497-2310 c/o The Depository Trust Co. 10 Commerce Drive (for Eligible Institutions Transfer Agent Drop Cranford, New Jersey 07016 only) 55 Water Street, 1st Floor New York, NY 10041-0099
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY. THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. Ladies and Gentlemen: The undersigned hereby tenders to CRI Acquisition, Inc., a Delaware corporation (the "Purchaser"), upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase dated August 4, 2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"), receipt of which is hereby acknowledged, the number of Shares (as such term is defined in the Offer to Purchase) set forth below, all pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Number of Shares: Name(s) of Record Holder(s): ---------------------- ---------------------------------------------- ---------------------------------------------- (Please Print) Certificate No.(s) (if available): Address(es): - ---------------------------------------------- ---------------------------------------------- - ---------------------------------------------- ---------------------------------------------- (Zip Code)
2 If Share(s) will be tendered by book-entry transfer, check the following box: [ ] The Depository Trust Company Account Number: Area Code and Telephone Number(s): ----------------------------- ---------------------------------------------- ---------------------------------------------- Dated: Signature(s): -------------------------------------- ---------------------------------------------- ----------------------------------------------
THE GUARANTEE BELOW MUST BE COMPLETED GUARANTEE (NOT TO BE USED FOR A SIGNATURE GUARANTEE) The undersigned, a participant in the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program, hereby guarantees to deliver to the Depositary either the certificates representing the Shares tendered hereby, in proper form for transfer, or a Book-Entry Confirmation with respect to such Shares, in any such case together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or an Agent's Message, and any other required documents within three trading days (as defined in the Offer to Purchase) after the date hereof. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver such Letter of Transmittal and such certificates for Shares, or such Book-Entry Confirmation, to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. All capitalized terms used herein have the meanings set forth in the Offer to Purchase. - -------------------------------------------------------------------------------- Name of Firm - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Address - -------------------------------------------------------------------------------- Area Code and Telephone Number - -------------------------------------------------------------------------------- Authorized Signature - -------------------------------------------------------------------------------- Title - -------------------------------------------------------------------------------- Name (Please type or print) Dated: --------------------------------------, 2000 NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. 2 EX-99.A1.D 5 ex99-a1_d.txt FORM OF LETTER TO BROKERS, DEALERS & OTHER NOMINEE 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF COMPUTER RESEARCH, INC. BY CRI ACQUISITION, INC. AT $2.42 NET PER SHARE - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 1, 2000, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE") - -------------------------------------------------------------------------------- To Brokers, Dealers, Banks, Trust Companies and Other Nominees: Enclosed is an Offer to Purchase dated August 4, 2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") relating to the Offer by CRI Acquisition, Inc., a Delaware corporation (the "Purchaser"), to purchase all of the outstanding shares of Common Stock, no par value (the "Shares"), of Computer Research, Inc., a Pennsylvania corporation (the "Company"), at $2.42 per Share, net to seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer. Please furnish copies of the enclosed materials to those of your clients for whom you hold Shares registered in your name or in the name of your nominee. Enclosed herewith are copies of the following documents: 1. Offer to Purchase dated August 4, 2000; 2. Letter of Transmittal to be used by stockholders of the Company in accepting the Offer. Facsimile copies of the Letter of Transmittal (with manual signatures) may be used to tender Shares; 3. The Solicitation/Recommendation Statement on Schedule 14D-9 filed by the Company; 4. A printed form of letter that may be sent to your clients for whose account you hold Shares in your name or in the name of a nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 5. Notice of Guaranteed Delivery to be used to accept the Offer if certificates for Shares are not immediately available or if the procedures for book-entry transfer cannot be completed on a timely basis; 6. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9; and 7. A return envelope addressed to Registrar and Transfer Company, the Depositary. The Offer is conditioned upon, among other things, (i) there being validly tendered and not withdrawn prior to the Expiration Date of the Offer, that number of shares which, when combined with the 1,403,495 shares of Common Stock of the Company purchased by Purchaser on July 7, 2000, represents at least sixty-six and two-thirds percent (66.67%) of the Shares currently outstanding on a fully diluted basis and (ii) the other conditions set forth in the Offer to Purchase. As used herein, "fully diluted basis" takes into account issued and outstanding Shares and shares subject to issuance under stock options, warrants and other securities convertible into shares that will be outstanding after closing of the Offer. 2 Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and will pay promptly after the Expiration Date for all Shares validly tendered prior to the Expiration Date and not properly withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance of such Shares. Payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or a timely book-entry confirmation with respect thereto), (ii) a Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an agent's message and (iii) any other documents required by the Letter of Transmittal. If holders of Shares wish to tender their Shares, but it is impracticable for them to deliver their certificates on or prior to the Expiration Date or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. YOUR PROMPT ACTION IS REQUESTED. PLEASE CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 1, 2000, UNLESS EXTENDED. The Purchaser will not pay any fees or commissions to any broker or dealer or other person (other than the Information Agent as described in the Offer to Purchase) in connection with the solicitation of tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. The Purchaser will pay all stock transfer taxes applicable to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal. Additional copies of the enclosed materials may be obtained by contacting the Information Agent at the location and telephone number set forth on the back cover of the Offer to Purchase. Very truly yours, MacKenzie Partners, Inc. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE DEPOSITARY OR THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THE FOREGOING OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL. 2 EX-99.A1.E 6 ex99-a1_e.txt FORM OF LETTER TO CLIENTS 1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF COMPUTER RESEARCH, INC. AT $2.42 NET PER SHARE BY CRI ACQUISITION, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, SEPTEMBER 1, 2000, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). August 4, 2000 To Our Clients: Enclosed for your consideration is an Offer to Purchase dated August 4, 2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer") relating to the Offer by CRI Acquisition, a Delaware corporation (the "Purchaser"), to purchase for cash all of the outstanding shares of Common Stock, no par value (the "Shares"), of Computer Research, Inc., a Pennsylvania corporation (the "Company"), at a price of $2.42 per Share, net to the seller in cash, without interest, upon the terms and conditions set forth in the Offer. WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. Accordingly, we request your instructions as to whether you wish to tender any of or all of the Shares held by us for your account upon the terms and subject to the conditions set forth in the Offer. Your attention is directed to the following: 1. The offer price is $2.42 per Share, net to you in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer. 2. The Offer is being made for all outstanding Shares. 3. The Board of Directors of the Company has unanimously approved the Offer and determined that the terms of the Offer are fair to the Company's stockholders. The Board of Directors has recommended acceptance of the Offer to the stockholders. 4. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. 5. The Offer and withdrawal rights will expire at 5:00 p.m., New York City time, on Friday, September 1, 2000, unless the Offer is extended. 6. The Offer is conditioned upon, among other things, (i) there being validly tendered and not withdrawn prior to the Expiration Date of the Offer, that number of shares which, when combined with the 1,403,495 shares purchased by the Purchaser on July 7, 2000, represents at least sixty-six and 2 two-thirds percent (66.67%) of the Shares currently outstanding on a fully diluted basis, and (ii) the other conditions set forth in the Offer to Purchase. As used herein, "fully diluted basis" takes into account issued and outstanding Shares and shares subject to issuance under stock options, warrants and other securities convertible into shares which will be outstanding after closing of the Offer. Your instructions to us should be forwarded promptly to permit us to submit a tender on your behalf prior to the expiration of the Offer. If you wish to have us tender any or all of the Shares held by us for your account, please so instruct us by completing, executing and returning to us the instruction form set forth below. An envelope to return your instructions to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified below. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. The Offer is not being made to (nor will tenders be accepted from or on behalf of) the holders of Shares residing in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the securities, blue sky or other laws of that jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of the Purchaser by one or more registered brokers or dealers that are licensed under the laws of that jurisdiction. INSTRUCTION WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF COMPUTER RESEARCH, INC. The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to Purchase dated August 4, 2000, and the related Letter of Transmittal, in connection with the offer by CRI Acquisition, Inc., a Delaware corporation, to purchase all of the outstanding shares of Common Stock, no par value, of Computer Research, Inc., a Pennsylvania corporation. This will instruct you to tender to the Purchaser the number of Shares indicated below (or if no number is indicated below, all Shares) that are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and related Letter of Transmittal. Dated:__________, 2000 NUMBER OF SHARES TO BE TENDERED: ______________ SHARES Unless otherwise indicated, it will be assumed that you instruct us to tender all Shares held by us for your account. I (we) understand that if I (we) sign this instruction form without indicating a lesser number of Shares in the space above, all Shares held by you for my (our) account will be tendered. SIGN HERE Signature(s) ___________________________________________________________________ Print Name(s) __________________________________________________________________ Print Address(es) ______________________________________________________________ Area Code and Telephone Number(s) ______________________________________________ Tax ID or Social Security Number(s) ____________________________________________ 2 EX-99.A1.F 7 ex99-a1_f.txt PRESS RELEASE 1 EXHIBIT 99(a)(1)F JOINT PRESS RELEASE CRI ACQUISITION COMMENCES TENDER OFFER TO ACQUIRE COMPUTER RESEARCH, INC. FOR $2.42 PER SHARE St. Louis, Missouri, August 4, 2000 - CRI Acquisition, Inc. has today commenced a tender offer at $2.42 in cash per share for all of the outstanding shares of common stock of Computer Research, Inc. (OTCBB:CRIX) that it does not already own. The tender offer is scheduled to expire at 5:00 p.m. New York City time on September 1, 2000, unless extended. On July 7, 2000, Computer Research announced that it had entered into a definitive purchase agreement with CRI Acquisition, a newly formed corporation owned by Rodger O. Riney. CRI Acquisition currently owns about 34.8% of the outstanding shares of Computer Research. Following completion of the tender offer, CRI Acquisition intends to consummate a second-step merger in which all the remaining Computer Research shareholders will also receive the same cash price paid in the tender offer. The tender offer is not subject to any financing contingency. The board of directors of Computer Research approved the purchase agreement and recommends that the shareholders of Computer Research accept the offer and tender their shares. McKenzie Partners, Inc. is the information agent for the tender offer. Computer Research provides computerized accounting and record keeping support services to more than 40 securities, brokers, dealers, banks and other financing institutions throughout the United States. Visit Computer Research at www.crix.com. Mr. Riney is the founder, president and chief executive officer of Scottrade, Inc. Scottrade is a securities brokerage firm that is registered with the SEC and the NASD. This release may contain some forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Contacts: McKenzie Partners, Inc. (212) 929-5500 Toll Free Telephone No: (800) 322-2885 Simon Coope Jeanne Carr EX-99.A1.G 8 ex99-a1_g.txt GUIDELINES FOR CERTIFICATION OF TAXPAYER I.D. # 1 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYOR -- Social Security Numbers have nine digits separated by two hyphens (i.e. 000-00-0000). Employer Identification Numbers have nine digits separated by only one hyphen (i.e. 00-0000000. The table below will help determine the proper number to give the payer. - -------------------------------------------------------------------------------- - ---------------------------------------------------------
GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF: - --------------------------------------------------------- 1. An individual's account. The individual 2. Two or more individuals The actual owner of (joint account) the account or, if combined funds, any one of the individuals(1) 3. Husband and wife (joint The actual owner of account) the account or, if joint funds, either person(1) 4. Custodian account of a minor The minor(2) (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult or, if the account) minor is the only contributor, the minor(1) 6. Account in the name of The ward, minor, or guardian or committee for a incompetent person(3) designated ward, minor, or incompetent person 7. a. The usual revocable The grantor- savings trust account trustee(1) (grantor is also trustee) b. So-called trust account The actual owner(1) that is not a legal or valid trust under State law - ---------------------------------------------------------
GIVE THE EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF: - --------------------------------------------------------- 8. Sole proprietorship account The owner(4) 9. A valid trust, estate, or The legal entity (Do pension trust not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.) 10. Corporate Account The corporation 11. Religious, charitable, or The organization educational organization account 12. Partnership account held in The partnership the name of the business 13. Association, club, or other The organization tax-exempt organization 14. A broker or registered The broker or nominee nominee 15. Account with the Department The public entity of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments - ---------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 (PAGE 2) OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - A corporation. - A financial institution. - An organization exempt from tax under Section 501(a) of the Internal Revenue Code or an individual retirement plan. - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States or any subdivision or instrumentality thereof. - A foreign government, a political subdivision of a foreign government or any agency or instrumentality thereof. - An international organization or any agency or instrumentality thereof. - A dealer in securities or commodities required to register in the United States or a possession of the United States. - A real estate investment trust. - A common trust fund operated by a bank under Section 584(a) of the Internal Revenue Code. - An exempt charitable remainder trust or a non-exempt trust described in Section 4947(a)(1) of the Internal Revenue Code. - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under Section 1441 of the Code. - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - Payments of patronage dividends where the amount received is not paid in money. - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under Section 852 of the Internal Revenue Code). - Payments described in Section 6049(b)(5) of the internal Revenue Code to non-resident aliens. - Payments on tax-free covenant bonds under Section 1451 of the Internal Revenue Code. - Payments made by certain foreign organizations. - Payments made to a nominee. Exempt payees described above must still complete the Substitute Form W-9 enclosed herewith to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS). Certain payments, other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041(A)(a), 6042, 6044, 6045, 6049, 6050A and 6050N of the Internal Revenue Code and the regulations promulgated thereunder. PRIVACY ACT NOTICE -- Section 6109 of the Internal Revenue Code requires most recipients of dividends, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the Internal Revenue Service. The Internal Revenue Service uses the numbers for identification purposes and to help verify the accuracy of the recipient's tax return. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of the gross amount of interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to a reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.D1 9 ex99-d1.txt PURCHASE AGREEMENT - DATED JULY 7, 2000 1 EXHIBIT 99(d)(l) ------------ PURCHASE AGREEMENT BY AND AMONG JAMES L. SCHULTZ, JAMES L. SCHULTZ AND HELEN D. SCHULTZ AS TENANTS BY THE ENTIRETIES AND AS JOINT TENANTS, DAVID J. VAGNONI, COMPUTER RESEARCH, INC. AND CRI ACQUISITION, INC. ------------ Dated as of July 7, 2000 2 TABLE OF CONTENTS 1. Purchase and Sale......................................................................................-1- 1.1 Purchase and Sale.............................................................................-1- (a) Initial Purchase.....................................................................-1- (b) Further Assurances...................................................................-1- 1.2 Tender Offer..................................................................................-2- 1.3 Company Actions...............................................................................-3- 1.4 Directors.....................................................................................-4- 2. Closing of Initial Purchase; Purchase Price............................................................-4- 2.1 Closing Date..................................................................................-4- 2.2 Purchase Price and Payment at Closing.........................................................-5- 3. Representations and Warranties.........................................................................-5- 3.1 Representations and Warranties of the Sellers and the Company.................................-5- (a) Due Organization; Good Standing and Power............................................-5- (b) Validity of Agreement; Capitalization................................................-5- (c) No Approvals or Notices Required; No Conflict with Instruments.......................-6- (d) Reports..............................................................................-6- (e) Absence of Certain Changes...........................................................-7- (f) Offer Documents; Other Information...................................................-8- (g) Certain Fees.........................................................................-8- (h) State Takeover Laws..................................................................-8- (i) Opinion of Financial Advisor.........................................................-9- (j) Intellectual Property................................................................-9- 3.2 Representations and Warranties of Buyer.......................................................-9- (a) Due Organization; Authorization and Validity of Agreement............................-9- (b) No Approvals or Notices Required; No Conflict with Instruments......................-10- (c) Offer Documents.....................................................................-10- (d) Certain Fees........................................................................-10- (e) Financial Ability...................................................................-10- 3.3 Survival of Representations and Warranties...................................................-10- 4. Covenants; Actions Prior to Closing...................................................................-11- 4.1 Access to Information........................................................................-11- 4.2 Conduct of the Business......................................................................-11- 4.3 Additional Agreements........................................................................-12- 4.4 Notification.................................................................................-12- 4.5 Acquisition Proposals........................................................................-12- 4.6 Public Announcements.........................................................................-13- 5. Conditions Precedent..................................................................................-13- 5.1 Conditions Precedent to Obligations of Buyer.................................................-13- (a) No Action...........................................................................-13- (b) Accuracy of Representations and Warranties..........................................-13-
i 3 (c) Performance of Agreements...........................................................-14- (d) Material Adverse Change.............................................................-14- 5.2 Conditions Precedent to the Obligations of the Sellers.......................................-14- (a) Accuracy of Representations and Warranties..........................................-14- (b) Performance of Agreements...........................................................-14- 6. Termination...........................................................................................-14- 6.1 General......................................................................................-14- 6.2 No Liabilities in Event of Termination.......................................................-14- 7. Covenants; Action Subsequent to Closing...............................................................-15- 7.1 Sellers' Covenants Not to Compete............................................................-15- 7.2 Articles of Incorporation; Bylaws............................................................-15- 7.3 Merger Without Meeting of Stockholders.......................................................-15- 7.4 Alternative Merger...........................................................................-16- (a) Long Form Merger....................................................................-16- (b) Proxy Statement.....................................................................-16- (c) Approval of Stockholders............................................................-17- 7.5 Employment Agreements........................................................................-17- 8. Indemnification.......................................................................................-17- 8.1 Indemnification by the Sellers...............................................................-17- 8.2 Indemnification by Buyer.....................................................................-17- 8.3 Indemnification Procedures...................................................................-17- 8.4 Limits on Liability..........................................................................-18- 9. Miscellaneous.........................................................................................-19- 9.1 Payment of Certain Fees and Expenses........................................................-19- 9.2 Notices......................................................................................-19- 9.3 Entire Agreement.............................................................................-20- 9.4 Binding Effect; Benefit......................................................................-20- 9.5 Assignability................................................................................-20- 9.6 Amendment; Waiver............................................................................-21- 9.7 Section Headings; Index......................................................................-21- 9.8 Reformation and Severability.................................................................-21- 9.9 Counterparts.................................................................................-21- 9.10 Release......................................................................................-21- 9.11 Applicable Law...............................................................................-22- 9.12 Exercise of Rights and Remedies..............................................................-22- 10. Definitions...........................................................................................-22- 10.1 Defined Terms................................................................................-22- 10.2 References...................................................................................-23-
