<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
LOISLAW.COM, INC.
AT
$4.3545 NET PER SHARE
BY
LL ACQUISITION CORP.,
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
WOLTERS KLUWER U.S. CORPORATION
------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MONDAY, JANUARY 29, 2001, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER,
DATED AS OF DECEMBER 19, 2000, BY AND AMONG WOLTERS KLUWER U.S. CORPORATION (THE
"PARENT"), LL ACQUISITION CORP. (THE "OFFEROR") AND LOISLAW.COM, INC. (THE
"COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER, THE MERGER AND THE MERGER AGREEMENT (AS EACH SUCH TERM IS DEFINED
HEREIN), HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS, AND UNANIMOUSLY
RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED BY THE EXPIRATION DATE (AS DEFINED HEREIN) AND NOT WITHDRAWN AT LEAST
THAT NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE ("SHARES"), OF
THE COMPANY WHICH WOULD CONSTITUTE TWO-THIRDS OF THE SHARES OUTSTANDING ON A
FULLY DILUTED BASIS, (ii) RECEIPT BY THE OFFEROR OF CERTAIN GOVERNMENTAL
APPROVALS AND (iii) THE SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS. SEE
SECTION 14--"CERTAIN CONDITIONS TO OUR OBLIGATIONS", WHICH SETS FORTH IN FULL
THE CONDITIONS OF THE OFFER.
---------------------
THIS OFFER IS NOT CONDITIONED UPON THE OFFEROR OR THE PARENT OBTAINING
FINANCING.
---------------------
If you wish to tender all or any part of your Shares you should either
(i) complete and sign the Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions in the Letter of Transmittal, have your
signature thereon guaranteed, if required by Instruction 1 to the Letter of
Transmittal, mail or deliver the Letter of Transmittal, or such facsimile
thereof, and any other required documents to the Depositary (as defined herein)
and either deliver the certificates for such Shares to the Depositary or deliver
such Shares pursuant to the procedures for book-entry transfers set forth in
Section 3--"Procedure for Tendering Shares" prior to the expiration date of the
Offer or (ii) request your broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for you. If you have Shares registered
in the name of a broker, dealer, commercial bank, trust company or other
nominee, you must contact such broker, dealer, commercial bank, trust company or
other nominee if you desire to tender such Shares.
If you desire to tender your Shares and your certificates for such Shares
are not immediately available, or if you cannot comply with the procedures for
book-entry transfers described in this Offer to Purchase on a timely basis, you
may tender such Shares by following the guaranteed delivery procedures set forth
in Section 3--"Procedure for Tendering Shares".
A summary of the principal terms of the Offer appears on pages 1-3 hereof.
If you have questions about the Offer, you can call Georgeson Shareholder
Communications Inc., the information agent for the Offer, or Merrill Lynch,
Pierce, Fenner & Smith Incorporated, the dealer manager for the Offer, at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. You can also obtain additional copies of this Offer to
Purchase, the related Letter of Transmittal and the Notice of Guaranteed
Delivery from Georgeson Shareholder Communications Inc., or your broker, dealer,
commercial bank, trust company or other nominee.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION, AND YOU SHOULD CAREFULLY READ BOTH IN THEIR ENTIRETY
BEFORE YOU MAKE A DECISION WITH RESPECT TO THE OFFER.
---------------------
THE DEALER MANAGER FOR THE OFFER IS:
MERRILL LYNCH & CO.
December 29, 2000
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---------------------
TABLE OF CONTENTS
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<TABLE>
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PAGE
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<S> <C>
SUMMARY TERM SHEET.......................................... 1
INTRODUCTION................................................ 4
THE OFFER................................................... 7
1. Terms of the Offer; Expiration Date; Extension of
Tender Period; Termination; Amendment................. 7
2. Acceptance for Payment and Payment for Shares........ 8
3. Procedure for Tendering Shares....................... 9
4. Withdrawal Rights.................................... 12
5. Certain United States Federal Income Tax
Considerations........................................ 12
6. Price Range of Shares; Dividends..................... 13
7. Certain Effects of the Transaction................... 14
8. Certain Information Concerning the Company........... 15
9. Certain Information Concerning Wolters Kluwer, the
Parent, Aspen and the Offeror......................... 16
10. Source and Amount of Funds........................... 16
11. Background of the Offer; Past Contacts, Transactions
or Negotiations with the Company...................... 17
12. Purpose of the Offer and the Merger; Plans for the
Company............................................... 18
13. The Merger Agreement, the Option Agreement, the Note
and the Security Agreement............................ 19
14. Certain Conditions to Our Obligations................ 32
15. Certain Legal Matters................................ 34
16. Fees and Expenses.................................... 36
17. Miscellaneous........................................ 36
Schedule I--Directors and Executive Officers of Wolters
Kluwer, the Parent, Aspen and the Offeror................. 37
</TABLE>
<PAGE>
SUMMARY TERM SHEET
We, LL Acquisition Corp., are an indirect wholly-owned subsidiary of Wolters
Kluwer U.S. Corporation, and we are offering to acquire all the outstanding
shares of common stock of Loislaw.com, Inc. The following are some questions
you, as a stockholder of Loislaw.com, may have and answers to those questions.
This summary sheet is not meant as a substitute for the information contained in
the remainder of this Offer to Purchase and the related Letter of Transmittal,
and the information contained in the summary sheet is qualified in its entirety
by the more detailed descriptions and explanations contained in this Offer to
Purchase and the related Letter of Transmittal. We urge you to carefully read
the entire Offer to Purchase and the related Letter of Transmittal prior to
making any decision regarding whether to tender your Shares.
WHO IS OFFERING TO BUY MY SHARES OF COMMON STOCK OF LOISLAW.COM?
We are LL Acquisition Corp., a Delaware corporation, and we are offering to
purchase your Shares of Loislaw.com, Inc., par value $.001 per share. We are an
indirect wholly-owned subsidiary of Wolters Kluwer U.S. Corporation and we were
formed for the purpose of making this Offer. See Section 9--"Certain Information
Concerning Wolters Kluwer, the Parent, Aspen and the Offeror" and Schedule I.
HOW MANY SHARES ARE YOU SEEKING TO PURCHASE, AT WHAT PRICE, AND DO I HAVE TO PAY
ANY BROKERAGE OR SIMILAR FEES TO TENDER?
We are offering to purchase all the outstanding shares of common stock of
Loislaw.com at a purchase price of $4.3545 per share, net to you, in cash,
without interest. If you tender your Shares directly to the Depositary that we
have hired to complete this transaction, you will not have to pay any brokerage
fees or any similar expenses. If you own your Shares through a broker or other
nominee, and your broker or other nominee tenders your Shares for you, your
broker or other nominee may charge you a fee. You should check whether your
broker or other nominee will charge you any fee to tender your Shares for you.
See "Introduction" and Section 1--"Terms of the Offer; Expiration Date;
Extension of Tender Period; Termination; Amendment".
WHY ARE YOU MAKING THIS OFFER?
We are making this offer because Wolters Kluwer nv, a corporation organized
under the laws of the Netherlands and our ultimate parent, wants to acquire
Loislaw.com. If the offer is consummated, we intend to merge with and into
Loislaw.com, and Loislaw.com will become an indirect wholly-owned subsidiary of
Wolters Kluwer nv.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Yes. We have the funds available to acquire the Shares in the Offer. See
Section 10--"Source and Amount of Funds".
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION ON WHETHER TO TENDER MY
SHARES IN THE OFFER?
No. Since we are paying cash for your Shares and the Offer is not subject to
a financing condition, we do not think our financial condition is important to
your decision to tender your Shares. See Section 10--"Source and Amount of
Funds".
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER MY SHARES?
You will have until at least 12:00 midnight, New York City time, on Monday,
January 29, 2001, to tender your Shares. We have the right to extend the time
period of the Offer, and Loislaw.com can cause us to extend such time period
under certain conditions. If we extend the time period of the Offer, this will
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extend the time that you will have to tender your Shares. See Section 1--"Terms
of the Offer; Expiration Date; Extension of Tender Period; Termination;
Amendment" and Section 3--"Procedure for Tendering Shares".
CAN YOU EXTEND THE TIME PERIOD OF THE OFFER?
We may, in certain circumstances, extend the time period of the Offer. If we
do extend, we will notify the Depositary of the extension, and we will make a
public announcement. This announcement will be made no later than 9:00 a.m., New
York City time, on the first business day after the day that would have been the
original expiration date. See Section 1--"Terms of the Offer; Expiration Date;
Extension of Tender Period; Termination; Amendment".
HOW DO I TENDER MY SHARES?
To tender your Shares, you must complete and sign the Letter of Transmittal,
which we have enclosed with this Offer to Purchase, indicating that you want to
sell your Shares to us. Then send the Letter of Transmittal along with the
certificates representing your Shares to the Depositary prior to the expiration
of the Offer. If your Shares are held in street name by your broker, dealer,
bank, trust company or other nominee, such nominee can tender your Shares
through The Depository Trust Company. If you cannot deliver all necessary
documents to the Depositary in time, you may be able to complete and deliver to
the Depositary the enclosed Notice of Guaranteed Delivery in lieu of the missing
documents, provided you are able to comply fully with its terms. See
Section 3--"Procedure for Tendering Shares".
IF I TENDER MY SHARES, WHEN WILL I GET PAID?
If the conditions to the Offer are satisfied and we consummate the Offer and
accept your Shares for payment, you will receive payment for the Shares you
tendered as soon as we are legally permitted to do so by applicable law
following the expiration of the Offer.
IF I TENDER MY SHARES, CAN I CHANGE MY MIND?
Yes. You can withdraw your Shares at any time prior to the expiration of the
Offer and, if we have not agreed to accept your Shares for payment by
February 26, 2001, you can withdraw your Shares at any time thereafter until we
accept your Shares for payment. In order to withdraw Shares, you must send
written notice of the withdrawal to the Depositary before the expiration of the
Offer. Be sure to specify the name of the registered holder(s) of the Shares,
the name of the person who tendered the Shares and the number of Shares that are
being withdrawn. See Section 4--"Withdrawal Rights".
WHAT DOES LOISLAW.COM'S BOARD OF DIRECTORS THINK OF THE OFFER?
Loislaw.com's board of directors has unanimously approved the Offer and has
unanimously determined that the Offer is fair to you and in your best interests.
See Section 11--"Background of Offer; Past Contacts; Transactions or
Negotiations with the Company".
WILL THE OFFER BE FOLLOWED BY A MERGER?
We and our parent have entered into a merger agreement with Loislaw.com that
provides that if we acquire at least two-thirds of Loislaw.com's outstanding
Shares pursuant to the Offer, we will be merged into Loislaw.com as soon as
practicable after the acquisition and the satisfaction of certain other
conditions contained in the merger agreement. If we acquire at least two-thirds
of the outstanding Shares, we will have sufficient voting power to approve the
merger without the approval of any other Loislaw.com stockholders.
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IF I OBJECT TO THE PRICE BEING OFFERED, WILL I HAVE APPRAISAL RIGHTS?
No. Appraisal rights are not available in the Offer. However, if the
proposed merger between us and Loislaw.com is consummated, then you would have
certain rights under the Delaware General Corporation Law to dissent and demand
appraisal of, and payment in cash of the fair value of, your Shares. See
Section 12--"Purpose of the Offer and the Merger; Plans for the Company" and
Section 15--"Certain Legal Matters".
WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF TENDERING MY
SHARES?
Your sale of Shares pursuant to this Offer is a taxable event for United
States federal income tax purposes and in all likelihood for state, local and
perhaps foreign income tax purposes. To the extent that the proceeds that you
receive from the sale of your Shares pursuant to this Offer exceed your basis in
the Shares sold, you may realize a capital gain. If your basis in the Shares
sold exceeds the proceeds you received pursuant to the sale, you may realize a
capital loss. Because tax matters are complicated, we encourage you to contact
your own tax advisor to determine the particular tax consequences of our Offer
to you. See Section 5--"Certain United States Federal Income Tax
Considerations".
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On December 28, 2000, the last trading day before the commencement of this
Offer, the Shares closed on the Nasdaq National Market at $4.21875 per share. On
December 18, 2000, the last trading day before the public announcement of our
intention to purchase the Shares, the Shares closed on the Nasdaq National
Market at $1.50 per share. Please obtain a recent quotation for your Shares
prior to deciding whether or not to tender.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
The consummation of this Offer is most significantly conditioned upon us
purchasing at least two-thirds of the outstanding Shares, on a fully diluted
basis. The Offer is also conditioned upon, among other things, our receiving all
material regulatory and related approvals; the absence of litigation challenging
this Offer or any law enacted preventing this Offer; and the absence of any
material adverse change affecting the business of Loislaw.com. See
Section 14--"Certain Conditions of Our Obligations".
IF THE NUMBER OF SHARES THAT REPRESENT AT LEAST TWO-THIRDS OF THE FULLY DILUTED
OUTSTANDING SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL LOISLAW.COM
CONTINUE AS A PUBLIC COMPANY?
Yes. However, if and when the merger takes place, Loislaw.com will no longer
be publicly owned. It is possible that, following the purchase of Shares
pursuant to the Offer and prior to the merger, there may be so few remaining
stockholders and publicly held Shares that the Shares will no longer be eligible
to be traded on the Nasdaq National Market or any other securities exchange,
there may not be an active public trading market (or, possibly, any public
trading market) for the Shares and Loislaw.com may cease making filings with the
United States Securities and Exchange Commission or otherwise cease being
required to comply with its rules relating to publicly held companies.