ii 4 PURCHASE AGREEMENT This Purchase Agreement (this "Agreement") is made and entered into as of July 7, 2000 by and among JAMES L. SCHULTZ, JAMES L. SCHULTZ AND HELEN D. SCHULTZ AS TENANTS BY THE ENTIRETIES AND AS JOINT TENANTS, and DAVID J. VAGNONI (collectively, the "Sellers" and individually, a "Seller"), COMPUTER RESEARCH, INC., a Pennsylvania corporation (the "Company"), and CRI ACQUISITION, INC., a Delaware corporation and its permitted assigns hereunder ("Buyer"). RECITALS: 1. Together, the Sellers own 1,403,495 shares (the "Seller Shares") of the common stock, no par value (the "Common Stock") of the Company, which is engaged in the business of back-office data processing for securities brokerage firms, bank broker dealers and municipal bond dealers (the "Business"); and 2. The Sellers desire to sell to Buyer and Buyer desires to acquire from the Sellers, the Seller Shares, in consideration of the payment by Buyer of the purchase price provided for herein, all upon the terms and subject to the conditions hereinafter set forth; and 3. The Company joins in the execution of this Agreement for the purpose of evidencing its consent to the transactions described herein and for the purpose of making certain representations and warranties to and covenants and agreements with Buyer. AGREEMENT In consideration of the premises and of the respective representations, warranties, covenants, agreements and conditions of the parties contained herein, it is hereby agreed as follows: 1. Purchase and Sale. 1.1 Purchase and Sale. (a) Initial Purchase. Subject to the terms and conditions of this Agreement, at the Closing, Sellers shall sell and deliver to Buyer and Buyer shall purchase from Sellers all of the Seller Shares, free and clear of all Encumbrances (the "Initial Purchase"). At the Closing, each of the Sellers shall deliver to Buyer certificates evidencing all of the shares of Common Stock owned by such Seller (which, in the aggregate, shall constitute all of the Seller Shares), duly endorsed for transfer or accompanied by duly executed stock powers. (b) Further Assurances. From time to time after the Closing, the Sellers will execute and deliver, or cause to be executed and delivered, without further consideration, such other instruments of conveyance, assignment, transfer and delivery and will take such 5 other actions as Buyer may reasonably request in order to more effectively transfer, convey, assign and deliver to Buyer, and to place Buyer in possession and control of any of the Seller Shares or to enable Buyer to exercise and enjoy all rights and benefits of the Sellers with respect thereto. 1.2 Tender Offer. (a) Provided that (w) the Initial Purchase shall have been closed, (x) none of the events set forth in Annex I hereto shall have occurred and be continuing, (y) the average closing price of the Common Stock for the fifteen trading days following the public announcement of this Agreement is less than or equal to $2.42 per share (the "Offer Price"), and (z) no other competing offer to purchase the Company or the Shares (as hereinafter defined) is made at any price (the conditions in w, x, y and z above being referred to as the "Offer Conditions"), then on or before July 31, 2000, or as soon as practicable thereafter (but in no event later than August 7, 2000), Buyer shall commence under the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the "Exchange Act")) a tender offer (the "Offer") to purchase all of the outstanding shares of Common Stock other than the Seller Shares (the "Shares") at the Offer Price per Share, net to the seller in cash, which Offer shall be on the terms set forth herein. Neither Buyer's commencement of the Offer nor the agreement by any holder of Shares to tender such Shares pursuant to the Offer shall be a condition precedent to the Closing of the purchase of the Seller Shares. Buyer shall, subject only to the satisfaction or waiver of the conditions set forth in Annex I hereto (the "Offer Conditions"), accept for payment, and pay for, all Shares validly tendered pursuant to the Offer (and not withdrawn) as soon as practicable after such acceptance and payment is legally permitted. Payment for any Shares accepted for payment shall be made within two business days after acceptance thereof by delivering the purchase price for such Shares to the depositary to whom such Shares have been tendered. Buyer shall have the right to change the terms and conditions of the Offer, so long as such changes do not, without the prior written approval of the Company, (i) decrease the Offer price or the number of Shares sought, (ii) amend the Offer to modify or add any conditions, (iii) change the form of consideration payable in the Offer or (iv) otherwise amend the Offer in any manner adverse to the holders of Shares other than to extend the Offer as permitted hereunder. The Offer shall expire on the date designated by the Buyer that is within three business days after the earliest time permitted by the Exchange Act, unless the Offer is extended by Buyer as permitted herein (the date of expiration, as the same may be extended, is herein referred to as the "Expiration Date"). Buyer may, from time to time, without the consent of the Company, extend the Expiration Date (i) if any of the Offer Conditions has not been satisfied, for the minimum period of time deemed appropriate by Buyer to satisfy such condition, but in no event later than the 20th business day following the initial Expiration Date (subject, with respect to the Minimum Condition (as defined in Annex I hereto), to the provisions of clause (ii) hereof); (ii) if all of the Offer Conditions have been satisfied other than the Minimum Condition, for a period of not more than 10 business days following the initial Expiration Date, in order to allow the Minimum Condition to be satisfied; and (iii) to provide for a subsequent offering period in accordance with Rule 14d- -2- 6 11 under the Exchange Act. It is agreed that the conditions set forth in Annex I, other than the Minimum Condition, are for the sole benefit of Buyer, and may be asserted by it regardless of the circumstances giving rise to such condition or may be waived by Buyer, in whole or in part at any time and from time to time. (b) As soon as practicable on the date the Offer is commenced, Buyer shall file with the Securities and Exchange Commission (the "Commission") a Tender Offer Statement on Schedule TO (together with all amendments and supplements thereto, the "Schedule TO") with respect to the Offer, which Schedule TO will contain (either as exhibits or incorporated by reference) the form of offer to purchase the Shares (the "Offer to Purchase") and related Letter of Transmittal (the "Letter of Transmittal"). Buyer and the Company agree to promptly correct the Schedule TO, the Offer to Purchase and related Letter of Transmittal, and all amendments thereto (which together constitute the "Offer Documents") if any information provided by any of them for use in the Offer Documents shall have become false or misleading in any respect, and Buyer shall take all steps necessary to cause the Schedule TO as so corrected to be filed with the Commission and the other Offer Documents as so corrected to be disseminated to the holders of the Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given an opportunity to review the Offer Documents prior to the filing thereof with the Commission. Buyer agrees to provide the Company with any written comments Buyer or its counsel may receive from the Commission with respect to the Offer Documents promptly after receipt thereof. 1.3 Company Actions. The Company hereby consents to the Offer and represents that its Board of Directors has (i) approved the Offer subject to the terms and conditions set forth herein, (ii) resolved that the Offer and the other transactions contemplated hereby are fair to and in the best interests of the Company's shareholders, and (iii) resolved to recommend acceptance of the Offer by the Company's shareholders. The Company shall file with the Commission a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") which shall reflect such recommendations. The Company hereby consents to the inclusion in the Offer of the recommendations referred to in this Section. The Company and the Buyer shall correct promptly any information provided by either of them for use in the Schedule 14D-9 which shall have become false or misleading in any material respect, and the Company shall take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the Commission and disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Buyer and its counsel shall be given the opportunity to review the Schedule 14D-9 prior to the filing thereof with the Commission. The Company agrees to provide Buyer with any written comments the Company or its counsel may receive from the Commission with respect to any documents filed by the Company with the Commission in connection with the transactions contemplated hereby, promptly after receipt thereof. In connection with the Offer, the Company will upon request of Buyer promptly furnish Buyer with such information and assistance as Buyer may reasonably request, including lists of the names and addresses of the shareholders of the Company, mailing labels and lists of security positions, and such assistance as Buyer or its agents may reasonably request in communicating the Offer to the record and beneficial holders of Shares. Subject to the -3- 7 requirements of Applicable Law, and except for such steps as are necessary to disseminate the Offer, Buyer (and its affiliates, associates and representatives) will hold in confidence the information contained in any such labels and lists and, if this Agreement is terminated, will upon request deliver to the Company all copies of, and any extracts or summaries from, such information then in their possession. 1.4 Directors. Buyer and the Company agree that, until after the conclusion of the merger described in Section 7 below, neither Buyer nor any of its affiliates shall elect any members of the Company's Board of Directors or seek to influence or change the management or policies of the Company in any way, and Buyer covenants and agrees on behalf of itself and its affiliates not to do so; however, if the Offer Conditions are not met, and Buyer determines not to proceed with the Offer, or if Buyer proceeds with the Offer but does not complete the Offer, then the Buyer shall, upon written notice to the Company, have the right to designate such number of directors, rounded up to the next whole number, as will give Buyer representation on the Board of Directors of the Company ("Equivalent Representation") equal to the product of the number of directors comprising the Board of Directors of the Company and the percentage that the aggregate number of shares of Common Stock beneficially owned by Buyer bears to the total number of shares of Common Stock outstanding. The Company shall exercise its best efforts to secure the resignations of such number of directors as is necessary to enable the Buyer's designees to be elected to the Board of Directors of the Company, and shall cause Buyer's designees to be so elected so that Buyer shall have Equivalent Representation on the Board of Directors of the Company. At the request of Buyer, the Company shall take, at its expense, all action necessary to effect any such election, including mailing to its stockholders the information required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, such action to be taken as soon as practicable after Buyer's request. Buyer shall supply to the Company and be solely responsible for any information with respect to itself and Buyer's designees, officers, directors and affiliates required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. If the Buyer exercises its rights to Equivalent Representation, any amendment or termination of this Agreement, extension for the performance or waiver of the obligations or other acts of Buyer or waiver of the Company's rights hereunder, which amendment, termination, extension or waiver would adversely affect the shareholders of the Company, shall also require the approval of all of the then serving directors, if any, who are directors as of the date hereof (the "Continuing Directors"). If the Offer Conditions are satisfied, the Continuing Directors shall not be removed prior to completion of the merger described in Section 7 below. If the number of Continuing Directors prior to the completion of the merger is reduced below two for any reason, the remaining Continuing Director shall be entitled to designate a person to fill such vacancy who shall be deemed a Continuing Director for all purposes of this Agreement. 2. Closing of Initial Purchase; Purchase Price. 2.1 Closing Date. The closing of the Initial Purchase (the "Closing") shall take place at (i) the offices of the Company concurrently with the execution of this Agreement or (ii) at such other time or place or on such other date as the parties hereto shall agree. The date on which the Closing is required to take place is herein referred to as the "Closing Date". -4- 8 2.2 Purchase Price and Payment at Closing. The aggregate purchase price for the Seller Shares in the Initial Purchase shall be $3,396,457.90 (the "Purchase Price"), which shall be payable in cash at the Closing. The portion of the Purchase Price payable to each Seller shall consist of the Offer Price per share of Common Stock multiplied by the number of Seller Shares held by such Seller, and shall be paid to each Seller at the Closing in the form of a bank cashier's check payable to the order of such Seller or, if requested by such Seller, in immediately available funds by confirmed wire transfer to a bank account to be designated by such Seller (such designation to occur no later than the second business day prior to the Closing Date). 3. Representations and Warranties. 