IF I DECIDE NOT TO TENDER MY SHARES, HOW WILL THE OFFER AFFECT MY SHARES?
As indicated above, if the Offer is successful, we expect to consummate a
merger transaction in which all stockholders not tendering in the Offer will
receive, for each Share they hold, $4.3545 in cash, without interest, subject to
their appraisal rights as described above.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER?
If you have any questions about the Offer, you can call Georgeson
Shareholder Communications Inc., the information agent for the Offer, at (800)
223-2064 (toll free) or Merrill Lynch, Pierce, Fenner & Smith Incorporated, the
dealer manager for the Offer, at (212) 236-3790 (call collect).
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To the Holders of Common Stock,
par value $.001 per share, of Loislaw.com, Inc.:
INTRODUCTION
We, LL Acquisition Corp., a Delaware corporation (the "Offeror") and an
indirect wholly-owned subsidiary of Wolters Kluwer U.S. Corporation, a Delaware
corporation (the "Parent"), hereby offer to purchase all outstanding shares of
common stock, par value $.001 per share (the "Common Stock" or the "Shares"), of
Loislaw.com, Inc., a Delaware corporation (the "Company" or "Loislaw.com"), at a
purchase price of $4.3545 per Share net to the seller in cash (such price, or
such higher price per Share as may be paid in the Offer (as defined below),
referred to herein as the "Offer Price"), without interest, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, constitute the "Offer"). The Parent is an indirect wholly-owned
subsidiary of Wolters Kluwer nv, a corporation organized under the laws of the
Netherlands ("Wolters Kluwer"). If you hold your Shares directly, you will not
be obligated to pay brokerage fees or commissions or, except as set forth in the
Letter of Transmittal, transfer taxes on the purchase of Shares pursuant to the
Offer. If you hold your Shares through a broker, dealer, bank, trust company or
other nominee, you should check with such broker, dealer, bank, trust company or
other nominee as to whether they charge any service fees. We will pay all
charges and expenses of Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), which is acting as dealer manager for the Offer (in such
capacity, the "Dealer Manager"), Morgan Guaranty Trust Company of New York,
which is acting as depositary for the Offer (the "Depositary") and Georgeson
Shareholder Communications Inc., which is acting as information agent for the
Offer (the "Information Agent"), incurred in connection with the Offer. See
Section 16--"Fees and Expenses".
The Board of Directors of the Company has unanimously approved the Offer,
the Merger (as defined below) and the Merger Agreement (as defined below), has
unanimously determined that the Offer and the Merger are fair to, and in the
best interests of, the Company's stockholders, and unanimously recommends that
the Company's stockholders accept the Offer and tender their Shares pursuant to
the Offer.
The Offer is conditioned upon, among other things, there being validly
tendered by the Expiration Date (as defined below) and not withdrawn at least
that number of Shares which would constitute two-thirds of the Shares
outstanding on a fully diluted basis (the "Minimum Condition"). The Offer is
also conditioned upon us obtaining certain governmental approvals and the
satisfaction of other terms and conditions. See Section 14--"Certain Conditions
to Our Obligations".
The Company has represented to us in the Merger Agreement that the Board of
Directors of the Company has received the opinion of U.S. Bancorp Piper Jaffray,
dated as of December 18, 2000, to the effect that, as of the date of such
opinion, and based upon and subject to the assumptions, factors and limitations
set forth therein, the $4.3545 per share in cash to be received by the holders
of Shares in the Offer and the Merger was fair from a financial point of view to
such holders. A copy of such opinion is contained in the Company's Statement on
Schedule 14D-9, which the Company is distributing to its stockholders.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of December 19, 2000 (the "Merger Agreement"), by and among the Parent, the
Offeror and the Company. The Merger Agreement provides that, among other things,
as soon as practicable after the purchase of Shares pursuant to the Offer and
the satisfaction of the other conditions set forth in the Merger Agreement and
in accordance with the relevant provisions of the Delaware General Corporation
Law, as amended (the "Delaware GCL"), we will be merged with and into the
Company (the "Merger"). See Section 12--"Purpose of the Offer and the Merger;
Plans for the Company". Following consummation of the Merger, the Company will
continue as the surviving corporation (the "Surviving Corporation") and will be
an indirect wholly-owned subsidiary of the Parent. At the effective time of the
Merger (the "Effective Time"), each Share of the Common Stock that is issued and
outstanding (other than Shares owned by the Company as treasury Stock, any
Shares owned by us, the Parent, or any other wholly-owned subsidiary of the
Parent, which shall be cancelled, and Shares held by stockholders who have
properly exercised appraisal rights under Delaware GCL, if any), will be
converted into the right to receive the Offer Price, without interest, upon
surrender of the certificates formerly representing such Shares. See Section
5--"Certain United States Federal Income Tax Considerations" for a description
of certain tax consequences of the Offer and
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the Merger. We and the Parent have represented and warranted under the Merger
Agreement that they have sufficient funds to purchase all the outstanding Shares
of the Company. See Section 13--"The Merger Agreement, the Option Agreement, the
Note and the Security Agreement".
The Merger Agreement provides that, promptly after we acquire at least
two-thirds of the outstanding Shares, pursuant to the Offer, we will be entitled
to designate up to that number of directors of the Board of Directors of the
Company (rounded up to the next whole number) as will make the percentage of the
Company's Board of Directors designated by us equal to the aggregate voting
power of the Shares we or any of our affiliates hold. Notwithstanding the
foregoing, until the Effective Time, the Company will have on its Board of
Directors at least two directors who were directors of the Company on the date
of the Merger Agreement; provided, that subsequent to the purchase of and
payment for Shares pursuant to the Offer, we will always have our designees
represent at least a majority of the entire Company's Board of Directors.
The Company has advised us that as of December 19, 2000, there were
(i) 50,000,000 authorized Shares, of which 21,244,849 Shares were issued and
outstanding and 164,444 Shares were held in treasury, (ii) outstanding stock
options under the Company's 1996 Stock Plan, the 1999 Nonqualified Stock Option
Plan for Nonemployee Directors and the Loislaw.com, Inc. 2000 Stock Option Plan
(collectively, the "Option Plans") for not in excess of 1,266,618 Shares,
(iii) 19,566 Shares reserved for issuance as part of the Company's Employee
Stock Purchase Plan, (iv) 33,056 Shares reserved for issuance upon exercise of
certain warrants to purchase Shares, and (v) 10,000,000 Shares of preferred
stock authorized, none of which were issued and outstanding as of such date. We,
together with the Parent, have entered into a Stock Option and Tender Agreement,
dated as of December 19, 2000 (the "Option Agreement"), with the stockholders of
the Company identified therein (each a "Stockholder" and collectively, the
"Stockholders") beneficially owning an aggregate of 14,279,590 outstanding
Shares (representing approximately 63.28% of the Shares outstanding on
December 19, 2000, on a fully diluted basis). Pursuant to the Option Agreement,
each Stockholder has agreed, among other things, (i) to tender in the Offer all
of such Stockholder's Shares now owned or which may hereafter be acquired by
such Stockholder, (ii) to grant to the Parent or us, as the Parent shall
designate, the option to purchase such Stockholder's Shares in certain
circumstances, (iii) to appoint the Parent as such Stockholder's proxy under
certain circumstances to vote such Stockholder's Shares in connection with the
Merger Agreement, (iv) with respect to certain questions put to stockholders of
the Company for a vote, to vote such Stockholder's Shares, in each case, in
accordance with the terms and conditions of the Option Agreement and (v) to
restrict transfers or exercises of Company Options (as defined in the Option
Agreement), if any, held by such Stockholder except as provided in the Option
Agreement. As of the date hereof, neither we nor the Parent beneficially own any
Shares. If we acquire at least two-thirds of the outstanding Shares on a fully
diluted basis in the Offer, the Minimum Condition will be satisfied, and we
would have sufficient voting power to approve the Merger without the affirmative
vote of any other stockholder. In the event that we acquire 90% or more of the
outstanding Shares, we would be able to effectuate the Merger by appropriate
resolutions of our Board of Directors without any meeting of or action by the
other stockholders of the Company.
We have been advised by the Company that, to the best of the Company's
knowledge, all of the Company's directors and executive officers currently
intend to tender all Shares owned by them pursuant to the Offer.
THE OFFER DOES NOT CONSTITUTE A SOLICITATION OF PROXIES FOR ANY MEETING OF
STOCKHOLDERS OF THE COMPANY OR ANY OFFER TO SELL OR SOLICITATION OF OFFERS TO
BUY WOLTERS KLUWER COMMON STOCK OR OTHER SECURITIES, ANY SUCH SOLICITATION WILL
BE MADE ONLY PURSUANT TO SEPARATE PROXY MATERIALS PURSUANT TO THE REQUIREMENTS
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT") AND ANY
SUCH OFFER WILL BE MADE ONLY THROUGH A REGISTRATION STATEMENT AND THE PROSPECTUS
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION. YOU SHOULD READ BOTH DOCUMENTS CAREFULLY IN THEIR
ENTIRETY BEFORE YOU MAKE A DECISION WITH RESPECT TO THE OFFER.
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THE OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE; EXTENSION OF TENDER PERIOD;
TERMINATION; AMENDMENT. 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 extension or amendment), we will accept for payment and pay for all
Shares validly tendered prior to the Expiration Date and not theretofore
properly withdrawn in accordance with Section 4--"Withdrawal Rights". The term
"Expiration Date" means 12:00 midnight, New York City time, on Monday,
January 29, 2001, unless we shall have extended the period of time for which the
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date at which the Offer, as so extended by us, shall expire.
If we shall decide, in our sole discretion, to increase the consideration
offered in the Offer to holders of Shares and if, at the time that notice of
such increase is first published, sent or given to holders of Shares in the
manner specified below, the Offer is scheduled to expire at any time earlier
than the expiration of a period ending on the tenth business day from, and
including, the date that such notice is first so published, sent or given, then
the Offer will be extended until the expiration of such period of ten business
days. For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or a federal holiday, and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
The Offer is conditioned upon satisfaction of the Minimum Condition and our
obtaining certain governmental approvals. We may terminate the Merger Agreement
and the Offer if certain events occur. The Offer is also subject to other terms
and conditions. See Section 14--"Certain Conditions to Our Obligations". We
expressly reserve the right (but shall not be obligated), in accordance with
applicable rules and regulations of the United States Securities and Exchange
Commission (the "Commission"), and subject to the limitations set forth in the
Merger Agreement and described below, to waive any condition (other than the
Minimum Condition) to the Offer prior to the Expiration Date. If the Minimum
Condition or any of the other conditions set forth in Section 14--"Certain
Conditions to Our Obligations" have not been satisfied by 12:00 midnight, New
York City time, on Monday, January 29, 2001 (or any other time then set as the
Expiration Date), then we may, subject to the terms of the Merger Agreement as
described below, elect to (i) extend the Offer and, subject to applicable
withdrawal rights, retain all tendered Shares until the expiration of the Offer,
as extended, (ii) subject to complying with applicable rules and regulations of
the Commission, accept for payment all Shares so tendered and not extend the
Offer, or (iii) subject to the Merger Agreement, terminate the Offer and not
accept for payment any Shares and return all tendered Shares to tendering
stockholders. Notwithstanding the foregoing, prior to invoking the conditions
set forth in paragraph (a) or (b) of Section 14--"Certain Conditions to Our
Obligations" with regard to actions taken or statutes, rules, regulations,
judgments, orders or injunctions promulgated, entered or enforced by any
governmental entity of competent jurisdiction in the United States or other
country in which the Company directly or indirectly has material assets or
operations with respect to our ownership of the Shares, operation of the
Company's business or prohibiting the Offer or the Merger, we shall have used
all reasonable efforts to cause any such actions to be taken or any such
judgment, order or injunction to be vacated or lifted.
Under the terms of the Merger Agreement, we shall not amend or waive the
Minimum Condition, decrease the Offer Price, decrease the number of Shares
sought, change the form of consideration to be paid pursuant to the Offer,
impose conditions to the Offer in addition to those set forth in Section 14--
"Certain Conditions to Our Obligations" or amend any other term of the Offer in
any manner adverse to the holders of the Shares.
Subject to the applicable rules and regulations of the Commission and
subject to the limitations set forth in the Merger Agreement, we also expressly
reserve the right, at any time and from time to time, in our sole discretion,
(i) to extend the period of time during which the Offer is open and thereby
delay payment for any Shares, regardless of whether such Shares were theretofore
accepted for payment, or to terminate the Offer and not to accept for payment or
pay for any Shares not theretofore accepted for
6
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payment or paid for, upon the occurrence of any of the conditions set forth in
Section 14--"Certain Conditions to Our Obligations", by giving written notice of
such delay or termination to the Depositary, and (ii) at any time or from time
to time, to amend the Offer in any respect. Our right to delay payment for any
Shares or not to pay for any Shares theretofore accepted for payment is subject
to the applicable rules and regulations of the Commission, including
Rule l4e-l(c) under the Exchange Act, relating to our obligation to pay for or
return tendered Shares promptly after the termination or withdrawal of the
Offer. Under no circumstances will interest be paid on the purchase price for
tendered Shares, whether or not we exercise our right to extend the Offer. There
can be no assurance that we will exercise our rights to extend the Offer.
Any extension of the period during which the Offer is open, delay in
acceptance for payment or termination or any amendment of the Offer will be
followed, as promptly as practicable, by public announcement thereof, such
announcement, in the case of an extension, to be issued not later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rules 14d-4(c) and 14e-l(d) under the Exchange Act. Without
limiting our obligations and the obligations of the Parent under such rules or
the manner in which we may choose to make any public announcement, we currently
intend to make announcements by issuing a press release to the Dow Jones News
Service and making any appropriate filing with the Commission.
If, subject to the terms of the Merger Agreement, we make a material change
in the terms of the Offer or the information concerning the Offer, or if we
waive a material condition of the Offer, we will disseminate additional tender
offer materials and extend the Offer if and to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act or otherwise. The
minimum period during which a tender offer must remain open following material
changes in the terms of the Offer or the information concerning the offer, other
than a change in price or a change in percentage of securities sought, will
depend upon the facts and circumstances, including the relative materiality of
the terms or information changed. With respect to a change in price or a change
in percentage of securities sought, a minimum period of ten business days is
generally required to allow for adequate dissemination to stockholders and
investor response.
If the Minimum Condition has been satisfied and all other conditions to the
Offer have been satisfied or waived but fewer than 90% of the Shares have been
validly tendered and not withdrawn as of the Expiration Date, we shall accept
and purchase all of the Shares tendered in the initial offer period and may
provide for a subsequent offering period (as contemplated by Rule 14d-11 under
the Exchange Act) as long as providing for the subsequent offering period does
not require the extension of the initial offer period under applicable rules and
regulations of the Commission, which subsequent offering period shall not exceed
twenty business days.
The Company has provided us with the Company's list of stockholders 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 to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), we will
accept for payment and will pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section
4--"Withdrawal Rights" promptly after the later to occur of (a) the Expiration
Date and (b) subject to compliance with
7
<PAGE>
Rule 14e-l(c) under the Exchange Act, the satisfaction or waiver of the
conditions set forth in Section 14--"Certain Conditions to Our Obligations". Our
payment obligations under the Merger Agreement have been guaranteed by the
Parent. See Section 13--"The Merger Agreement, the Option Agreement, the Note
and the Security Agreement". Subject to compliance with Rule 14e-l(c) under the
Exchange Act, we expressly reserve the right to delay payment for Shares in
order to comply in whole or in part with any applicable law. See Section
1--"Terms of the Offer; Expiration Date; Extension of Tender Period;
Termination; Amendment" and Section 15--"Certain Legal Matters". In all cases,
payment for Shares tendered and accepted for payment pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) certificates for such
Shares or timely confirmation (a "Book-Entry Confirmation") of a book-entry
transfer of such Shares into the Depositary's account at The Depository Trust
Company (the "Book-Entry Transfer Facility"), pursuant to the procedures set
forth in Section 3--"Procedure for Tendering Shares", (ii) a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile thereof)
with all required signature guarantees or, in the case of a book-entry transfer,
an Agent's Message (as defined below) and (iii) any other documents required by
the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that we may
enforce such agreement against the participant.
For purposes of the Offer, we will be deemed to have accepted for payment,
and thereby to have purchased, Shares validly tendered and not withdrawn as, if
and when we give written notice to the Depositary of our acceptance of such
Shares for payment. In all cases, payment for Shares purchased pursuant to the
Offer will be made by deposit of the purchase price with the Depositary, which
will act as agent for tendering stockholders for the purpose of receiving
payment from us and transmitting such payment to tendering stockholders. If, for
any reason whatsoever, acceptance for payment of any Shares tendered pursuant to
the Offer is delayed, or we are unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to our rights under Section
1--"Terms of the Offer; Expiration Date; Extension of Tender Period;
Termination; Amendment", the Depositary may, nevertheless, on behalf of the
Offeror, retain tendered Shares, and such Shares may not be withdrawn, except to
the extent that the tendering stockholders are entitled to withdrawal rights as
described in Section 4--"Withdrawal Rights" and as otherwise required by
Rule 14e-l(c) under the Exchange Act. Under no circumstances will we pay
interest on the purchase price for tendered Shares because of any delay in
making such payment.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased or untendered
Shares will be returned, without expense to the tendering stockholder (or, in
the case of Shares delivered by book-entry transfer to the Book-Entry Transfer
Facility, such Shares will be credited to an account maintained within the
Book-Entry Transfer Facility), as promptly as practicable after the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, we increase the price being paid for
Shares accepted for payment pursuant to the Offer, we will pay such increased
consideration for all Shares purchased pursuant to the Offer, whether or not
such Shares were tendered prior to such increase in consideration.
3. PROCEDURE FOR TENDERING SHARES. VALID TENDERS. For Shares to be validly
tendered pursuant to the Offer, (i) the Depositary must receive at the address
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date (A) a properly completed and duly executed Letter of Transmittal (or a
manually signed facsimile thereof), with any required signature guarantees and
certificates representing
8
<PAGE>
such Shares or (B) in the case of a book-entry transfer, an Agent's Message and
a Book-Entry Confirmation, in each case, with any other required documents or
(ii) the tendering stockholder must comply with the guaranteed delivery
procedure set forth below. No alternative, conditional or contingent tenders
will be accepted. 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.
BOOK-ENTRY TRANSFER. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer 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 system may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for transfer. Although delivery of Shares may be
effected through book-entry at the Book-Entry Transfer Facility prior to the
Expiration Date, (i) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer and
any other documents required by the Letter of Transmittal, must, in any case, be
transmitted to and received by the Depositary at the address set forth on the
back cover of this Offer to Purchase or (ii) the guaranteed delivery procedures
described below must be complied with.
SIGNATURE GUARANTEE. Signatures on the Letter of Transmittal must be
guaranteed by a financial institution (including most commercial banks, savings
and loan associations and brokerage houses) which is a member in good standing
of the Securities Transfer Agents Medallion Program, The New York Stock
Exchange, Inc. Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an "Eligible Institution" and collectively "Eligible
Institutions"), unless the Shares tendered thereby are tendered (i) by a
registered holder of Shares who has not completed either the box labeled
"Special Delivery Instructions" or the box labeled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of any
Eligible Institution. If the certificates evidencing Shares are registered in
the name of a person or persons other than the signer of the Letter of
Transmittal, or if payment is to be made, or delivered to, or certificates for
unpurchased Shares are to be issued or returned to, a person other than the
registered owner or owners of such Shares, then the tendered certificates must
be endorsed or accompanied by duly executed stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates, with the signatures on the certificates or stock powers guaranteed
by an Eligible Institution as provided in the Letter of Transmittal. See
Instructions 1 and 5 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely basis, such Shares may nevertheless be tendered if all of
the following guaranteed delivery procedures are duly complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by us, is received by the
Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), and any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and any other documents required by the
Letter of Transmittal, are received by the Depositary within three trading
days after the date of such Notice of Guaranteed
9
<PAGE>
Delivery. The term "trading day" is any day on which the Nasdaq National
Market is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary and must include a guarantee by
an Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
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 option and risk of the tendering stockholder. If delivery is by mail,
registered mail with return receipt requested, properly insured, is recommended.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for such Shares or the Book-Entry
Confirmation, (ii) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), with all 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.
BACKUP FEDERAL INCOME TAX WITHHOLDING. To prevent "backup" withholding with
respect to payment of the purchase price of Shares purchased pursuant to the
Offer or pursuant to the Merger, each tendering stockholder must either provide
the Depositary with such stockholder's correct Taxpayer Identification Number
("TIN") and certify that such stockholder is not subject to backup federal
income tax withholding by completing the Substitute Form W-9 included in the
Letter of Transmittal or establish some other exemption to backup withholding.
Foreign holders must submit a completed Form W-8 to avoid backup withholding.
This form may be obtained from the Depositary. See Instructions 8 and 9 set
forth in the Letter of Transmittal and Section 5--"Certain United States Federal
Income Tax Considerations".
EXAMINATION OF VALIDITY. We will determine, in our sole discretion, all
questions as to the form of documents and the validity, eligibility (including
time of receipt) and acceptance for payment of any tender of Shares and our
determination will be final and binding on all parties. We reserve the absolute
right to reject any or all tenders of any Shares that we determine not to be in
proper form or the acceptance of or payment for which may, in our opinion, be
unlawful. We also reserve the absolute right to waive any of the conditions of
the Offer, subject to the limitations set forth in the Merger Agreement, or any
defect or irregularity in the tender of any Shares. Our interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
Instructions to the Letter of Transmittal) will be final and binding on all
parties. No tender of Shares will be deemed to have been validly made until all
defects and irregularities have been cured or waived. None of us, the Parent,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
OTHER REQUIREMENTS. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), you irrevocably
appoint our designees as your attorneys-in-fact and proxies, each with full
power of substitution, in the manner set forth in the Letter of Transmittal, to
the full extent of your rights with respect to the Shares tendered and accepted
for payment by us (and any and all other Shares or other securities issued or
issuable in respect of such Shares on or after December 29, 2000). All such
powers of attorney and proxies shall be considered coupled with an interest in
the tendered Shares. This appointment is effective when, and only to the extent
that, we accept for payment the Shares deposited with the Depositary. Upon
acceptance for payment, all prior powers of attorney and proxies granted by you
with respect to such Shares or other securities or rights will, without further
action, be revoked and no subsequent proxies may be given or written consent
executed (and, if given or executed, will not be deemed effective). Our
designees will, with respect to the Shares and other securities or rights, be
empowered to exercise all your voting and other rights as they in their sole
judgment deem proper in
10
<PAGE>
respect of any annual or special meeting of the Company's stockholders, or any
adjournment or postponement thereof. We reserve the right to require that, in
order for Shares to be deemed validly tendered, immediately upon our payment for
such Shares, we must be able to exercise full voting and other rights with
respect to such Shares and the other securities or rights issued or issuable in
respect of such Shares, including voting at any meeting of stockholders (whether
annual or special or whether or not adjourned) in respect of such Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute your acceptance of the terms and conditions of the Offer, as
well as your representation and warranty that (i) you have the full power and
authority to tender, sell, assign and transfer the tendered Shares (and any and
all other Shares or other securities issued or issuable in respect of such
Shares on or after December 29, 2000) and (ii) when we accept for payment the
same we will acquire good and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claims. Our acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between you and us upon the terms and subject to
the conditions of the Offer.
4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section
4--"Withdrawal Rights", tenders of Shares made pursuant to the Offer are
irrevocable. You may withdraw tenders of Shares made pursuant to the Offer at
any time prior to the Expiration Date and, unless such Shares are accepted for
payment pursuant to the Offer, they may also be withdrawn at any time after
February 26, 2001. If purchase of or payment for Shares is delayed for any
reason, or if we are unable to purchase or pay for Shares for any reason, then,
without prejudice to our rights under the Offer, tendered Shares may be retained
by the Depositary on our behalf and may not be withdrawn except to the extent
that tendering stockholders are entitled to withdrawal rights as set forth in
this Section 4--"Withdrawal Rights", subject to Rule 14e-1(c) under the Exchange
Act, which provides that no person who makes a tender offer shall fail to pay
the consideration offered or return the securities deposited by or on behalf of
security holders promptly after the termination or withdrawal of the Offer.
To withdraw Shares tendered pursuant to the Offer, a written, telegraphic,
telex or facsimile transmission notice of withdrawal must be timely received by
the Depositary at the address set forth on the back cover of this Offer to
Purchase and must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the registered
holder(s), if different from the name of the person who tendered such Shares. If
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the release of such certificates,
the serial numbers shown on such certificates must be submitted to the
Depositary and, unless such 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 tendered pursuant to the procedures
for book-entry transfer set forth in Section 3--"Procedure for Tendering
Shares", any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and must otherwise comply with such Book-Entry Transfer Facility's
procedures. We will determine, in our sole discretion, all questions as to the
form and validity (including time of receipt) of notices of withdrawal, and our
determination will be final and binding on all parties. None of the Offeror, the
Parent, the Dealer Manager, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section
3--"Procedure for Tendering Shares".
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS. The following
is a summary of certain United States federal income tax considerations of the
Offer and the Merger to holders whose Shares are
11
<PAGE>
purchased pursuant to the Offer or whose Shares are converted to cash in the
Merger (including pursuant to the exercise of appraisal rights). The discussion
is for general information only and does not purport to consider all aspects of
United States federal income taxation that may be relevant to holders of Shares.
The discussion is based on current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), existing, proposed and temporary regulations
promulgated thereunder and administrative and judicial interpretations thereof,
all of which are subject to change. The discussion applies only to holders of
Shares in whose hands Shares are capital assets within the meaning of Section
1221 of the Code, and may not apply to Shares received pursuant to the exercise
of employee stock options or otherwise as compensation, or to certain types of
holders of Shares (such as insurance companies, tax-exempt organizations and
broker-dealers) who may be subject to special rules under the United States
federal income tax laws. This discussion does not discuss the United States
federal income tax consequences to a holder of Shares who, for United States
federal income tax purposes, is a non-resident alien individual, a foreign
corporation, a foreign partnership or a foreign estate or trust, nor does it
consider the effect of any foreign, state or local tax laws.