3.1 Representations and Warranties of the Sellers and the Company. The Sellers and the Company, jointly and severally, represent and warrant to Buyer as of the date hereof and as of the Closing Date as follows: (a) Due Organization; Good Standing and Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Pennsylvania. The Company has the corporate power and authority to own, lease and operate its assets and to conduct its business as now conducted. The Company is duly authorized, qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which its right, title or interest in or to any of its assets, or the conduct of its business, requires such authorization, qualification or licensing, except where the failure to so qualify or to be in good standing in such other jurisdictions would not have a material adverse effect on any of the assets, the business or the results of operations of the Company. No actions or proceedings to dissolve the Company are pending. The Company has delivered to Buyer true and complete copies of its minute books and stock transfer books, each of which is accurate and complete. The Company has no Subsidiaries. (b) Validity of Agreement; Capitalization. This Agreement has been duly executed and delivered by the Sellers and the Company and constitutes a legal, valid and binding obligation of each of them, enforceable against them in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally and by general equity principles. The Company's authorized capital consists of 5,000,000 shares of common stock, no par value, of which 4,037,255 are issued and 4,037,255 are outstanding. All of the issued and outstanding shares of the Company have been duly authorized and validly issued, are fully paid and nonassessable, have not been issued in violation of any preemptive or similar rights, and have been issued in compliance with all Applicable Laws (including state and federal securities laws). There are (and as of the Closing Date there will be) outstanding (i) no shares of capital stock or other voting securities of the Company other than as described above, no securities of the Company convertible into or exchangeable for shares of the capital stock or other voting securities of the Company, (ii) no options or other rights to acquire from the Company, and no obligation of the Company to issue or sell, any shares of its capital stock or other voting securities or any securities of the Company convertible into or exchangeable for such capital -5- 9 stock or voting securities, (iii) no equity equivalents, interest in the ownership or earnings, or other similar rights of or with respect to the Company, and (iv) no shares of any other entity owned by the Company. There are (and as of the Closing Date there will be) no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any shares, securities, options, equity equivalents, interests or rights. Sellers are (and at the Closing Date will be) the record and beneficial owners of, and upon consummation of the transactions contemplated hereby Buyer will acquire, good, valid and marketable title to, 883,310 shares of Common Stock held by James L. Schultz and by James L. Schultz and Helen D. Schultz as Tenants by the Entireties and as joint tenants, and 520,185 shares of Common Stock held by David J. Vagnoni, free and clear of all Encumbrances, other than (i) those that may arise by virtue of any actions taken by or on behalf of Buyer or its affiliates or (ii) restrictions on transfer that may be imposed by federal or state securities laws. To the knowledge of the Sellers and the Company, there are no voting or other stockholders agreements to which any shares of Common Stock are subject. (c) No Approvals or Notices Required; No Conflict with Instruments. Except for filings required under federal and state securities laws and with the National Association of Securities Dealers, Inc. and any necessary shareholder vote, the execution, delivery and performance of this Agreement by the Sellers and the Company and the consummation of the transactions contemplated hereby (i) will not violate (with or without the giving of notice or the lapse of time or both) or require any consent, approval, filing or notice under, any provision of any Applicable Law and (ii) will not result in the creation of any Encumbrance on the Seller Shares under, conflict with, or result in the breach or termination of any provision of, or constitute a default under, or result in the acceleration of the performance of the obligations of, or the payment of any termination or other similar fee or reimbursement amount by, the Sellers or the Company under, or result in the creation of an Encumbrance upon any portion of the assets of the Company pursuant to, the charters or by-laws of the Company, or any indenture, mortgage, deed of trust, lease, licensing agreement, contract, instrument or other agreement to which the Sellers or the Company are a party or by which any of them or any of their assets is bound or affected. The Seller Shares are transferable and assignable to Buyer as contemplated by this Agreement without the waiver of any right of first refusal or the consent of any other party being obtained, and there exists no preferential right of purchase in favor of any person with respect of any of the Seller Shares, any other shares of Common Stock or the Business or any of the assets of the Company. (d) Reports. (1) Since January 1, 1995, the Company has filed all forms, reports and documents with the Commission required to be filed by it pursuant to the applicable requirements of the Securities Act of 1933, as amended (together with rules and regulations promulgated thereunder, the "Securities Act") and the Exchange Act, all of which complied in all material respects with all applicable requirements of the Securities Act and the Exchange Act. Each final prospectus, definitive proxy statement and report filed by the Company with the Commission since January 1, 1995 complied as of its respective filing -6- 10 date (or, in the case of a final prospectus, the effective date thereof) in all material respects with all applicable requirements of the Securities Act and the Exchange Act. None of such forms, reports and documents filed with the Commission, including, without limitation, any exhibits, financial statements or schedules included therein, at the time filed (or, in the case of a final prospectus, the effective date thereof), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (ii) The consolidated balance sheets and the related consolidated statements of earnings and of cash flows (including the related notes thereto) of the Company (the "Financial Statements") included in the Company's Annual Report on Form 10-KSB for the fiscal year ended August 31, 1999 (the "10K"), the Company's Quarterly Report on Form 10-QSB for the fiscal quarters ended November 30, 1999 and February 29, 2000 (the"10Qs"), and the Company's Quarterly Report on Form 10-QSB for the fiscal quarter ended May 31, 2000 previously supplied in draft form to Buyer (the "Draft 10Q", and, together with the 10K and the 10Qs, the "Reports") have been prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as stated in the Financial Statements, including the related notes, and except that the quarterly financial statements do not contain all of the footnote disclosures required by generally accepted accounting principles) and fairly present the consolidated financial position of the Company as of their respective dates, and the results of consolidated operations and consolidated cash flows for the periods presented therein, subject in the case of the unaudited financial statements, to normal year-end adjustments and any other adjustments described therein, none of which adjustments would be material. (iii) Except as disclosed in the Financial Statements, since February 29, 2000 to the date of this Agreement, the Company has not incurred a liability of a nature which would be required to be reflected on a consolidated balance sheet of the Company prepared as of the date of this Agreement and in accordance with generally accepted accounting principles, other than liabilities to persons or entities not affiliated with the Company and which were incurred in the ordinary course of business, consistent with past practice. (e) Absence of Certain Changes. Except as contemplated by this Agreement or disclosed in the Reports, and except for information received by the Company regarding the probable loss of its customer, Regions Financial Corp., since February 29, 2000, the Company has not suffered any adverse effect on its business, condition (financial or otherwise), operations or assets. Except as disclosed in the Reports, since February 29, 2000, there has not been (i) any declaration, setting aside or payment of any dividend or other distribution in respect of shares of capital stock of the Company, any redemption or other acquisition by the Company of any shares of its capital stock, any change in the authorized capital stock or outstanding capital stock of the Company, any change in any Seller's ownership interest in the Company, or any grant or issuance of any options, warrants, calls, -7- 11 conversion rights or commitments with respect to the capital stock of the Company; (ii) any increase in the rate or terms of compensation payable or to become payable by the Company to its directors, officers or employees; (iii) any increase in the rate or terms of any bonus, insurance, pension or other employee benefit plan, payment or arrangement made to, for or with any such directors, officers or employees; (iv) other than the Letter of Intent entered into with SunGard Data Systems, Inc., any entry into, or any material amendment to, any agreement, commitment or transaction by the Company which is material to the Company taken as a whole other than agreements with a term of no greater than one year made or entered into in the ordinary course of business with persons or entities not affiliated with the Company; or (v) any change by the Company in accounting methods, principles or practices except for changes made after the date hereof and required by generally accepted accounting principles. (f) Offer Documents; Other Information. None of the information relating to the Company supplied in writing by the Company specifically for inclusion in the Offer Documents or obtained from any document filed by the Company with the Commission, and none of the information contained in the Schedule 14D-9, including any amendments or supplements thereto, or any schedules required to be filed with the Commission in connection therewith, will, at the respective times of filing with the Commission contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (g) Certain Fees. Neither the Company nor its officers, directors or employees, nor Sellers, on behalf of the Company or themselves, has employed any broker or finder or incurred any other liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated hereby, other than the fees and expenses payable to William Lerner, which shall be paid by the Company. (h) State Takeover Laws. Subchapters E through H of Chapter 25, Title 15 of the Pennsylvania Business Corporation Law ("PBCL") do not apply to the Company, and the Buyer shall not be affected by the provisions set forth therein. Each Seller and the Company has taken all necessary action to exempt the transactions contemplated by this Agreement from, or if necessary to challenge the validity or applicability of, any applicable "moratorium," "fair price," "business combination," "control share" or other anti-takeover laws. The Company has taken all action so that the entering into of this Agreement and the consummation of the transactions contemplated hereby do not and will not result in the grant of any rights to any person under the Articles of Incorporation, Bylaws or other governing instruments of the Company or restrict or impair the ability of Buyer to vote, or otherwise to exercise the rights of a stockholder with respect to, shares of the Company that may be directly or indirectly acquired or controlled by it. (i) Opinion of Financial Advisor. The Company has delivered, or will deliver within three (3) business days following Closing, to Buyer a signed opinion of the -8- 12 Company's financial advisor, Valuation Professionals of Newport Beach, California, dated as of the date of this Agreement, which opinion states that the consideration to be received by the holders of Company Common Stock is fair, from a financial point of view, to such holders. (j) Intellectual Property. (i) The Company owns all rights, title and interest in and to all Intellectual Property, inventions, trade secrets, copyrights, patents, trademarks, know-how, ideas, expressions, processes, subroutines, algorithms and programming techniques necessary to conduct its Business, other than those inventions, trade secrets, copyrights, patents, trademarks, know-how, ideas, expressions, processes, subroutines, algorithms and programming techniques that are owned by third parties and used by the Company under adequate licenses or other rights (the "Third Party Rights"). (ii) The Company has the sole and exclusive right to use the Intellectual Property used in the conduct of the Business without infringing or violating the rights of any third parties. No consent of third parties will be required for the use thereof by the Company upon consummation of the transactions contemplated by this Agreement. No claim has been asserted by any person to the ownership of or right to use any such Intellectual Property or challenging or questioning the validity or effectiveness of any such license or agreement, and neither the Company nor the Sellers know of any valid basis for any such claim. (iii) There exists no claim that, or inquiry as to whether, any product, activity or operation of the Company infringes upon or involves, or has resulted in the infringement of, any proprietary right of any other person, corporation or other entity; and no proceedings have been instituted, are pending or are threatened which challenge the rights of the Company with respect thereto. The Company has not given and is not bound by any agreement of indemnification for any Intellectual Property as to any property manufactured, used or sold by the Company. (iv) The Company's owned software is unique and original, is free of any claims or encumbrances, and does not infringe any patent, copyright, trade secret or other proprietary right of any person, nor does it include or make use of any trade secrets or confidential or proprietary information owned by any third party, other than the Third Party Rights. The Company's owned software is free of material programming errors or defects in workmanship or materials. 