Because individual circumstances may differ, each holder of Shares should
consult such holder's own tax advisor to determine the applicability of the
rules discussed below to such holder and the particular tax effects to such
holder of the Offer and the Merger, including the application and effect of
state, local and other income tax laws.
The receipt of cash for Shares pursuant to the Offer or the Merger will be a
taxable transaction for United States federal income tax purposes. In general,
for United States federal income tax purposes, a holder of Shares will recognize
gain or loss equal to the difference between (i) the holder's adjusted tax basis
in the Shares sold pursuant to the Offer or converted to cash in the Merger and
(ii) the amount of cash received therefor. Gain or loss must be determined
separately for each block of Shares (i.e., Shares acquired at the same cost in a
single transaction) sold pursuant to the Offer or converted to cash in the
Merger. Assuming that Shares are held as a capital asset, such gain or loss will
be a capital gain or loss. Any such capital gain will be a long-term capital
gain taxable to a non-corporate holder at a maximum rate of 20% if the holder's
Shares have been held for more than one year on the date of sale (in the case of
the Offer) or the Effective Time of the Merger (in the case of the Merger); and
a short-term capital gain taxable to a non-corporate holder at a maximum rate of
up to 39.6% if the Shares have been held for one year or less on the date of
sale (or the Effective Time of the Merger).
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%, unless a holder of Shares (i) is a
corporation or comes within certain exempt categories and, when required,
demonstrates this fact or (ii) provides a correct TIN to the payor, certifies as
to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A holder who does not
provide a correct TIN may be subject to penalties imposed by the Internal
Revenue Service. Any amount paid as backup withholding does not constitute an
additional tax and will be creditable against the holder's United States federal
income tax liability. Each holder of Shares should consult with his or her own
tax advisor as to his or her qualification for exemption from backup withholding
and the procedure for obtaining such exemption. Holders tendering their Shares
in the Offer may prevent backup withholding by completing the Substitute Form
W-9 included in the Letter of Transmittal. See Section 3--"Procedure for
Tendering Shares." Similarly, holders who convert their Shares into cash in the
Merger may prevent backup withholding by completing a Substitute Form W-9 and
submitting it to the paying agent for the Merger.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are traded in the
over-the-counter market, with daily quotations reported on the Nasdaq quotation
system. The Company has never declared or paid a
12
<PAGE>
cash dividend on its common stock. The following table sets forth for the
periods indicated the high and low closing sales price per Share as reported by
published financial sources:
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
1999
Third Quarter (1)...................................... $14.50 $14.50
Fourth Quarter......................................... 44.00 13.25
2000
First Quarter.......................................... $40.25 $17.63
Second Quarter......................................... 19.88 6.19
Third Quarter.......................................... 12.38 4.81
Fourth Quarter (2)..................................... 4.50 0.69
</TABLE>
------------------------
(1) In connection with the Company's initial public offering, the Common Stock
began trading on September 30, 1999.
(2) Through December 28, 2000.
On December 18, 2000, the last full trading day prior to the announcement of
the Offer, the last reported closing sales price per Share as reported on the
Nasdaq National Market was $1.50.
7. CERTAIN EFFECTS OF THE TRANSACTION. MARKET FOR SHARES. Our purchase of
the Shares pursuant to the Offer will reduce the number of Shares that might
otherwise trade publicly and will reduce the number of holders of shares. This
could adversely affect the liquidity and market value of the remaining shares
held by stockholders other than us. Depending upon the aggregate market value
and per Share price of any Shares not purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued inclusion on the Nasdaq
National Market, which requires that an issuer have at least 750,000 publicly
held shares with a market value of $5 million held by at least 400 stockholders
holding round lots and have net tangible assets of at least $4 million. If these
standards are not met, the Shares might nevertheless continue to be included on
the Nasdaq Stock Market with quotations published on the Nasdaq's "additional
list" or in one of the "local lists". However, if the number of holders of
shares of common stock falls below 400, or if the number of publicly held shares
of common stock falls below 750,000, or if there are not at least two market
makers for such shares, NASD rules provide that the common stock would no longer
be "qualified" for Nasdaq Stock Market reporting, and Nasdaq Stock Market would
cease to provide any quotations. Shares held directly or indirectly by an
officer or director of the Company, or by any beneficial owner of more than 10%
of the Shares, ordinarily will not be considered as being publicly held for this
purpose. If, as a result of the purchase of Shares pursuant to the Offer or
otherwise, the Shares no longer meet the requirements for continued inclusion in
any other tier of the Nasdaq Stock Market, and the Shares are no longer included
in any tier of Nasdaq Stock Market, the market for such Shares could be
adversely affected.
In the event the Shares no longer meet the requirements for inclusion in any
tier of the Nasdaq Stock Market, quotations might still be available from other
sources. The extent of the public market for such Shares and availability of
such quotations would, however, depend upon the number of holders of such Shares
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration of the
Shares under the Exchange Act, as described below, and other factors.
The Company intends to delist from the Nasdaq National Market as soon as
practicable following the consummation of the Offer and in any event following
the consummation of the Merger.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application by the
Company to the Commission if there are fewer
13
<PAGE>
than 300 record holders of Shares. It is our intention to seek to cause an
application for such termination to be made as soon after consummation of the
Offer as the requirements for termination of registration of the Shares are met.
If such registration were terminated, the Company would no longer legally be
required to disclose publicly in proxy materials distributed to stockholders the
information which it now must provide under the Exchange Act or to make public
disclosure of financial and other information in annual, quarterly and other
reports required to be filed with the Commission under the Exchange Act, and the
officers, directors and 10% stockholders of the Company would no longer be
subject to the "short-swing" insider trading reporting and profit recovery
provisions of the Exchange Act. Furthermore, if such registration were
terminated, persons holding "restricted securities" of the Company may be
deprived of their ability to dispose of such securities under Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act").
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers. If registration of Shares under the Exchange Act were terminated,
the Shares would no longer be "margin securities."
8. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set
forth herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Although we have no knowledge
that would indicate that statements contained herein based upon such information
or documents are untrue, we do not, nor does the Parent or the Dealer Manager,
assume any responsibility for the accuracy or completeness of the information
concerning the Company, furnished by the Company, or contained in such documents
and records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to us.
The Company is a Delaware corporation with its principal executive offices
located at 105 North 28th Street, Van Buren, Arkansas. The Company is a national
provider of primary and secondary source material for legal research that is
delivered on a subscription basis over the Internet.
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files periodic reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. The Company is required to disclose in such proxy statements
certain information, as of particular dates, concerning the Company's directors
and officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interests of such persons
in transactions with the Company. Such reports, proxy statements and other
information may be inspected at the public reference facilities maintained by
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the regional offices of the Commission located at Seven World Trade Center,
13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison
Street (Suite 400), Chicago, Illinois 60661. Copies of such material may also be
obtained by mail, at prescribed rates, from the Commission's principal office at
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a
World Wide Web site on the internet at http://www.sec.gov that contains reports
and other information regarding registrants that file electronically with the
Commission. Such material should also be available for inspection at the offices
of Nasdaq, 1735 K Street, N.W., Washington D.C. 20006.
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9. CERTAIN INFORMATION CONCERNING WOLTERS KLUWER, THE PARENT, ASPEN AND THE
OFFEROR. We are a Delaware corporation that was formed as an acquisition
vehicle in connection with the Offer, the Merger and the other transactions
contemplated by the Merger Agreement and we will be merged with and into the
Company pursuant to the Merger. We are an indirect wholly-owned subsidiary of
the Parent and a direct wholly-owned subsidiary of Aspen Publishers, Inc., a
Delaware corporation ("Aspen"). Aspen is a direct wholly-owned subsidiary of the
Parent. The Parent is a wholly-owned subsidiary of Wolters Kluwer International
Holding B.V. ("Wolters Kluwer International"), a corporation organized under the
laws of the Netherlands and a wholly-owned subsidiary of Wolters Kluwer. Wolters
Kluwer International and the Parent are holding companies formed by Wolters
Kluwer solely for the purpose of holding shares of capital stock of indirect
subsidiaries of Wolters Kluwer.
Wolters Kluwer (www.wolterskluwer.com) is a multinational information
services company with annual sales of more than EUR 3 billion (1999), employing
approximately 18,000 people in Europe, North America and Asia Pacific. The
company's core activities are publishing in the fields of legal, tax and
business; international health and science; and education. The Wolters Kluwer
certificates of shares are quoted on the Euronext Amsterdam nv. Wolters Kluwer's
United States holdings include Aspen, CCH Incorporated, Facts and Comparisons,
Legal Information Services, Lippincott Williams & Wilkins, Inc., Plenum
Publishing, Inc., Ovid Technologies, Inc. and Blessing/White, Inc. The principal
executive offices of Wolters Kluwer are located at Apollolaan 153, 1070 AV,
Amsterdam, the Netherlands. Our principal executive office and that of the
Parent is c/o Wolters Kluwer United States Inc., 161 North Clark Street, 48th
Floor, Chicago, Illinois 60601. The principal executive office of Aspen is
located at 200 Orchard Ridge Drive, Gaithersburg, Maryland 20878.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of our directors and
executive officers as well as those of Wolters Kluwer, the Parent and Aspen are
set forth in Schedule I hereto.
Except as provided in the Merger Agreement, the Option Agreement and as
otherwise described in this Offer to Purchase, none of Wolters Kluwer, the
Parent, Aspen or us, or, to the best of our knowledge and the best knowledge of
the Parent, none of the persons listed on Schedule I hereto, has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, 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
Wolters Kluwer, the Parent, Aspen or us, or, to the best of our knowledge and
the best knowledge of the Parent, none of the persons listed on Schedule I
hereto, has had, within the past two years, any business relationships or
transactions with the Company or any of its executive officers, directors or
affiliates that would require reporting under the rules of the Commission
applicable to this Offer to Purchase. Except as set forth in this Offer to
Purchase, within the past two years, there have been no contacts, negotiations
or transactions between Wolters Kluwer, the Parent, Aspen or us or any of our
respective subsidiaries, or, to the best of our knowledge and the best knowledge
of the Parent, any of the persons listed on Schedule I hereto, and the Company
or its affiliates, concerning a merger, consolidation or acquisition, tender
offer or other acquisition of securities, election of directors or a sale or
other transfer of a material amount of assets. Except as set forth in this Offer
to Purchase, neither we nor the Parent, nor, to the best of our knowledge and
the best knowledge of the Parent, any of the persons listed on Schedule I
hereto, beneficially owns any Shares or has effected any transactions in the
Shares during the past sixty days.
10. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required to
consummate the Offer and the Merger is estimated to be approximately
$95 million, which amount excludes related fees and expenses. We intend to
obtain the required funds from Wolters Kluwer's available cash balances.
11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS
WITH THE COMPANY.
The Company's Chief Executive Officer, Kyle Parker, contacted Wolters Kluwer
by letter dated April 27, 2000 for purposes of determining whether Wolters
Kluwer might have an interest in entering into
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a strategic business relationship with the Company. U.S. Bancorp Piper Jaffray
also contacted Wolters Kluwer in May 2000. As a result of these contacts and
several subsequent telephone conversations, the Company entered into a
Confidentiality Agreement with the Parent on June 6, 2000 (the "Confidentiality
Agreement"), pursuant to which certain information would be exchanged by the
parties on a confidential basis.
On June 9, 2000, a member of the Parent's senior management and several
members of the senior management of Aspen hosted a presentation made by members
of the Company's management team. Although the focus of this meeting was a
potential strategic business relationship, Parent's representative asked if the
Company would be interested in discussing a possible acquisition of the Company
by Wolters Kluwer or one of its affiliates, and the Company's Chief Executive
Officer indicated that the Company would be willing to entertain such
discussions.
During June, July and August, 2000, the Company's senior management and
senior management of the Parent and Aspen had several telephone conversations
regarding a potential strategic relationship, and a possible acquisition of the
Company was occasionally discussed in general terms.
On August 29, 2000, a member of the Parent's senior management and several
members of Aspen's senior management met with the Company's senior management to
prepare for a presentation to be made to the Executive Board of Wolters Kluwer.
On August 30, 2000, the senior management of the Parent, Aspen and the
Company made a presentation to the Executive Board of Wolters Kluwer via
teleconference. The purpose of this meeting was to provide information about the
Company and its operations to Wolters Kluwer that would enable it to evaluate a
possible acquisition of the Company, but potential terms of an acquisition
transaction were not discussed.
On September 21, 2000, the Parent's senior management hosted a presentation
made by the Company's senior management team to discuss the possible acquisition
of the Company.
Although the parties had begun preliminary discussions regarding a possible
acquisition of the Company, they continued to discuss a possible strategic
business relationship as well. On October 17, 2000, several members of Aspen's
senior management met with the Company's senior management at the Company's
offices in Van Buren, Arkansas. This meeting was devoted primarily to a
discussion of a possible strategic relationship, though a possible acquisition
transaction was discussed on a limited basis.
From November 6, 2000 through November 8, 2000, senior management of Aspen
met with the Chief Executive Officer of the Company in New York primarily to
discuss a possible strategic relationship between the Company and Aspen,
including information integration issues, licensing of content, and marketing
and sales opportunities.
On November 30, 2000, the Executive Board of Wolters Kluwer authorized an
offer, contingent upon receipt of approval by the Supervisory Board of Wolters
Kluwer, to acquire 100% of the equity of the Company for approximately
$90 million. The Parent orally submitted such an offer to the Company on the
afternoon of November 30, 2000 (the "Initial Proposal").
On December 5, 2000, the Company rejected the Initial Proposal and indicated
that the price per share to be offered to the Company's shareholders was
insufficient.
On December 6, 2000, the Supervisory Board of Wolters Kluwer met and
discussed with the Executive Board of Wolters Kluwer the status of the
discussions with the Company.
On December 11, 2000, the Executive Board of Wolters Kluwer authorized a
revised offer, contingent upon receipt of approval by the Supervisory Board of
Wolters Kluwer, to acquire 100% of the equity of the Company for $95 million.
The Parent orally submitted such an offer to the Company on the afternoon of
December 11, 2000 (the "Revised Proposal"). On the evening of December 13, 2000,
the Chief Executive Officer of the Company advised the Parent orally that the
Company had tentatively determined that the price included in the Revised
Proposal was acceptable, subject to final approval of the Company's Board of
Directors and the negotiation of the final terms and conditions of the
transaction.
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From December 13, 2000 through the morning of December 19, 2000, the
Company's legal counsel and financial advisor and our legal counsel and
financial advisor held negotiations concerning the Merger Agreement, the Stock
Option Agreement, the Note and the Security Agreement.
On December 14, 2000, the Executive Board of Wolters Kluwer sent a strategic
evaluation, along with the terms of the Proposal (as defined below) to the
members of the Supervisory Board of Wolters Kluwer.
By December 18, 2000, the Supervisory Board of Wolters Kluwer had reviewed
the Proposal and authorized the Executive Board to proceed with the acquisition
of the Company on the terms set forth in the Merger Agreement, the Option
Agreement, the Note and the Security Agreement (collectively, the "Proposal").
The Company's Board of Directors met with the Company's legal and financial
advisors on December 16 and 18, 2000, and determined to accept the Proposal.
On December 19, 2000, the Merger Agreement, the Option Agreement, the Note
and the Security Agreement were finalized and executed. On the morning of
December 19, 2000, a public announcement was made simultaneously in the United
States and the Netherlands concerning the transaction.
On December 29, 2000, the Parent and the Offeror commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY. The purpose
of the Offer, the Merger, the Merger Agreement and the Option Agreement is to
enable us to acquire control of, and the entire equity interest in, the Company.
The Offer, the Merger Agreement and the Option Agreement are intended to
increase the likelihood that the Merger will be effected as promptly as
practicable.
Under the Certificate of Incorporation of the Company, any merger (other
than a merger effectuated pursuant to the short-form merger provisions of the
Delaware GCL) must be approved by the Company's Board of Directors and the
affirmative vote of the holders of that number of Shares which would constitute
two-thirds of the Shares outstanding. The Company's Board of Directors has
unanimously approved the Offer, the Merger and the Merger Agreement and the
transactions contemplated thereby. The Company has agreed (if required by
applicable law to consummate the Merger) to take all action necessary to convene
a meeting of its stockholders as promptly as practicable after the consummation
of the Offer for the purpose of obtaining stockholder approval of the Merger. We
have agreed that, subject to applicable law, all Shares we own, all Shares owned
by the Parent or any of the Parent's other subsidiaries will be voted in favor
of the Merger. The stockholders' meeting shall be held as soon as practicable
(subject to any statutory or other restrictions) following the purchase of
Shares pursuant to the Offer. If we own that number of Shares which would
constitute two-thirds of the Shares outstanding, approval of the Merger can be
obtained without the affirmative vote of any other stockholder of the Company.
In the event that we acquire 90% or more of the Shares, we would be able to
effectuate the Merger by appropriate resolutions of our Board of Directors
without any meeting of or action by the stockholders of the Company.
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company will
have certain rights under the Delaware GCL to dissent and demand appraisal of,
and payment in cash of the fair value of, their Shares. Such rights, if the
statutory procedures are complied with, could lead to a judicial determination
of the fair value (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their Shares. Any such judicial determination of the fair
value of Shares could be based upon considerations other than or in addition to
the price paid in the Offer and the market value of the Shares, including asset
values and the investment value of the Shares. The value so determined could be
more or less than the purchase price per Share pursuant to the Offer or the
consideration per Share to be paid in the Merger.
In the event that appraisal rights were available, an objecting stockholder
shall cease to have any rights as a stockholder with respect to the Shares
except the right to receive payment of the fair value thereof. The stockholder's
rights may be restored only upon the withdrawal, with the consent of the
Company, of the demand for payment, no filing of a petition for appraisal within
the time required, a
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determination of the court that the stockholder is not entitled to an appraisal,
or the abandonment or rescission of the transaction to which the stockholder
objected.
The foregoing summary of the rights of objecting stockholders does not
purport to be a complete statement of the procedures to be followed by
stockholders desiring to exercise their dissenters' appraisal rights. The
preservation and exercise of dissenters' rights are conditioned on strict
adherence to the applicable provisions of the Delaware GCL.
RULE 13E-3. The Commission has adopted Rule 13e-3 under the Exchange Act,
which is applicable to certain "going private" transactions and which may, under
certain circumstances, be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer or otherwise
in which we seek to acquire the remaining Shares not held by us. We believe,
however, that Rule 13e-3 will not be applicable to the Merger if the Merger is
consummated within one year after the termination of the Offer at the same per
Share price as paid in the Offer. If applicable, Rule 13e-3 requires, among
other things, that certain financial information concerning the Company and
certain information relating to the fairness of the proposed transaction and the
consideration offered to minority stockholders in such transaction be filed with
the Commission and disclosed to stockholders prior to consummation of the
transaction.
PLANS FOR THE COMPANY. Wolters Kluwer believes that the acquisition of the
Company will provide Wolters Kluwer with an opportunity to substantially
accelerate its overall strategy and broaden its ability to deliver comprehensive
Internet portals to legal professionals. The Company will become a unit of
Aspen.
13. THE MERGER AGREEMENT, THE OPTION AGREEMENT, THE NOTE AND THE SECURITY
AGREEMENT. The following is a summary of certain material provisions of the
Merger Agreement, the Option Agreement, the Note and the Security Agreement,
copies of which are attached as exhibits to the Schedule TO we filed in
connection with the Offer. These summaries do not purport to be complete and are
qualified in their entirety by reference to the respective texts of the Merger
Agreement, the Option Agreement, the Note and the Security Agreement.
Capitalized terms used in this Section 13 and not otherwise defined in this
Offer to Purchase shall have the meanings set forth in the Merger Agreement.
THE MERGER AGREEMENT
THE OFFER. The Merger Agreement provides for the commencement of the Offer
not later than the tenth business day from the public announcement of the
execution of the Merger Agreement. Our obligation to accept for payment and to
pay for any Shares validly tendered and not withdrawn is subject only to the
Minimum Condition, and to the other conditions set forth in
Section 14--"Certain Conditions to Our Obligations". The Merger Agreement
provides that we cannot amend or waive the Minimum Condition or decrease the
Offer Price or the number of Shares sought, change the form of consideration to
be paid pursuant to the Offer, impose conditions to the Offer in addition to
those set forth in Section 14--"Certain Conditions to Our Obligations", amend
any other term or condition of the Offer in any manner adverse to the holders of
Shares or extend the Expiration Date of the Offer without the prior written
consent of the Company. Notwithstanding the foregoing, we shall be entitled to
extend the Offer, without the consent of the Company, if at the initial
expiration of the Offer, which will be twenty business days following
commencement of the Offer, or any extension thereof, any condition to the Offer
is not satisfied or waived, and at the Company's request, we shall extend the
Offer from time to time, until June 19, 2001, if at the Expiration Date all of
the Offer conditions have not been satisfied or waived as permitted by the
Merger Agreement. Any extension of the Offer shall not, without the written
consent of the Company, exceed the number of days that we reasonably believe
will be necessary so that the Offer conditions will be satisfied. In addition,
we may, without the consent of the Company, extend any Expiration Date of the
Offer for any period required by applicable rules, regulations, interpretations
or positions of the Commission applicable to the Offer or for any period
required by applicable law. If the Minimum Condition has been satisfied and all
other conditions to the Offer have been satisfied or waived but fewer than 90%
of the
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Shares have been validly tendered and not withdrawn as of the Expiration Date,
we shall accept and purchase all of the Shares tendered in the initial offer
period and may provide for a subsequent offering period (as contemplated by
Rule 14d-11 under the Exchange Act) as long as providing for the subsequent
offering period does not require the extension of the initial offer period under
applicable rules and regulations of the Commission, which subsequent offering
period shall not exceed twenty business days. In addition, the Offer Price may
be increased and the Offer may be extended to the extent required by law in
connection with such increase, in each case without the consent of the Company.
COMPANY ACTIONS. Pursuant to the Merger Agreement, the Company has agreed
that, as promptly as practicable following the commencement of the Offer, it
will file with the Commission and mail to its stockholders, a
Solicitation/Recommendation Statement on Schedule 14D-9 containing the
recommendation of the Board of Directors that the Company's stockholders accept
the Offer and approve the Merger, subject to the fiduciary duties of the
Company's directors under applicable law and to the provisions of the Merger
Agreement.
THE MERGER. The Merger Agreement provides that at the Effective Time, we
shall be merged with and into the Company. Following the Merger, our separate
corporate existence shall cease and the Company shall continue as the Surviving
Corporation and shall succeed to and assume all of our rights and obligations in
accordance with the Delaware GCL.
At the Effective Time, the Certificate of Incorporation of the Company shall
be the Certificate of Incorporation of the Surviving Corporation and our Bylaws
shall be the Bylaws of the Surviving Corporation. Our directors and officers
shall become the directors and officers of the Surviving Corporation.
CONVERSION OF SECURITIES. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any Shares, each holder of a
Share that is issued and outstanding (other than Shares owned by the Company as
treasury stock, and any Shares owned by the Parent, us, or any other
wholly-owned subsidiary of the Parent, which shall be cancelled, and Shares held
by stockholders who have properly exercised appraisal rights under Delaware GCL,
if any) shall acquire the right to receive the Offer Price without interest as
consideration for the conversion of each Share. Each share of our stock issued
and outstanding immediately prior to the Effective Time shall, at the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any of our Shares, be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.001 per share, of the Surviving
Corporation.
REPRESENTATIONS AND WARRANTIES. In the Merger Agreement, the Company has
made customary representations and warranties to us and to the Parent,
including, but not limited to, representations and warranties as to organization
and qualification, subsidiaries, capital structure, authority to enter into the
Merger Agreement and to consummate the transactions contemplated thereby,
required consents and approvals, filings made by the Company with the Commission
under the Exchange Act (including financial statements included in the documents
filed by the Company under that act), absence of material adverse changes,
absence of litigation, employee benefit plans, environmental laws and
regulations, intellectual property, tax matters, liability insurance, the
inapplicability of certain state takeover statutes, engagement of brokers and
finders and the accuracy of information supplied.
We and the Parent have also made customary representations and warranties to
the Company, including, but not limited to, representations and warranties as to
organization, authority to enter into the Merger Agreement and to consummate the
transactions contemplated thereby, required consents and approvals, financing,
accuracy of information supplied and engagement of brokers and finders.