3.2 Representations and Warranties of Buyer. Buyer represents and warrants to the Sellers as follows: (a) Due Organization; Authorization and Validity of Agreement. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. This Agreement has been duly executed and delivered by Buyer and constitutes -9- 13 a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as the same may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally and by general equity principles. (b) No Approvals or Notices Required; No Conflict with Instruments. The execution, delivery and performance of this Agreement by Buyer and the consummation by it of the transactions contemplated hereby (i) will not violate (with or without the giving of notice or the lapse of time or both), or require any consent, approval, filing or notice under any provision of any Applicable Law, and (ii) will not conflict with, or result in the breach or termination of any provision of, or constitute a default under, or result in the acceleration of the performance of the obligations of Buyer, under, the charter or bylaws of Buyer or any indenture, mortgage, deed of trust, lease, licensing agreement, contract, instrument or other agreement to which Buyer is a party or by which Buyer or any of its assets or properties is bound. (c) Offer Documents. The Offer Documents (including any amendments or supplements thereto) shall contain all information which is required to be included therein in accordance with the Exchange Act and other Applicable Laws, and will not, at the respective times the Offer Documents or any amendments or supplements thereto are filed with the Commission, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, except that no representation is given with respect to information supplied in writing by the Company specifically for inclusion in the Offer Documents or obtained from any document filed by the Company with the Commission. While the Offer is outstanding, Buyer will promptly correct any statements in the Schedule TO and the other Offer Documents that to its knowledge become false or misleading and take all steps necessary to cause such Schedule TO as so corrected to be filed with the Commission and Offer Documents as so corrected to be disseminated to each holder of Shares, in each case only as and to the extent required by Applicable Law. (d) Certain Fees. Neither Buyer nor any of its officers, directors, employees or representatives has employed any broker or finder or incurred any other liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated hereby, other than fees and expenses payable to Sanders Morris Harris, which shall be the sole responsibility of Buyer. (e) Financial Ability. Buyer has, and any permitted assignee of Buyer will have, the financial ability to consummate the purchase of the Seller Shares pursuant to this Agreement and the purchase of the Shares pursuant to the Offer. 3.3 Survival of Representations and Warranties. The respective representations and warranties of the parties contained herein shall expire on the second anniversary of the Closing Date; provided that there shall be no expiration of any such representation or warranty as to which a bona -10- 14 fide claim has been asserted by written notice of such claim delivered to the party or parties making such representation or warranty during the survival period. This Section 3.3 shall not at any time relieve any party hereto from the performance of such party's agreements, covenants and undertakings set forth in this Agreement. 4. Covenants; Actions Prior to Closing. 4.1 Access to Information. During the period beginning on the date hereof and ending on the Closing Date, the Sellers and the Company will (a) give or cause to be given to Buyer and its representatives such access, during normal business hours, to the plant, properties, books and records of the Company as Buyer shall from time to time reasonably request and (b) furnish or cause to be furnished to Buyer such financial and operating data and other information with respect to the Company as Buyer shall from time to time reasonably request. Buyer and its representatives shall be entitled, in consultation with the Sellers, to such access to the representatives, officers and employees of the Company as Buyer may reasonably request. 4.2 Conduct of the Business. Except as specifically required or contemplated by this Agreement or otherwise consented to or approved in writing by Buyer, during the period commencing on the date hereof and ending on the Closing Date: (a) the Company shall not conduct its businesses except in the usual, regular and ordinary manner consistent with current practice and, to the extent consistent with such current practice, shall use reasonable best efforts to keep available the services of the present employees of the Company and preserve the Company's present relationships with persons having business dealings with the Company; (b) the Company shall not fail to maintain the Company's books, accounts and records in the usual, regular and ordinary manner, on a basis consistent with past practice, and shall comply in all material respects with all Applicable Laws and other obligations of the Company; (c) the Company shall not (i) sell, pledge or issue any option or other right to acquire any stock owned by it, (ii) amend its Articles of Incorporation or Bylaws, (iii) split, combine or reclassify the outstanding Common Stock, (iv) declare, set aside or pay any dividend payable in cash, stock or property with respect to the Common Stock, or (v) tender any Common Stock for purchase pursuant to the Offer; (d) the Company shall not (i) issue any additional shares of, securities convertible into shares of, or rights of any kind to acquire any shares of, its capital stock, (ii) sell, transfer, lease or otherwise encumber any assets or incur any indebtedness other than in the ordinary course of business consistent with past practice, and that, with respect to incurrence of indebtedness, is prepayable without penalty or premium, (iii) make any material capital expenditures other than replacements, repairs or betterments made in the ordinary course of business, (iv) acquire any corporation, partnership or other business organization or -11- 15 enterprise, (v) acquire or offer to acquire any of its capital stock, or (vi) modify in any material respect any agreement with respect to any of the foregoing; (e) the Company shall not grant any severance or termination pay to or increase the compensation payable to, or enter into or amend any employment agreement with, any officer, director or employee of the Company (except pursuant to agreements of the Company in effect on the date hereof disclosed in the 10K); and the Company shall not increase benefits payable under its current severance or termination pay policies; (f) the Company shall not adopt, or amend to increase compensation or benefits payable under, any plan, agreement, trust, fund or arrangement for the benefit of any employees; and (g) the Company shall not agree or commit to take any of the actions prohibited in this Section or any action that would make any representation or warranty contained in Section 3.1 untrue. 4.3 Additional Agreements. Subject to the terms and conditions herein provided and the fiduciary duties of the Board of Directors of the Company, each of the parties hereto agrees to use its best efforts consistent with prudent business judgment to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under Applicable Law to consummate and make effective the transactions contemplated by this Agreement, including using its best efforts consistent with prudent business judgment to lift or rescind any injunction, restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated hereby, to obtain all necessary waivers, consents, approvals and authorizations and to effect all necessary registrations and filings; subject, however, to the appropriate vote of the shareholders of the Company if required by Applicable Law or the rules of the Nasdaq National Stock Market. Each party further agrees to use its best efforts, consistent with prudent business judgment, subject to the restrictions of this Agreement, and except as otherwise contemplated by this Agreement, to cause the representations and warranties of such parties contained herein to be true and correct in all material respects at the Closing Date as if made again at that date. 4.4 Notification. The Sellers and the Company shall promptly notify Buyer in writing and keep it advised as to (i) any litigation or administrative proceeding filed or pending against the Company or, to their knowledge, threatened against it, including any such litigation or administrative proceeding that challenges the transactions contemplated hereby; (ii) any material damage or destruction of any of the assets of the Company; (iii) any material adverse change in the results of operations of the Company; and (iv) any variance from the representations and warranties contained in Section 3.1 hereof or of any failure or inability on the part of the Sellers or the Company to comply with any of their respective covenants contained in this Section 4. 4.5 Acquisition Proposals. None of the Sellers, the Company, or any affiliate, director, officer, employee or representative of any of them shall, directly or indirectly (i) solicit, initiate or knowingly encourage any Acquisition Proposal or (ii) engage in discussions or negotiations with any -12- 16 person that is considering making or has made an Acquisition Proposal. Sellers and the Company shall immediately cease and cause to be terminated any existing activities, discussions or negotiations with any persons conducted heretofore with respect to any Acquisition Proposal and shall promptly request each such person who has heretofore entered into a confidentiality agreement in connection with an Acquisition Proposal to return to Sellers and the Company all confidential information heretofore furnished to such person by or on behalf of any Seller or the Company. If at any time prior to commencement of the Offer, the Company receives an unsolicited, written, bona fide Acquisition Proposal from a third party, the Company's Board of Directors may, but only if, in the good faith judgement of the Board, based, as to legal matters, on the advice of legal counsel, the Board determines that the failure to do so would be inconsistent with the discharge of its fiduciary duties to the Company's shareholders under Applicable Law, proceed with discussions regarding such Acquisition Proposal and furnish information and access pursuant to confidentiality agreements that do not prohibit or restrict disclosure of any matter to Buyer and negotiate any such Acquisition Proposal. The Company shall immediately advise Buyer orally and in writing of the receipt of any Acquisition Proposal, the terms and conditions thereof and the identity of the person making the proposal. The term "Acquisition Proposal," as used herein, means any offer or proposal for or any indication of interest in, a merger, tender offer or other business combination involving the Company or any of its affiliates, or the acquisition of an equity interest in or substantial portion of the assets of, the Company or any affiliate of the Company, other than the transactions contemplated by this Agreement. 4.6 Public Announcements. Neither Buyer, on the one hand, nor Sellers and the Company, on the other, shall issue any press release or otherwise make any public statements with respect to this Agreement or the transactions contemplated hereby without the prior written consent of the other party. 5. Conditions Precedent. 5.1 Conditions Precedent to Obligations of Buyer. The obligations of Buyer under this Agreement are subject to the satisfaction (or waiver by Buyer) at or prior to the Closing Date of each of the following conditions: (a) No Action. No action of any private party or Governmental Entity shall have been taken or threatened and no statute, rule, regulation or executive order shall have been proposed, promulgated or enacted by any Governmental Entity which seeks to restrain, enjoin or otherwise prohibit or to obtain damages or other relief in connection with this Agreement or the transactions contemplated hereby. (b) Accuracy of Representations and Warranties. All representations and warranties of the Sellers and the Company contained herein or in any certificate or document delivered to Buyer pursuant hereto shall be true and correct in all material respects on and as of the Closing Date, with the same force and effect as though such representations and warranties had been made on and as of the Closing Date, except as contemplated or permitted by this Agreement. -13- 17 (c) Performance of Agreements. The Sellers and the Company shall have, in all material respects, performed all obligations and agreements, and complied with all covenants and conditions, contained in this Agreement to be performed or complied with by them prior to or at the Closing Date. (d) Material Adverse Change. The Company shall have suffered no Material Adverse Change from the date of this Agreement until the Closing Date (provided, however, that any change in the customer status of Regions Financial Corp. shall not be a Material Adverse Change). 5.2 Conditions Precedent to the Obligations of the Sellers. The obligations of the Sellers under this Agreement are subject to the satisfaction (or waiver by the Sellers) at or prior to the Closing Date of each of the following conditions: (a) Accuracy of Representations and Warranties. All representations and warranties of Buyer contained herein or in any certificate or document delivered to the Sellers pursuant hereto shall be true and correct on and as of the Closing Date, with the same force and effect as though such representations and warranties had been made on and as of the Closing Date, except as contemplated or permitted by this Agreement. (b) Performance of Agreements. Buyer shall have performed all obligations and agreements, and complied with all covenants and conditions contained in this Agreement to be performed or complied with by it prior to or at the Closing Date. 6. Termination. 6.1 General. This Agreement may be terminated and the transactions contemplated herein may be abandoned (a) by mutual consent of Buyer and the Sellers, or (b) following the Closing, by the Buyer or the Seller, if the Offer Conditions have not been satisfied by July 31, 2000; provided, however, that if the Offer Conditions have not been satisfied on or before such date due to a breach of this Agreement by one of the parties or an affiliate of that party, that party may not terminate this Agreement. 6.2 No Liabilities in Event of Termination. In the event of any termination of this Agreement as provided above, this Agreement shall forthwith become wholly void and of no further force or effect and there shall be no liability on the part of Buyer, the Sellers, the Company or their respective officers, directors, or agents, except that the provisions of Section 9.1 hereof shall remain in full force and effect, and provided that nothing contained herein shall release any party from liability for any failure to comply with any provision, covenant or agreement contained herein. -14- 18 7. Covenants; Action Subsequent to Closing. 7.1 Sellers' Covenants Not to Compete. In order to allow Buyer to realize the full benefit of its bargain in connection with the purchase of the Seller Shares, the Sellers will not at any time for a period of five years following the Closing Date, directly or indirectly, acting alone or as a member of a partnership or as a holder of in excess of 5% of any security of any class, or as a consultant to or representative of, any corporation or other business entity, (a) engage in any business in competition with the Business as conducted by the Sellers or the Company at the date hereof in those geographic areas in which such Business is conducted or has been conducted within one year prior to the Closing Date; or (b) request any present or future customer or supplier of the Company or of the Business as conducted by the Company, Buyer or their respective affiliates to curtail or cancel its business with the Company, Buyer or their respective affiliates; or (c) unless otherwise required by Applicable Law, disclose to any person, firm or corporation any details of organization or business affairs of the Company or the Business, any names of past or present customers of the Company, or any other non-public information concerning the Business or the Company; or (d) induce or attempt to influence any employee of Buyer or the Company assigned to the conduct of the Business to terminate his or her employment. The Sellers acknowledge that in the event the scope of the covenants set forth in this Section 7.1 is deemed to be too broad in any court proceeding, the court may reduce such scope to that which it deems reasonable under the circumstances. The parties hereto agree and acknowledge that Buyer would not have any adequate remedy at law for the breach or threatened breach by any of the Sellers or any of their affiliates of the covenants and agreements set forth in this Section 7.1 and, accordingly, the Sellers further agree that Buyer may, in addition to the other remedies which may be available to it hereunder, file suit in equity to enjoin any of the Sellers and any of their affiliates from such breach or threatened breach and consent to the issuance of injunctive relief hereunder. The Sellers understand and agree that the act of Buyer in entering into this Agreement, and Buyer's covenants and payments hereunder, shall and do constitute sufficient consideration for the Sellers to agree not to compete against Buyer as set out in this Section 7.1. 7.2 Articles of Incorporation; Bylaws. The Articles of Incorporation and Bylaws of the Company will not be amended for a period of six years from the Closing Date in any manner that would adversely affect the indemnification or litigation expense reimbursement rights thereunder of individuals who on or prior to the Closing Date were directors, officers, employees or agents of the Company, except if such amendment is required by Applicable Law. 7.3 Merger Without Meeting of Stockholders. In the event that the Offer is commenced and Buyer shall acquire in the aggregate at least 90% of the outstanding shares of the voting capital -15- 19 stock of the Company, pursuant to the Offer or otherwise (including the purchase of the Seller Shares pursuant to this Agreement), the parties hereto shall, at the request of Buyer and subject to the provisions of this Section 7, take all necessary and appropriate action to cause a corporation wholly owned by Buyer to be merged with and into the Company, with the Company as the surviving corporation, without a meeting of stockholders of the Company, in accordance with the Applicable Law; such that each share of capital stock of the corporation wholly owned by Buyer shall be canceled and cease to be outstanding and each share of the Company Common Stock shall be exchanged for cash consideration equal to the Offer Price. 7.4 Alternative Merger. (a) Long Form Merger. In the event that Buyer shall acquire in the aggregate less than 90% but more than 66 2/3% of the outstanding shares of the voting capital stock of the Company, pursuant to the Offer or otherwise (including the purchase of the Seller Shares pursuant to this Agreement), then, as soon as practicable after the acquisition of Shares in the Offer the parties hereto shall, subject to the provisions of this Section 7, take all necessary and appropriate action to cause a corporation wholly owned by Buyer to be merged with and into the Company, with the Company as the surviving corporation, in accordance with the Applicable Law; such that each share of capital stock of the corporation wholly owned by Buyer shall be cancelled and cease to be outstanding and each share of the Company Common Stock shall be exchanged for cash consideration equal to the Offer Price. (b) Proxy Statement. If a merger is to be effected under this Section 7.4, the Company shall, if required by Applicable Law, prepare and file with the Commission a Proxy Statement or Information Statement (the "Proxy Statement") as soon as reasonably practicable after the purchase of and payment for Shares pursuant to the Offer, and shall use its best efforts to have the Proxy Statement cleared by the Commission. If at any time prior to the effective time of such merger any event shall occur that should be set forth in an amendment of or a supplement to the Proxy Statement, the Company shall prepare and file with the Commission such amendment or supplement as soon thereafter as is reasonably practicable. Buyer and the Company shall cooperate with each other in the preparation of the Proxy Statement, and the Company shall notify Buyer of the receipt of any comments of the Commission with respect to the Proxy Statement and of any requests by the Commission for any amendment or supplement thereto or for additional information, and shall provide to Buyer promptly copies of all correspondence between the Company or any representative of the Company and the Commission with respect to the Proxy Statement. The Company shall give Buyer and its counsel the opportunity to review the Proxy Statement and all responses to requests for additional information by and replies to comments of the Commission before their being filed with, or sent to, the Commission. Each of the Company and Buyer agrees to use its best efforts, after consultation with the other parties hereto, to respond promptly to all such comments of and requests by the Commission and to cause the Proxy Statement to be mailed to the holders of Company Common Stock entitled to vote at the Company Stockholders' Meeting at the earliest practicable time. -16- 20 (c) Approval of Stockholders. If required by Applicable Law in order to consummate the merger under this Section 7.4, the Company shall, through its Board of Directors, duly call, give notice of, convene and hold a meeting of its stockholders for the purpose of voting on the adoption of this Agreement and the merger contemplated hereby as soon as reasonably practicable after the purchase of and payment for Shares pursuant to the Offer. At such meeting, Buyer shall cause all shares of Company Common Stock owned by Buyer to be voted in favor of the adoption of this Agreement and the merger contemplated hereby. 7.5 Employment Agreements. Following the Closing of the Initial Purchase, the Buyer, the Company and the Sellers shall negotiate in good faith Consulting Agreements between the Company and each of Mr. Schultz and Mr. Vagnoni and an Employment Agreement between the Company and Mr. Schultz on the terms set forth in Annex II. 8. Indemnification. 8.1 Indemnification by the Sellers. Subject to the provisions of this Section 8, the Sellers and the Company, jointly and severally prior to the consummation of the Offer, and thereafter the Sellers, jointly and severally, shall protect, indemnify and hold harmless Buyer, its affiliates and their officers, directors, employees, representatives and agents in respect of any losses, claims, damages, liabilities, deficiencies, delinquencies, defaults, assessments, fees, penalties or related costs or expenses, including, but not limited to, court costs and attorneys' and accountants' fees and disbursements, and any federal, state or local income or franchise taxes payable in respect of the receipt of cash or money in discharge of the foregoing, but reduced by any net amount paid to Buyer on account of such loss by any insurance policies (collectively referred to herein as "Damages") to which Buyer may become subject if such Damages arise out of or are based upon the breach of any of the representations and warranties (whether such breach occurred as of the date of execution of this Agreement or as of the Closing Date), covenants or agreements made by the Sellers or the Company in this Agreement, including the Exhibits and Schedules hereto, or in any certificate or instrument delivered by or on behalf of the Sellers or the Company pursuant to this Agreement. 8.2 Indemnification by Buyer. Subject to the provisions of this Section 8, Buyer shall protect, indemnify and hold harmless the Sellers and the Company, in respect of any Damages to which the Sellers may become subject if such Damages arise out of or are based upon the breach of any of the representations, warranties, covenants or agreements made by Buyer in this Agreement, including the Exhibits and Schedules hereto, or in any certificate delivered by or on behalf of Buyer pursuant to this Agreement. 8.3 Indemnification Procedures. The obligations and liabilities of each indemnifying party hereunder with respect to claims resulting from the assertion of liability by the other party or third parties shall be subject to the following terms and conditions: (a) If any person shall notify an indemnified party (the "Indemnified Party") with respect to any matter which may give rise to a claim for indemnification (a "Claim") against -17- 21 Buyer or the Sellers (the "Indemnifying Party") under this Section 8, then the Indemnified Party shall promptly notify each Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is prejudiced. (b) Any Indemnifying Party will have the right to defend the Indemnified Party against the Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within 15 days after the Indemnified Party has given notice of the Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety (subject to any limitations contained in Section 8) of any Damages the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of or caused by the Claim, (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Claim and fulfill its indemnification obligations hereunder, (iii) the Claim involves only money damages and does not seek an injunction or other equitable relief, (iv) settlement of, or an adverse judgment with respect to, the Claim is not, in the good faith judgment of the Indemnifying Party, likely to establish a precedential custom or practice materially adverse to the continuing business interests of the Indemnified Party, and (v) the Indemnifying Party conducts the defense of the Claim actively and diligently and in good faith. (c) So long as the Indemnifying Party is conducting the defense of the Claim in accordance with Section 8.3(b) above, (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Claim, (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably), and (iii) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Claim without the prior written consent of the Indemnified Party (not to be withheld unreasonably). (d) In the event any of the conditions in Section 8.3(b) above is or becomes unsatisfied, however, (i) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party in connection therewith), (ii) the Indemnifying Party will remain responsible for any damages the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Claim to the fullest extent provided in this Section 8. 8.4 Limits on Liability. Anything contained in this Agreement to the contrary notwithstanding, the liability of any party for indemnity shall only extend to matters for which a bona fide claim has been asserted by written notice of such claim delivered to the Indemnifying Party on -18- 22 or before the second anniversary of the Closing Date. The maximum liability of any Seller hereunder shall be the amount of the Purchase Price he has received. 