COVENANTS RELATING TO THE CONDUCT OF BUSINESS. During the period from the
date of the Merger Agreement until the time the Parent's director designees have
been elected to, and constitute a majority of, the Board of Directors of the
Company, the Company has agreed that it will, in all material respects, carry on
its business according to its ordinary and usual course, consistent with past
practice, seek to preserve
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intact its current business organization, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it, to the end that its
goodwill and ongoing business shall not be materially impaired. The Company has
agreed that, except as otherwise expressly contemplated by the Merger Agreement,
during such period, the Company will not, without the prior written consent of
the Parent:
(i) issue, sell, grant, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (A) any additional shares of capital stock of any class
(including the Shares), or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of
capital stock, or any rights, warrants, options, calls, commitments or any
other agreements of any character to purchase or acquire any shares of
capital stock or any securities or rights convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of capital stock
or (B) any other securities in respect of, in lieu of, or in substitution
for, Shares outstanding on the date of the Merger Agreement, other than
issuance of Shares upon exercise of options or warrants outstanding as of
the date of the Merger Agreement;
(ii) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding Shares;
(iii) split, combine, subdivide or reclassify any Shares or declare, set
aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any Shares or otherwise
make any payments to stockholders in their capacity as such;
(iv) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company (other than the Merger);
(v) adopt any amendments to its Certificate of Incorporation or Bylaws
or alter through reorganization, restructuring or in any other fashion the
corporate structure or ownership of the Company;
(vi) make any acquisition, by means of merger, consolidation or
otherwise, or disposition, of assets or securities (other than the Merger),
in each case other than in the ordinary course of business consistent with
past practice;
(vii) sell, lease, license, mortgage or otherwise encumber or subject to
any lien (other than liens incurred in connection with any loans from Parent
or one of its affiliates) or otherwise dispose of any of its properties or
assets, except sales in the ordinary course of business consistent with past
practice;
(viii) (A) incur any indebtedness for borrowed money (other than loans
from the Parent or one of its affiliates) or guarantee any such indebtedness
of another person, or issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company, or (B) make any loans,
advances or capital contributions to, or investments in, any other person,
other than the Company;
(ix) make or agree to make any new capital expenditure or expenditures
which, individually, is in excess of $100,000 or, in the aggregate, are in
excess of $500,000;
(x) make any material tax election or settle or compromise any material
income tax liability;
(xi) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) included in the most recent report required to be filed by
the Company with the Commission pursuant to the federal securities laws and
the Commission rules and regulations or incurred in the ordinary course of
business consistent with past practice, or waive any
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benefits of, or agree to modify in any respect, any confidentiality,
standstill or similar agreements to which the Company is a party;
(xii) except in the ordinary course of business, modify, amend or
terminate any contract or agreement to which the Company is a party, or
waive, release or assign any rights or claims;
(xiii) except as required to comply with applicable law, (A) adopt,
enter into, terminate or amend any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or
understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of the Company
(collectively, "Benefit Plans"), other than arrangements or understandings
adopted, entered into, terminated or amended in the ordinary course of
business consistent with past practice, (B) increase in any manner the
compensation or fringe benefits of, or pay any bonus to, any director,
officer or employee (except for normal increases or bonuses in the ordinary
course of business consistent with past practice), (C) pay any benefit not
provided for under any Benefit Plan, (D) except as permitted in clause (B)
above, grant any awards under any bonus, incentive, performance or other
compensation plan or arrangement or Benefit Plan (including the grant of
stock options, stock appreciation rights, stock based or stock related
awards, performance units or restricted stock, or the removal of existing
restrictions in any Benefit Plans or agreement or awards made thereunder) or
(E) other than in the ordinary course of business consistent with past
practice, take any action to fund or in any other way secure the payment of
compensation or benefits under any employee plan, agreement, contract or
arrangement or Benefit Plan;
(xiv) (A) take, or agree or commit to take, any action that would make
any representation or warranty of the Company in the Merger Agreement
inaccurate at the Effective Time (except for representations and warranties
which speak as of a particular date, which need be accurate only as of such
date), (B) omit, or agree or commit to omit, to take any action necessary to
prevent any such representation or warranty from being inaccurate in any
material respect at the Effective Time (except for representations and
warranties which speak as of a particular date, which need be accurate only
as of such date), provided however that the Company shall be permitted to
take or omit to take such action which can be cured, and in fact is cured,
at or prior to the Effective Time or (C) take, or agree or commit to take,
any action that would result in, or is reasonably likely to result in, any
of the conditions to the Merger not being satisfied, except that such action
shall be permitted if it is consistent with the fiduciary duties of the
Company's Board of Directors to the Company's stockholders under applicable
law; or
(xv) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
NO SOLICITATION. The Company has agreed in the Merger Agreement that, from
and after the date of the Merger Agreement and prior to the Effective Time, the
Company (a) will not, nor shall it authorize or permit its officers, directors,
employees, representatives and agents to, initiate, solicit or encourage,
directly or indirectly, any proposal or offer for a merger or other business
combination involving the Company or any proposal or offer to acquire a
significant equity interest in, or a significant portion of any assets of, the
Company other than transactions contemplated by the Merger Agreement (an
"Alternative Proposal") or engage in any negotiations or enter into any
agreement or provide any confidential information or data to any person in
connection with or relating to any Alternative Proposal; (b) will immediately
cease any existing discussions or negotiations, if any, with any parties
conducted prior to the execution of the Merger Agreement with respect to any
Alternative Proposal; and (c) will notify the Parent as soon as practicable if
any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations and/or discussions are sought to be
initiated or continued with, the Company. Notwithstanding the foregoing, the
Company's Board of Directors on behalf of the Company
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shall not be required to act, with respect to unsolicited Alternative Proposals,
in any manner which, in the opinion of the Company's Board of Directors after
consultation with its counsel, could reasonably be deemed inconsistent with its
fiduciary duties to the Company's stockholders or refrain from taking any action
that could reasonably be deemed to be required by such fiduciary duties.
STOCK OPTIONS. As of the Effective Time, each outstanding stock option (an
"Option" and, collectively, the "Options") granted under the Option Plans,
whether or not then vested or exercisable, shall be converted into the right to
receive from the Company an amount of cash equal to the product of (i) the
number of Shares subject to the Option and (ii) the excess, if any, of the
Merger Consideration over the exercise price per Share of such option (the
"Option Consideration"). Prior to the Effective Time, the Company shall take all
steps necessary to give written notice to each holder of an Option that (i) all
Options shall be canceled effective as of the Effective Time and (ii) upon the
execution and delivery to the Company by such holder of an instrument
acknowledging cancellation of all Options held by such holder effective as of
the Effective Time ("Cancellation Instrument"), the Company shall pay such
holder, promptly following the Effective Time, the Option Consideration for all
Options held by such holder. Any amounts payable pursuant to the Merger
Agreement with respect to Options shall be subject to any required withholding
of taxes and shall be paid without interest. Parent agrees to provide the
Company with sufficient funds to permit the Company to satisfy its obligations
under the Merger Agreement to holders of Options.
INDEMNIFICATION. From and after the consummation of the Offer, the Parent
shall and shall cause the Company (or, if after the Effective Time, the
Surviving Corporation) to indemnify, defend and hold harmless all past and
present officers and directors of the Company to the full extent permitted by
applicable law or the Company's Certificate of Incorporation and Bylaws or
indemnification agreements in effect on the date of the Merger Agreement
including provisions relating to the advancement of expenses incurred in the
defense of any action or suit for acts or omissions occurring at or prior to the
Effective Time to the extent that any such claim is based on, or arises out of,
the fact that such person is or was a director or officer of the Company. The
Parent will cause the Surviving Corporation to provide, for an aggregate period
of not less than six years from the Effective Time, the Company's current
directors and officers liability insurance and indemnification policy that
provides coverage for events occurring at or prior to the Effective Time that is
no less favorable than the Company's existing policy. The Merger Agreement also
provides that the Parent shall make proper provision so that our successors and
assigns and the successors and assigns of the Parent will assume the
indemnification obligations described above.
EMPLOYEES. The Merger Agreement provides that, (a) following the Effective
Time, the Surviving Corporation will provide pension, health and welfare
benefits (other than stock option, stock purchase or similar plans) to employees
of the Company who continue their employment after the Effective Time (each, a
"Continuing Employee") on terms which are generally no less favorable to such
Continuing Employee than the benefits being provided to such Continuing Employee
immediately prior to the Effective Time and (b) if at any time the Parent shall
make a determination that any Continuing Employee is eligible to participate in
any of its benefit plans after the Effective Time, then, for purposes of
eligibility and vesting with respect to any such plans, the Parent will cause
the Surviving Corporation to recognize the service of the Continuing Employees
through the Effective Time as if such service had been performed with the
Parent.
BOARD REPRESENTATION. The Merger Agreement provides that promptly after
such time as we acquire the Shares pursuant to the Offer, the Parent shall be
entitled to designate at its option that number of directors, rounded to the
next whole number, of the Company's Board of Directors, subject to compliance
with Section 14(f) of the Exchange Act, as will make the percentage of the
Company's directors designated by the Parent equal to the aggregate voting power
of the Shares owned by us, the Parent or any of our respective affiliates;
provided, however, until the Effective Time, such Board of Directors shall have
at least two directors who are directors on the date of the Merger Agreement
(the "Company Designees"),
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provided, that subsequent to the purchase of and payment for Shares pursuant to
the Offer, the Parent shall always have its designees represent at least a
majority of the entire Company's Board of Directors. From and after the time
that the Parent's designees constitute a majority of the Company's Board of
Directors, any actions relating to the amendment or termination of the Merger
Agreement by the Company or any extension of time requiring the approval of the
Company or waiver of any condition or rights of the Company thereunder or any
action that would adversely affect the rights of the stockholders of the Company
or the holders of options must be approved by a majority of the directors of the
Company then in office who were directors of the Company as of the date of the
Merger Agreement; provided, that if there shall be no such directors, the Parent
will cause to be elected to the Board of Directors of the Company two persons
who shall not be stockholders, affiliates or associates of the Parent or us, and
none of the foregoing may be effected without their consent. Subject to
applicable law, the Company has agreed to take all action which is reasonably
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.
CONDITIONS PRECEDENT. The respective obligations of each party to effect
the Merger are subject to the fulfillment at or prior to the Effective Time of
the following conditions: (i) if required by applicable law, the stockholders of
the Company shall have approved the Merger; provided, however, that we and the
Parent shall vote all of our Shares entitled to vote thereon in favor of the
Merger; (ii) no statute, rule, regulation, executive order, decree, ruling or
injunction or other order issued by any court of competent jurisdiction or other
governmental or regulatory entity preventing the consummation of the Merger
shall be in effect; provided, however, that each of the parties shall have used
its reasonable efforts to have any such decree, ruling, injunction or order
vacated; and (iii) all material governmental consents, orders and approvals
legally required for the consummation of the Merger shall have been obtained and
any waiting period (and any extension thereof) under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and under
antitrust laws of applicable jurisdictions outside the United States applicable
to the Merger shall have expired or been terminated.
TERMINATION. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time:
(a) By the mutual consent of the Parent, the Company and us.
(b) By either the Company or the Parent:
(i) if Shares shall not have been purchased pursuant to the Offer on
or prior to six months from the execution of the Merger Agreement;
provided, however, that the right to terminate shall not be available to
any party whose failure to fulfill any obligation under the Merger
Agreement has been the cause of, or resulted in, our failure or the
failure of the Parent to purchase Shares pursuant to the Offer on or
prior to such date; or
(ii) if any governmental entity of competent jurisdiction in the
United States or other country in which the Company directly or
indirectly has material assets or operations shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling
or other action the parties hereto shall use their respective reasonable
efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by the Merger
Agreement and such order, decree, ruling or other action shall have
become final and non-appealable.
(c) By the Company's Board of Directors:
(i) if, prior to the purchase of Shares pursuant to the Offer,
(A) the Company's Board of Directors shall have entered into or shall
have publicly announced its intention to enter into a definitive
agreement or an agreement in principle with respect to any Alternative
Proposal that the Company's Board of Directors determines, in good faith
after consultation with its financial
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advisors, is a bona fide proposal to acquire, directly or indirectly, all
of the Shares then outstanding or all or substantially all the assets of
the Company, and otherwise on terms which the Company's Board of
Directors determines in good faith (after consultation with the Company's
financial advisor) to be more favorable to the Company and its
stockholders than the Offer and the Merger (a "Superior Proposal");
(B) the Company's Board of Directors shall have withdrawn, or modified or
changed in a manner adverse to the Parent or us, its approval or
recommendation of the Offer, the Merger Agreement or the Merger or shall
have recommended a Superior Proposal or shall have executed, or shall
have announced its intention to enter into, an agreement in principle or
definitive agreement relating to a Superior Proposal with a person or
entity other than the Parent, us or our respective affiliates (or the
Company's Board of Directors resolves to do any of the foregoing);
(C) any person or group (as defined in Section 13(d)(3) of the Exchange
Act) (other than the Parent, us or our respective affiliates) shall have
become, after the date of the Merger Agreement, the beneficial owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of 50% or more
of the outstanding Shares, or (D) any representation or warranty made by
the Parent or us in the Merger Agreement shall not have been true and
correct in all material respects when made, or we or the Parent shall
have failed to observe or perform in any material respect any of its
material obligations under the Merger Agreement, provided that prior to
exercising such right of termination, the Company shall give prompt
written notice to the Parent of such misrepresentation or breach of
warranty or failure to observe or perform; provided, further, that the
Company shall not have such right of termination if the condition
resulting in such misrepresentation or breach of warranty or failure to
observe or perform is cured (i) in the event such notice is delivered on
or prior to the fourth business day prior to the then-scheduled
expiration date of the Offer, not later than the earlier of (A) such
expiration date and (B) ten business days following delivery of such
notice and (ii) in the event such notice is delivered on or after the
third business day prior to such expiration date, not later than three
business days following such delivery (it being agreed that in such event
the Offer shall be extended as necessary at least until the end of such
cure period); or
(ii) if we or the Parent shall have terminated the Offer, or the
Offer shall have expired, without us or the Parent, as the case may be,
purchasing any Shares pursuant thereto; provided that the Company may not
terminate the Merger Agreement for the reasons set forth in this
paragraph if we are, or the Company is, in material breach of the Merger
Agreement;
(iii) if we, the Parent, or any of our respective affiliates shall
have failed to commence the Offer on or prior to ten business days
following the date of the initial public announcement of the Offer or
shall have failed to pay for the Shares in accordance with the terms of
the Offer; provided, that the Company may not terminate the Merger
Agreement for the reasons set forth in this paragraph if the Company is
in material breach of the Merger Agreement; or
(iv) if, at any time after April 19, 2001, upon request made by the
Company in accordance with the terms of the Grid Promissory Demand Note
dated December 19, 2000, made by the Company in favor of the Parent (the
"Note"), the Parent fails to make an advance to the Company as required
in accordance with the terms of the Note; provided, that the Company may
not terminate the Merger Agreement for the reasons set forth in this
paragraph if the Company is in material breach of the Merger Agreement.
(d) By the Parent or us:
(i) if, due to an occurrence that, if occurring after the
commencement of the Offer, would result in a failure to satisfy any of
the conditions to the Offer (see Section 14--"Certain Conditions to Our
Obligations"), we, the Parent or any of our respective affiliates shall
have failed to commence the Offer promptly following the date of the
initial public announcement of the Offer but in any event on or prior to
the tenth business day following the initial public
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announcement of the Offer; provided that neither we nor the Parent may
terminate the Merger Agreement for the reasons set forth in this
paragraph if we are, or the Parent is, in material breach of the Merger
Agreement; or
(ii) prior to the purchase of Shares pursuant to the Offer, if
(A) the Company shall have received any Alternative Proposal which the
Company's Board of Directors has determined to designate as a Superior
Proposal; (B) the Company's Board of Directors shall have withdrawn, or
modified or changed in a manner adverse to us or the Parent, its approval
or recommendation of the Offer, the Merger Agreement or the Merger or
shall have recommended an Alternative Proposal or shall have executed, or
shall have announced its intention to enter into, an agreement in
principle or definitive agreement relating to an Alternative Proposal
with a person or entity other than us, the Parent or our respective
affiliates (or the Company's Board of Directors resolves to do any of the
foregoing); (C) any person or group (as defined in Section 13(d)(3) of
the Exchange Act) (other than us, the Parent or any of our respective
affiliates) shall have become, after the date of the Merger Agreement,
the beneficial owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of the outstanding Shares, or (D) any
representation or warranty made by the Company in the Merger Agreement
shall not have been true and correct in all material respects when made
and shall have resulted in, or is reasonably likely to result in, an
adverse change in the assets, liabilities, financial condition or results
of operations of the Company which is material to the Company, other than
any change or effect arising out of general economic conditions (a
"Company Material Adverse Effect"), or the Company shall have failed to
observe or perform in any material respect any of its material
obligations under the Merger Agreement; provided that prior to exercising
such right of termination, we or the Parent shall give prompt written
notice to the Company of such misrepresentation or breach of warranty or
failure to observe or perform; provided, further, that we or the Parent
shall not have such right of termination if the condition resulting in
such misrepresentation or breach of warranty or failure to observe or
perform is cured (i) in the event such notice is delivered on or prior to
the fourth business day prior to the Expiration Date of the Offer, not
later than the earlier of (A) such Expiration Date and (B) ten business
days following delivery of such notice and (ii) in the event such notice
is delivered on or after the third business day prior to such Expiration
Date, not later than three business days following such delivery (it
being agreed that in such event the Offer shall be extended as necessary
at least until the end of such cure period).
EFFECT OF TERMINATION; TERMINATION FEE. The Merger Agreement provides that
if the Company's Board of Directors terminates the Merger Agreement pursuant to
the provisions described in (c)(i)(A) or (B) under "Termination" above or if we
or the Parent terminate the Merger Agreement pursuant to the provisions
described in clauses (d)(ii)(A) or (B) under "Termination" above, then
immediately following such termination, the Company must promptly pay to the
Parent $3.5 million. Nothing contained in such provision will relieve any party
from liability for fraud or for willful breach of the Merger Agreement.
Except as set forth above, whether or not the Merger is consummated, all
costs and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby shall be paid by the party incurring such
expenses.
OPTION AGREEMENT
GENERAL. As a condition of our willingness to enter into the Merger
Agreement, we required that each of the Stockholders set forth therein enter
into the Option Agreement.
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AGREEMENT TO TENDER. Pursuant to the Option Agreement, the Stockholders
severally (and not jointly) have agreed to tender and sell to us pursuant to the
Offer, a total of 14,279,590 outstanding Shares owned of record or owned
beneficially with the right to sell by the Stockholders (plus any additional
Shares acquired by them upon exercise prior to the consummation of the Offer of
Options held by them). Each Stockholder severally (and not jointly) has agreed
to deliver to the Depositary, promptly, but not later than ten days following
the date of this Offer to Purchase, the Letter of Transmittal together with the
certificates for the Stockholder's Shares, if available, or a "Notice of
Guaranteed Delivery," if the Stockholder's Shares are not available. Each of the
Stockholders has also severally (and not jointly) agreed not to withdraw (except
in certain limited circumstances) any Shares tendered into the Offer unless the
Offer is terminated by us or the Parent without any Shares being purchased
thereunder.
OPTION TO PURCHASE. Each Stockholder has also severally granted to the
Parent or us, as the Parent shall designate (for purposes of this "Option
Agreement" section only, the "Optionee"), a conditional irrevocable option (the
"Stock Option") to purchase all of the Stockholder's Shares owned of record or
owned beneficially with the right to sell by such Stockholder at a purchase
price equal to the Offer Price. Except as described below, the Stock Option may
be exercised by Optionee, in whole and for all of such Stockholder's Shares but
not in part or for less than all of such Stockholder's Shares, during the period
(the "Exercise Period") beginning on the earlier of (i) the date the Offer is
terminated by the Parent or us for any reasons set forth in (f) or (g) of the
Conditions to the Offer (as set forth in Annex A to the Merger Agreement) and
(ii) the termination of the Merger Agreement pursuant to Section 7.1(c)(i)(a) or
(b) of the Merger Agreement and, in either case, ending twenty business days
after initial public announcement of a Superior Proposal.
CONDITIONS TO DELIVERY OF THE SHARES. The Option Agreement provides that
the obligation of the Stockholders to deliver, and the Optionee to pay for, the
Shares upon exercise of the Stock Option is subject to (i) all waiting periods
under the HSR Act, applicable to the exercise of the Stock Option and delivery
of the Shares, having expired or been terminated, and (ii) there being no
permanent injunction or other order by any court of competent jurisdiction
restricting, preventing or prohibiting the exercise of the Stock Option or the
delivery of the Stockholder's Shares in respect of such exercise.
REPRESENTATION AND WARRANTIES. The Option Agreement contains customary
representations and warranties by each Stockholder severally (and not jointly)
to the Parent and us, including those relating to (i) authority to enter into
the Option Agreement and sell Shares owned of record or owned beneficially with
the right to sell by such Stockholder, (ii) no options, warrants or other rights
to purchase or acquire such Stockholder's Shares, (iii) good and marketable
title to such Stockholder's Shares, free and clear of all liens, claims,
encumbrances and security interests, (iv) legality, validity and binding effect
of the Option Agreement and (v) no violation of agreements, judgments, laws,
rules and regulations. The Option Agreement also contains customary
representations and warranties by us and the Parent, including those relating to
authority to enter into the Option Agreement, the sufficiency of funds of the
Parent, legality, validity and binding effect of the Option Agreement and no
violation of agreements, judgments, laws, rules and regulations.
NO DISPOSITION OF STOCKHOLDERS' SHARES AND NO ACQUISITION OF SHARES. Each
Stockholder has severally (and not jointly) agreed that, except as contemplated
by the Option Agreement, such Stockholder will not offer or agree to sell,
transfer, tender, assign, hypothecate or otherwise dispose of, or create any
security interest, lien, claim, pledge, option, right of first refusal,
limitation on such Stockholder's voting rights, charge or other encumbrance with
respect to, such Stockholder's Shares. Each such Stockholder has also agreed
severally (and not jointly) that he or she will not, and will not offer or agree
to, acquire any additional Shares or options, warrants or other rights to
acquire Shares, without the prior written consent of us or the Parent. Each
Stockholder agrees severally (and not jointly) that such Stockholder shall not
grant any proxy or power of attorney with respect to the voting of Shares (each
a "Voting Proxy") to any person except to vote in favor of any of the
transactions contemplated by the Option Agreement or the
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Merger Agreement. No Voting Proxy shall be given or written consent executed by
such Stockholder after the date of the Option Agreement with respect to such
Stockholder's Shares (and if given or executed, will not be effective) so long
as the Option Agreement remains in effect; provided, however, that such
Stockholder may hereafter grant Voting Proxies in furtherance of such
Stockholder's obligations under the Voting Agreement section of the Option
Agreement.
COVENANTS OF THE PARENT AND THE OFFEROR. We and the Parent have agreed not
to sell, offer to sell or otherwise dispose of the Shares in violation of the
Securities Act. We and the Parent have also agreed to perform in all material
respects all of our respective obligations under the Merger Agreement.
NO SOLICITATION. Each Stockholder severally (and not jointly) has agreed
that he or she will immediately cease any existing discussions or negotiations,
if any, with any parties with respect to any acquisition or exchange of all or
any material portion of the assets of, or any equity interest in, the Company or
any of its subsidiaries or any business combination with the Company or any of
its subsidiaries. Each Stockholder has also agreed that from and after the date
of the Option Agreement, no Stockholder will directly or indirectly solicit or
initiate any takeover proposal from any person, or engage in discussions or
negotiations relating thereto except to the extent permitted in the Merger
Agreement. Each Stockholder will promptly notify the Parent of its receipt of
any Alternative Proposal. Notwithstanding anything to the contrary contained in
the Option Agreement, the parties have agreed that provisions set forth above
will not limit or restrict in any manner whatsoever any Stockholder's action or
conduct as a director of the Company.
VOTING AGREEMENT. During the time the Option Agreement is in effect, each
Stockholder has severally (and not jointly) agreed to vote all of the Shares
owned of record or owned beneficially with the right to sell by such Stockholder
(i) in favor of the Merger, the Merger Agreement and the transactions
contemplated by the Merger Agreement, (ii) against any action or agreement that
would result in a breach in any material respect of any covenant, representation
or warranty or any other obligation of the Company under the Merger Agreement,
and (iii) against any action or agreement that would materially impede,
interfere with or attempt to discourage the Offer or the Merger. Each
Stockholder also has severally (and not jointly) agreed that, if the Merger
Agreement terminates solely by reason of the Company's exercise of its
termination rights pursuant to Section 7.1(c)(1)(a) or (b) of the Merger
Agreement and for so long as the Exercise Period has not ended, such Stockholder
(i) will attend or otherwise participate in all stockholder meetings, or actions
by written consent, (ii) shall not, without the prior written consent of the
Parent or us, vote any of such Shares in favor of any actions requiring
stockholder approval which are described in the covenant section of the Merger
Agreement, and (iii) will vote such Stockholder's Shares and use its reasonable
efforts as a stockholder to prevent the Company from taking certain actions
prohibited in the Merger Agreement.
The Stockholders have agreed that if during the Exercise Period any
Stockholder breaches the voting agreements described above, such Stockholder
shall be deemed to have granted Parent proxies to vote his or her Shares except
that the Parent shall not have the right to vote to reduce the Offer Price or
the Merger Consideration or to amend or modify the Merger Agreement or
materially adversely affect or reduce the rights or benefits of the Company or
any stockholders of the Company under the Offer or the Merger Agreement or
materially reduce our obligations or materially increase our rights or the
rights of the Parent thereunder. The Option Agreement provides that such proxies
terminate if (i) the Offer expires or terminates without any Shares being
purchased thereunder in violation of the Offer or the Merger Agreement or
(ii) we or the Parent is in violation of the Option Agreement.
TRANSFER OF OPTIONS. The Option Agreement also provides that each of the
Stockholders holding options to purchase Shares pursuant to the Company Stock
Option Plans (for purposes of this section a "Company Option") has agreed
severally (and not jointly) that so long as the Option Agreement remains in
effect, such Stockholder (for purposes of this section an "Optionholder") will
not transfer any Company Options held by such Optionholder; provided, however,
that at the Effective Time each Optionholder has agreed to accept an amount in
respect of such Company Options equal to the product of (A) the excess, if
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any, of the Offer Price over the per share exercise price of each such Company
Option and (B) the number of Shares subject thereto (such payment to be net of
applicable withholding taxes) and each such Company Option will thereafter be
cancelled.
THE NOTE
GENERAL. On December 19, 2000, the Company executed the Note in favor of
the Parent for the amount of $7.0 million. The amount borrowed under the Note,
in the aggregate, will not exceed $5.0 million prior to April 19, 2001, or
$7.0 million on or after April 19, 2001.
INTEREST; PREPAYMENT. The Company is required to pay interest at a rate of
9.5% per year on the principal amount borrowed, and for any overdue installment
of principal, the Company is required to pay interest at a rate equal to 11.5%
per year. The loan may be prepaid by the Company without penalty or premium at
any time.
LOANS DUE ON DEMAND. The Parent may demand the payment of all loans
outstanding under the Note within five business days of written notice of such
demand to the Company, provided, however, that the Parent cannot make a demand
prior to the earlier to occur of (i) the termination of the Merger Agreement, or
(ii) the consummation of the transactions contemplated by the Merger Agreement.
However, if the Merger Agreement is terminated by the Parent or us other than as
permitted by the terms of the Merger Agreement or in the event any material
provision of the Merger Agreement is breached by the Parent or us, then
following such termination or material breach the Parent will not make a demand
prior to June 19, 2001, unless an event of default under the Note has occurred.
In the Note, the Company affirms, acknowledges and ratifies that subject
only to the provisions above, all monies due under the Note are payable on
demand, which demand may be made at any time by the Parent in its sole
discretion irrespective of whether an event of default has occurred.
SECURITY INTEREST. The Note is secured by the liens granted by the Company
to the Parent pursuant to a Security Agreement, dated as of December 19, 2000,
between the Company and the Parent (the "Security Agreement"), which liens
encumber the accounts and general intangible assets of the Company (as more
fully described below).