9. Miscellaneous. 9.1 Payment of Certain Fees and Expenses. Except as otherwise provided herein, each of the parties hereto shall pay the fees and expenses incurred by it in connection with the negotiation, preparation, execution and performance of this Agreement, including, without limitation, brokers' fees, attorneys' fees and accountants' fees; provided, however, that if an event described in Section (ii)(h) of Annex I has occurred, the Company shall pay all of Buyer's reasonable fees and expenses incurred in connection with the transaction contemplated herein. The Sellers will file all necessary documentation and returns with respect to all sales, use, transfer and other similar Taxes arising or resulting from the purchase and sale of the Seller Shares hereunder. In addition, each Seller acknowledges that he, and not the Company or the Buyer, will pay all Taxes due on receipt of the consideration payable to that Seller under this Agreement. 9.2 Notices. All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given and received (i) if personally delivered or if delivered by telex, telegram, facsimile or courier service, when actually received by the party to whom notice is sent or (ii) if delivered by mail (whether actually received or not), at the close of business on the fifth business day next following the day when placed in the mail, postage prepaid, certified or registered, addressed to the appropriate party or parties, at the address of such party or parties set forth below (or at such other address as such party may designate by written notice to all other parties in accordance herewith): (a) If to Buyer: CRI Acquisition, Inc. c/o Mr. Rodger O. Riney 12855 Flushing Meadow Drive St. Louis, Missouri 63131 with a copy to: Gardere Wynne Sewell & Riggs, L.L.P. 1000 Louisiana, Suite 3400 Houston, Texas 77002-5007 Attention: Bryan W. Baker Facsimile: (713) 276-6754 -19- 23 (b) If to a Seller: Mr. James L. Schultz Ms. Helen D. Schultz Mr. David J. Vagnoni c/o Computer Research, Inc. Southpointe Plaza I, Suite 300 400 Southpointe Boulevard Cannonsburg, Pennsylvania 15317-8539 (c) If to the Company: Computer Research, Inc. Southpointe Plaza I, Suite 300 400 Southpointe Boulevard Cannonsburg, Pennsylvania 15317-8539 with a copy to: Mr. John J. Zak, Esq. Hodgson Russ Andrews Woods & Goodyear, LLP One M&T Plaza, Suite 2000 Buffalo, New York 14203-2391 Facsimile: (716) 849-0349 9.3 Entire Agreement. This Agreement (including the Exhibits and Schedules hereto and the other transaction documents expressly contemplated hereby) constitutes the entire agreement between the parties hereto and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof. 9.4 Binding Effect; Benefit. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, personal representatives, successors and assigns. Except as provided expressly herein, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective heirs, personal representatives, successors and assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement. 9.5 Assignability. This Agreement shall not be assignable by the Sellers or the Company without the prior written consent of the Buyer, or by the Buyer without the prior written consent of the Sellers; provided, however, that Buyer shall be entitled to assign its rights and obligations under this Agreement to an affiliate of such Buyer without the consent of the Sellers, but the Buyer shall not be released from its obligations hereunder. -20- 24 9.6 Amendment; Waiver. This Agreement may be amended, supplemented or otherwise modified only by a written instrument executed by the parties hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and executed by the party so waiving. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants, or agreements contained herein, and in any documents delivered or to be delivered pursuant to this Agreement and in connection with the Closing hereunder. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. 9.7 Section Headings; Index. The section headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. 9.8 Reformation and Severability. If any provision of this Agreement shall be declared by any court of competent jurisdiction to be illegal, void or unenforceable, that provision will, to the extent possible, be modified in such manner as to be valid, legal and enforceable but so as to most nearly retain the intent of the parties hereto as expressed herein, and if such a modification is not possible, that provision will be severed from this Agreement, and in either case the validity, legality and enforceability of the remaining provisions of this Agreement will not in any way be affected or impaired thereby. 9.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. 9.10 Release. Notwithstanding any other provision of this Agreement and subject to the limitations the last sentence of this Section 9.10 sets forth, each Seller hereby unconditionally and irrevocably releases and forever discharges, effective as of and forever after the Closing, to the fullest extent Applicable Law permits, the Buyer and its past, present and future officers, directors, employees, agents and affiliates (including the Company) (collectively, the "Released Parties") from any and all debts, liabilities, obligations, claims, demands, actions or causes of action, suits, judgments or controversies of any kind whatsoever (collectively, "Pre-Closing Claims") against the Company that arise out of or are based on any agreement or understanding or act or failure to act (INCLUDING ANY ACT OR FAILURE TO ACT THAT CONSTITUTES ORDINARY OR GROSS NEGLIGENCE OR RECKLESS OR WILLFUL, WANTON MISCONDUCT), misrepresentation, omission, transaction, fact, event or other matter occurring prior to the time of the Closing (whether based on any law, regulation, right of action, at law or in equity, or otherwise, foreseen or unforeseen, matured or unmatured, known or unknown, accrued or not accrued) (collectively, "Pre-Closing Matters"), including without limitation: (i) claims by such Seller with respect to payment of royalties or repayment of loans or indebtedness; (ii) any rights, titles and interests in, to or under any agreements, arrangements or understandings to which such Seller is a party; and (iii) claims by such Seller with respect to dividends, violation of preemptive rights, or payment of salaries or other compensation or in any way arising out of or in connection with the Seller's employment with the Company, the cessation of that employment, the -21- 25 Seller's status as an officer, director or stockholder of the Company or otherwise (but excluding any and all claims in respect of accrued and unpaid cash compensation owing to the Seller at such rates or in such amounts, as the case may be, as have been in effect for the six months preceding the Closing Date and benefits accrued under each Company benefit plan). Each Seller also agrees not to file or bring any proceeding before any Governmental Entity on the basis of or respecting any Pre-Closing Claim concerning any Pre-Closing Matter against any Released Party. Each Seller (i) acknowledges that he fully comprehends and understands all the terms of this Section 9.10 and their legal effects and (ii) expressly represents and warrants that (A) he is competent to effect the release made in this Section 9.10 knowingly and voluntarily and without reliance on any statement or representation of any Released Party or its representatives and (B) he had the opportunity to consult with an attorney of his choice regarding this Section 9.10. This Section 9.10 will not affect the rights of the Sellers under this Agreement or any other document entered in connection with this Agreement. 9.11 Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to any conflicts of law provisions thereof that would cause the laws of any other jurisdiction to apply. 9.12 Exercise of Rights and Remedies. Except as this Agreement otherwise provides, no delay or omission in the exercise of any right, power or remedy accruing to any party hereto as a result of any breach or default hereunder by any other party hereto will impair any such right, power or remedy, nor will it be construed, deemed or interpreted as a waiver of or acquiescence in any such breach or default, or of any similar breach or default occurring later; nor will any waiver of any single breach or default be construed, deemed or interpreted as a waiver of any other breach or default hereunder occurring before or after that waiver. No right, remedy or election under any term of this Agreement will be deemed exclusive, but each will be cumulative with all other rights, remedies and elections available at law or in equity. 10. Definitions. 10.1 Defined Terms. As used in this Agreement, each of the following terms has the meaning given it below: "affiliate" means, with respect to any person, any other person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such person. "Applicable Law" means any statute, law, rule or regulation or any judgment, order, writ, injunction or decree of any Governmental Entity to which a specified person or property is subject. -22- 26 "Encumbrances" means liens, charges, pledges, options, mortgages, deeds of trust, security interests, claims, restrictions (whether on voting, sale, transfer, disposition or otherwise), licenses, sublicenses, easements and other encumbrances of every type and description, whether imposed by law, agreement, understanding or otherwise. "Governmental Entity" means any court or tribunal in any jurisdiction (domestic or foreign) or any public, governmental or regulatory body, agency, department, commission, board, bureau or other authority or instrumentality (domestic or foreign). "Intellectual Property" means patents, trademarks, service marks, trade names, copyrights, trade secrets, know-how, inventions, and similar rights, and all registrations, applications, licenses and rights with respect to any of the foregoing. "Material Adverse Change" means a material adverse change after the date of this Agreement in the business, condition (financial or otherwise), operations, assets, or prospects of the Company taken as a whole. "person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, enterprise, unincorporated organization or Governmental Entity. "reasonable best efforts" means a party's best efforts in accordance with reasonable commercial practice and without the incurrence of unreasonable expense. "Subsidiary" means any corporation more than 30 percent of whose outstanding voting securities, or any partnership, joint venture, or other entity more than 30 percent of whose total equity interests, is owned, directly or indirectly, by the Company. "Taxes" means any income taxes or similar assessments or any sales, excise, occupation, use, ad valorem, property, production, severance, transportation, employment, payroll, franchise or other tax imposed by any United States federal, state or local (or any foreign or provincial) taxing authority, including any interest, penalties or additions attributable thereto. 10.2 References. All references in this Agreement to Sections, paragraphs and other subdivisions refer to the Sections, paragraphs and other subdivisions of this Agreement unless expressly provided otherwise. The words "this Agreement", "herein", "hereof", "hereby", "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. Whenever the words "include", "includes" and "including" are used in this Agreement, such words shall be deemed to be followed by the words "without limitation". Each reference herein to a Schedule, Exhibit or Annex refers to the item identified separately in writing by the parties hereto as the described Schedule, Exhibit or Annex to this -23- 27 Agreement. All Schedules, Exhibits and Annexes are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Wherever the context shall so require, all words herein in the male gender shall be deemed to include the female or neuter gender, all singular words shall include the plural, and all plural words shall include the singular. The language used in this Agreement shall be deemed to be the language the parties hereto have chosen to express their mutual intent, and no rule of strict construction will be applied against any party hereto. [Remainder of Page Intentionally Left Blank] -24- 28 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement on the date first above written. /s/ James L. Schultz --------------------------------- JAMES L. SCHULTZ JAMES L. SCHULTZ AND HELEN D. SCHULTZ, AS TENANTS BY THE ENTIRETIES AND AS JOINT TENANTS By: /s/ James L. Schultz ------------------------------ James L. Schultz and By: /s/ Helen D. Schultz -------------------------- Helen D. Schultz /s/ David J. Vagnoni --------------------------------- DAVID J. VAGNONI COMPUTER RESEARCH, INC. By: /s/ James L. Schultz ------------------------------ Name: James L. Schultz Title: President CRI ACQUISITION, INC. By: /s/ Rodger O. Riney ------------------------------ Name: Rodger O. Riney Title: President [Signature Page to Purchase Agreement] 29 GUARANTY The undersigned (the "Guarantor") hereby irrevocably, unconditionally and absolutely guarantees, in favor of the Sellers and the Company the truth and accuracy of the representations and warranties made by Buyer in this Agreement and the full performance by Buyer of its covenants and agreements (the "Obligations") under this Agreement. Any of the Sellers or the Company may enforce the Guarantors' obligations hereunder without first suing or enforcing its rights or remedies against Buyer. Guarantor hereby waives (a) notice of acceptance of this guaranty, (b) notice of the occurrence of any breach or default by Buyer in respect of the Obligations, and (c) demand for payment, presentment, protest, notice of protest and non-payment, or other notice of default. The Guarantor hereby consents and agrees to, and acknowledges that his obligations hereunder shall not be released or discharged by, the following: (a) the renewal, extension, modification, increase, amendment or alteration of the Obligations, (b) any waiver, extension or compromise granted to Buyer by the Sellers or the Company, (c) the insolvency, bankruptcy, liquidation or dissolution of Buyer, (d) the invalidity, illegality or unenforceability of all or any part of the Obligations, (e) the full or partial release of Obligations, and (f) the extension or waiver of the time for Buyer's performance of or compliance with any of the Obligations. EXECUTED as of the date first set forth above. /s/ Rodger O. Riney -------------------------------- RODGER O. RINEY 30 ANNEX I to Purchase Agreement The capitalized terms used in this Annex I have the meanings set forth in the Purchase Agreement to which this Annex I is attached, except that the term "Agreement" shall be deemed to refer to said Purchase Agreement. Certain Conditions of the Offer. Notwithstanding any other provision of the Offer, Buyer shall not be required to accept for payment or pay for, and may delay the acceptance for payment of or payment for any tendered Shares or may terminate or amend the Offer, if (i) the number of Shares validly tendered and not withdrawn immediately prior to the expiration of the Offer plus the number of Seller Shares purchased in the Initial Purchase shall be less than two-thirds of the Company's outstanding Common Stock determined on a fully diluted basis (including, without limitation, all Shares issuable by the Company upon the exercise of any options, warrants or rights, or upon the conversion or exchange of any securities or rights convertible into or exercisable or exchangeable for Shares) (the "Minimum Condition"), or (ii) on or after the date of the Agreement and at or before the time of payment for any of such Shares (whether or not any Shares have theretofore been accepted for payment) any of the following shall occur and be continuing: (a) there shall be in effect an injunction, order, decree, judgment, statute, rule, or regulation which (i) materially restricts or prohibits the making or consummation of the Offer, (ii) materially restricts or prohibits the ownership or operation by Buyer of its or the Company's business or assets or compels Buyer (or any of its respective affiliates) to dispose of or hold separate any material portion of its or the Company's business or assets, (iii) imposes any material limitations on the ability of Buyer effectively to acquire or to hold or to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by Buyer on all matters properly presented to the shareholders of the Company, or (iv) imposes any limitations on the ability of Buyer or any of its affiliates effectively to control in any material respect the business and operations of the Company; or (b) there shall be instituted, pending or threatened any suit, action, or proceeding which has a reasonable probability of resulting in (i) any of the consequences referred to in paragraph (a) immediately preceding, (ii) the assessment of material damages against the Company, Buyer or any of their affiliates with respect to the transactions contemplated by this Agreement, or (iii) a Material Adverse Change; or 31 (c) (i) any general suspension of, or limitation on prices for, trading in securities on the New York Stock Exchange or the United States over-the-counter market, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any limitation by any Governmental Authority or any other event which is reasonably likely to have a material adverse effect on the extension of credit by banks or other lending institutions of the United States, (iv) a commencement of a war, armed hostilities or other national or international calamity or national emergency directly involving or directly affecting the United States, (v) in the case of any of the foregoing (except for (iv)) existing at the date of execution of the Agreement, any material acceleration or worsening thereof; or (d) the Company shall have breached or failed to perform any of its obligations, covenants or agreements under the Agreement (except where such breaches would not, in the aggregate, constitute a Material Adverse Change); or (e) any representation or warranty of the Company set forth in the Agreement shall have not been true when made (except where such failures to be true would not, in the aggregate, constitute a Material Adverse Change); or (f) any representation or warranty of the Company set forth in the Agreement, if made again as of the date of the consummation of the Offer, would not be true as of such date (except where such failures to be true would not, in the aggregate, constitute a Material Adverse Change); or (g) the Agreement shall have been terminated pursuant to its terms; or (h) the Company's Board of Directors shall have (i) withdrawn or adversely modified its approval or recommendation in favor of the Offer, (ii) after receipt of an Acquisition Proposal by the Company, failed to publicly reconfirm its recommendations as set forth in Section 1.2 of the Agreement within five business days after the Company's receipt of Buyer's written request for such reconfirmation, or (iii) recommended acceptance, or shall have determined to recommend acceptance, of any Acquisition Proposal received by the Company after the date of the Agreement; or (i) Buyer and the Company shall have agreed that Buyer shall amend the Offer to terminate the Offer or postpone the payment for Shares pursuant thereto; which in the reasonable judgment of Buyer, in any such case, and regardless of the circumstances giving rise to any such condition (other than circumstances caused by the breach by Buyer of its obligations under the Agreement), makes it inadvisable to proceed with the Offer or with acceptance for payment or payment for Shares. The foregoing conditions (other than the Minimum Condition) are for the sole benefit of Buyer, subject to the terms of the Agreement, and may be asserted or waived by Buyer in whole or Annex I - 2 32 in part, at any time and from time to time, in the sole discretion of Buyer. The failure by Buyer at any time to exercise its rights under any of the foregoing conditions shall not be deemed a waiver of any such rights and each such right shall be deemed an ongoing right which may be asserted at any time or from time to time. Annex I - 3 33 ANNEX II The Company and Schultz shall enter into: (a) An Employment Agreement having a term of one year and a salary of $200,000 per year. The Employment Agreement will provide that it may be extended by mutual agreement of Schultz and the Company. The Employment Agreement will provide that Schultz shall have generally the same duties, title and responsibilities as he currently has with the Company. (b) A Consulting Agreement, which shall begin upon termination of the Employment Agreement and extend for two years thereafter, at a fee of $100,000 per year. The Consulting Agreement will require Schultz to consult with the Company from time to time as requested by the Company. The Company and Vagnoni shall enter into a two-year Consulting Agreement at a fee of $50,000 in the first year and $25,000 in the second. The Consulting Agreement will require Vagnoni to consult with the Company from time to time as requested by the Company. EX-99.D2 10 ex99-d2.txt 1ST AMENDMENT TO PURCHASE AGREEMENT - 08/01/2000 1 EXHIBIT 99(d)(2) FIRST AMENDMENT TO PURCHASE AGREEMENT This First Amendment (this "Amendment") is made and entered into as of August 1, 2000 by and among JAMES L. SCHULTZ, JAMES L. SCHULTZ AND HELEN D. SCHULTZ AS TENANTS BY THE ENTIRETIES AND AS JOINT TENANTS, and DAVID J. VAGNONI (collectively, the "Sellers"), COMPUTER RESEARCH, INC., a Pennsylvania corporation (the "Company"), and CRI ACQUISITION, INC., a Delaware corporation and its permitted assigns hereunder ("Buyer"). RECITALS: -------- WHEREAS, the Sellers, the Company and Buyer entered into that certain Purchase Agreement dated July 7, 2000 (the "Purchase Agreement"); and WHEREAS, the Sellers, the Company and Buyer desire to amend the Purchase Agreement in certain respects; NOW, THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. The introductory language of Section 4.2 is hereby amended to read as follows: "4.2 Conduct of the Business. Except as specifically required or contemplated by this Agreement or otherwise consented to or approved in writing by Buyer, during the period commencing on the date hereof and ending on the date of the conclusion or abandonment of the merger described in Section 7:" 2. Section 7.3 of the Purchase Agreement is hereby amended to read as follows: "7.3 Merger Without Meeting of Stockholders. In the event that the Offer is commenced and Buyer shall acquire in the aggregate at least 80% of the outstanding shares of the voting capital stock of the Company, pursuant to the Offer or otherwise (including the purchase of the Seller Shares pursuant to this Agreement), the parties hereto shall, at the request of Buyer and subject to the provisions of this Section 7, take all necessary and appropriate action to cause a corporation wholly owned by Buyer to be merged with and into the Company, with the Company as the surviving corporation, without a meeting of stockholders of the Company, in accordance with the Applicable Law; such that each share of capital stock of the corporation wholly owned by Buyer shall be canceled and cease to be outstanding and each share of the Company Common Stock shall be exchanged for cash consideration equal to the Offer Price." 2 3. Section 7.4(a) of the Purchase Agreement is hereby amended to read as follows: "(a) Long Form Merger. In the event that Buyer shall acquire in the aggregate less than 80% but more than 66 2/3% of the outstanding shares of the voting capital stock of the Company, pursuant to the Offer or otherwise (including the purchase of the Seller Shares pursuant to this Agreement), then, as soon as practicable after the acquisition of Shares in the Offer the parties hereto shall, subject to the provisions of this Section 7, take all necessary and appropriate action to cause either (i) a corporation wholly owned by Buyer to be merged with and into the Company or (ii) Buyer to be merged with and into the Company, with in each such case the Company as the surviving corporation, in accordance with the Applicable Law; such that each share of capital stock of the corporation wholly owned by Buyer shall be cancelled and cease to be outstanding and each share of the Company Common Stock shall be exchanged for cash consideration equal to the Offer Price." 4. The Purchase Agreement, as amended by this Amendment, shall continue in full force and effect in accordance with its terms. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 2 3 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment to be effective as of the date first above written. /s/ JAMES L. SCHULTZ ---------------------------------------- JAMES L. SCHULTZ JAMES L. SCHULTZ AND HELEN D. SCHULTZ, AS TENANTS BY THE ENTIRETIES AND AS JOINT TENANTS By: /s/ JAMES L. SCHULTZ ------------------------------------- James L. Schultz and By: /s/ HELEN D. SCHULTZ --------------------------------- Helen D. Schultz /s/ DAVID J. VAGNONI ---------------------------------------- DAVID J. VAGNONI COMPUTER RESEARCH, INC. By: /s/ JAMES L. SCHULTZ ------------------------------------- Name: James L. Schultz Title: President CRI ACQUISITION, INC. By: /s/ RODGER O. RINEY ------------------------------------- Name: Rodger O. Riney Title: President EX-99.D4 11 ex99-d4.txt 1ST AMENDMENT TO FINANCIAL ADVISORY AGREEMENT 1 EXHIBIT 99(d)(4) FIRST AMENDMENT TO FINANCIAL ADVISORY AGREEMENT This First Amendment to Financial Advisory Agreement (this "Amendment") is made and entered into as of August 1, 2000, by and between Rodger O. Riney ("Riney"), Sanders Morris Harris Inc. (the "Advisor") and CRI Acquisition, Inc. ("CRI Acquisition"). 1. Reference is hereby made to the Financial Advisory Agreement dated June 30, 2000 by and between Riney and Advisor, concerning the acquisition of Computer Research, Inc. (the "Advisory Agreement"). 2. The Advisory Agreement is hereby amended to include CRI Acquisition as a party and for all purposes thereunder, the term "Client" shall mean Rodger O. Riney and CRI Acquisition, jointly and severally. 3. The Advisor agrees, that in any jurisdiction, if any, and only in such jurisdiction, where securities, blue sky or other laws require the Clients' Offer to Purchase tender offer statement to be made by a licensed broker or dealer, the Offer to Purchase shall be deemed to be delivered on behalf of Client by Advisor. Advisor shall not be requested by Client to make, nor shall Advisor make any recommendation or solicitation in connection with the tender offer. 4. The Client agrees that the activities of the Advisor set forth in paragraph 3 of this Amendment shall be deemed for all purposes to be activities under the Advisory Agreement, and subject to each of the provisions thereof, including those involving confidentiality and indemnification. 5. The Advisory Agreement, as amended by this First Amendment, shall continue in full force and effect in accordance with its terms. IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written. CRI ACQUISITION, INC. By: /s/ RODGER O. RINEY -------------------------------------- Rodger O. Riney, President /s/ RODGER O. RINEY ----------------------------------------- RODGER O. RINEY SANDERS MORRIS HARRIS INC. By: /s/ BRUCE MCMAKEN -------------------------------------- Bruce McMaken, Sr. Vice President -----END PRIVACY-ENHANCED MESSAGE-----