USE OF PROCEEDS. The Company has agreed not to use any of the proceeds of
the loans for the purpose of purchasing or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
or to extend credit to any person for the purpose of purchasing or carrying any
such margin stock, or for any purpose which violates, or is inconsistent with,
any of Regulations T, U or X of such Board of Governors.
REPRESENTATIONS AND WARRANTIES. In the Note, the Company has made customary
representations and warranties to the Parent, including, but not limited to,
representations and warranties as to organization and qualification, authority
to enter into the Note, required consents and approvals, binding obligation of
the Note, defaults and absence of litigation.
PERFECTION OF LIEN. So long as the Note remains unpaid or the Company has
any commitments under the Note, the Company has agreed to cause the Parent to
have a perfected first and prior security interest in all of the accounts and
general intangible assets of the Company and their proceeds, and the Company
will take all actions requested by us necessary or appropriate to perfect such
interest.
EVENTS OF DEFAULT. If (i) the Company fails to make any payment of
principal outstanding on demand as demand is permitted under the terms of the
Note, or following three business days' written notice, interest on the Note or
any fee provided for on demand as demand is permitted under the terms of the
Note, (ii) the Company defaults in the performance or observance of any covenant
or agreement contained in the Note following five days' written notice thereof,
(iii) any representation or warranty made by or on
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behalf of the Company in the Note, the Merger Agreement or in any other
certificate, agreement, instrument, or statement delivered to the Parent by or
on behalf of the Company will at any time prove to have been incorrect when made
in any material respect, (iv) any judgment against the Company or any
attachment, levy or execution against any of its properties for any material
amount will remain unpaid, or will not be released, discharged, dismissed,
stayed or fully bonded for a period of sixty days or more after its entry, issue
or levy, as the case may be, (v) the Company shall make an assignment for the
benefit of creditors, or a trustee, receiver or liquidator shall be appointed
for the Company or for any of its property, or (vi) the commencement of any
proceedings by the Company under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt, receivership, liquidation or dissolution
law or statute, or the commencement of any such proceedings without the consent
of the Company and such proceedings will continue undischarged for a period of
sixty days, then the Parent may declare the entire unpaid principal amount of
the Note and all interest and fees accrued and unpaid to be immediately due and
payable.
THE SECURITY AGREEMENT
GENERAL. The Company has entered into the Security Agreement with the
Parent as a condition precedent to making the Note.
GRANT OF SECURITY INTEREST. In the Security Agreement, the Company has
agreed to assign, pledge and grant to the Parent a continuing first priority
security interest in the collateral consisting of all of the Company's right,
title and interest in and to all of the following property and interests in
property, and all products, proceeds, substitutions, additions, accessions and
replacements thereof (all of the same being herein referred to as the
"Collateral"):
(a) All accounts, accounts receivable, contracts, notes, bills,
acceptances, choses in action, chattel paper, instruments, documents and
other forms of obligations at any time owing to the Company arising out of
goods sold or leased or for services rendered by the Company, including,
without limitation, accounts receivable and contract rights arising under
agreements to which the Company is a party, the proceeds thereof and all of
the Company's rights with respect to any goods represented thereby, whether
or not delivered, goods returned by customers and all rights as an unpaid
vendor or lienor, including rights of stoppage in transit and of recovering
possession by proceedings including repletion and reclamation, together with
all customer lists, books and records, ledger and account cards, computer
tapes, software, disks, printouts and records, whether now in existence or
hereafter created, relating thereto (collectively referred to hereinafter as
"Accounts");
(b) All general intangibles of the Company in which the Company now has
or hereafter acquires any rights, including but not limited to causes of
action, corporate or business records, inventions, designs, goodwill, trade
names, trade secrets, trade processes, patents, licenses, permits,
franchises, customer lists, computer programs, all claims under guaranties,
tax refund claims, rights and claims against carriers and shippers, leases,
claims under insurance policies, all rights to indemnification and all other
intangible personal property and intellectual property of every kind and
nature (collectively referred to hereinafter as "Intangibles");
(c) All rights now or hereafter accruing to the Company under contracts,
leases, agreements or other instruments to perform services, to hold and use
land and facilities, and to enforce all rights thereunder;
(d) All books and records relating to any of the Collateral (including,
without limitation, customer data, credit files, computer programs,
printouts, and other computer materials and records of the Company
pertaining to any of the foregoing); and
(e) All accessions to, substitutions for and all replacements, products
and proceeds of the foregoing, including, without limitation, proceeds of
insurance policies insuring the Collateral.
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SECURITY FOR OBLIGATIONS. The Security Agreement secures the full and
prompt payment and performance of all obligations of the Company to pay any
amounts due under the Note, whether for principal, interest (including, without
limitation, all interest that accrues after the commencement of any case,
proceeding or other action relating to bankruptcy, insolvency or reorganization
of the Company), fees or otherwise (collectively, the "Obligations"). The Parent
and the Company have agreed that it is their intention that the security
interest granted under the Security Agreement is to attach upon the execution of
the Security Agreement.
COMPANY REMAINS LIABLE. Notwithstanding anything to the contrary, (i) the
Company will remain fully liable under any contracts and agreements included in
the Collateral to perform all of its duties and obligations thereunder,
(ii) the Parent's exercise of any of its rights pursuant to the Security
Agreement will not release the Company from any of its duties or obligations
under any such Collateral, and (iii) the Parent is not obligated or liable under
any such Collateral by reason of the Security Agreement, nor is the Parent
obligated to perform any obligations or duties of the Company thereunder or to
take any action under the Security Agreement.
REPRESENTATIONS AND WARRANTIES: In the Security Agreement, the Company has
made customary representations and warranties to the Parent, including, but not
limited to, representations and warranties as to the location of its principal
place of business and assets, title to the assets, absence of financing
statements, other than those made in its favor, the validity of the first
perfected priority lien, which lien is subject to certain permitted liens, and
the Company's name.
COVENANTS. In the Security Agreement, the Company has covenanted and agreed
that it will (i) preserve and maintain the lien created by the Security
Agreement and will protect and defend its title to the Collateral so that the
lien so granted will be and remain a continuing first priority security
interest, subject to certain permitted liens in the Collateral, (ii) not create,
assume or suffer to exist any other lien in the Collateral except certain
permitted liens, (iii) maintain books and records pertaining to the Collateral
and (iv) pay all taxes, assessments and other charges lawfully levied or
assessed upon its properties or upon any of the Collateral when due. If, in the
Parent's sole opinion, any lien, other than certain permitted liens, may create
an obligation having priority over the lien granted pursuant to the Security
Agreement, the Parent may pay such lien and the amount of such payment will be
charged to the Company and be secured by the lien granted pursuant to the
Security Agreement.
The Company has also agreed to comply with the following covenants regarding
the Collateral: (i) the Company will keep the Collateral at its present
location; provided, however, that the Company may establish any other location,
on written notice delivered to the Parent not less than thirty days prior to
establishing any such other location, (ii) the Company will cause the Collateral
to be maintained and preserved in good condition, repair and working order,
excepting ordinary wear and tear and (iii) the Company will not permit any of
the Collateral to become a fixture to any real estate that is not subject to a
mortgage or deed of trust made by the Company in favor of the Parent.
INSURANCE. The Security Agreement requires the Company, at its own expense,
to maintain insurance with respect to the Collateral in such amounts, against
such risks, in such form and with such insurers, as will be customary for
businesses similar to the Company's business.
TRANSFERS AND OTHER LIENS. The Company will not, without the Parent's prior
written consent, (i) sell, assign or otherwise dispose of any of the Collateral
except the sale, assignment or other disposition of assets no longer used or
useful in the conduct of its business and the sale, assignment or other
disposition of assets in the ordinary course of business consistent with past
practice or the grant of non-exclusive licenses to customers in the ordinary
course of business or (ii) create or suffer to exist any lien upon or with
respect to any of the Collateral, other than certain permitted liens.
30
<PAGE>
REMEDIES UPON DEFAULT. If the Company defaults on its obligations under the
Note or the Security Agreement, the Parent may exercise any rights or remedies
provided for in the Security Agreement or under applicable law, including, but
not limited to:
(i) demand, sue for, collect or receive any money or property at any
time payable or receivable on account of or in exchange for, or make any
compromise or settlement deemed desirable with respect to, any of the
Collateral, and the Parent may modify the terms of payment or of a release,
all without incurring responsibility to, or discharging or otherwise
affecting any liability to the Parent of, the Company;
(ii) enter upon the premises, or wherever the Collateral is, and take
possession thereof, and maintain such possession on the Company's premises,
or demand and receive such possession from any person who has possession
thereof, or remove the Collateral or any part thereof, to such other places
as the Parent may desire, all without any obligation;
(iii) require the Company to, at its expense, assemble all or part of
the Collateral as directed by the Parent and make it available to the Parent
at a place to be designated by the Parent which is reasonably convenient to
both parties;
(iv) without notice (except as specified below) and with or without
taking the possession thereof, sell, lease, assign, grant options to
purchase or otherwise dispose of the Collateral or any part thereof in one
or more parcels at public or private sale, at any location chosen by the
Parent, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as the Parent may deem commercially
reasonable. The Company has also agreed that the Parent will have no
obligation to preserve rights in the Collateral against prior parties or to
marshal any Collateral for the benefit of any person; and
(v) apply, without notice, any cash or cash items constituting
Collateral in the Parent's possession to payment of any of the Obligations.
The Company granted to the Parent a license or other right to use, without
charge, the Company's intellectual property, as it pertains to the Collateral,
in completing production of, advertising for, sale of, and the selling of any
Collateral, and the Company's rights under all licenses and franchise agreements
will inure to the Parent's benefit. The Company has waived, to the extent
permitted by applicable law, all rights of the Company to prior notice and
hearing under any other applicable statute or constitution. In addition, all
cash proceeds received by the Parent in respect of any sale of, collection from
or other realization upon all or any part of the Collateral will, after payment
of any amounts payable to the Parent pursuant to the indemnity (as described
below), be applied against the obligations in such order as the Parent elects,
and any balance left will be returned to the Company.
INDEMNITY AND EXPENSES. In the Security Agreement, the Company agrees to
indemnify the Parent from and against any and all claims, losses and liabilities
arising out of or resulting from the Security Agreement (including, without
limitation, enforcement of the Security Agreement), except claims, losses or
liabilities resulting solely from the Parent's gross negligence or willful
misconduct.
The Company will also upon demand pay the Parent the amount of any and all
reasonable expenses (including the reasonable fees and disbursements of counsel)
which the Parent may incur in connection with (i) the administration of the
Security Agreement, (ii) the custody, use or operation of, or the sale of, or
other realization upon, any of the Collateral or (iii) the exercise or
enforcement of any of the Parent's rights hereunder.
SECURITY INTERESTS ABSOLUTE. The Security Agreement establishes that all of
the Parent's rights, all Obligations of the Company and the liens, are absolute
and unconditional, irrespective of any lack of validity or enforceability of the
Note, any related document or any other agreement, or any other
31
<PAGE>
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Company in respect of the Obligations or the Security
Agreement.
CONTINUING SECURITY INTEREST. The Company has agreed that the Security
Agreement creates a continuing security interest in the Collateral and will
(i) remain in full force and effect until no Obligations are outstanding,
(ii) be binding upon the Company and its successors and (iii) inure, together
with the Parent's rights and remedies pursuant to the Security Agreement, to the
benefit of the Parent and its successors, transferees and assigns.
14. CERTAIN CONDITIONS TO OUR OBLIGATIONS. Notwithstanding any other term
of the Offer, and in addition to (and not in limitation of) our rights to extend
and amend the Offer at any time in our sole discretion (subject to the
provisions of the Merger Agreement) we shall not be required to accept for
payment or, subject to any applicable rules and regulations of the Commission,
including Rule 14e-l(c) under the Exchange Act (relating to our obligation to
pay for or return tendered Shares after the termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate or amend the Offer as to any Shares not then paid for, if (i) any
applicable waiting period under the HSR Act or the antitrust laws of applicable
jurisdictions outside the United States has not expired or terminated, (ii) the
Minimum Condition has not been satisfied or (iii) at any time on or after
December 19, 2000, and before the expiration of the Offer, any of the following
conditions exist:
(a) there shall be any statute, rule, regulation, judgment, order or
injunction promulgated, entered, enforced, enacted, issued or applicable to the
Offer or the Merger by any governmental entity of competent jurisdiction in the
United States or other country in which the Company directly or indirectly has
material assets or operations which (1) prohibits the consummation of the Offer
or the Merger, (2) as a result of the Offer or the Merger, restrains or
prohibits, or imposes any material limitations on, the Parent's or our ownership
or operation of all or a material portion of the businesses or assets of the
Parent and its subsidiaries, taken as a whole, or of the business or assets of
the Company, or compels the Parent or any of the Parent's subsidiaries or
affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Company, or of the Parent and the Parent's
subsidiaries, taken as a whole, or requires us, the Parent or the Company, to
pay damages that are material in relation to the Company, (3) challenges,
prohibits, or makes illegal the acceptance for payment, payment for or purchase
of Shares pursuant to, or consummation of, the Offer or the Merger, (4) imposes
material limitations on our ability or the ability of the Parent to effectively
exercise full rights of ownership of the Shares accepted for payment pursuant to
the Offer, including, without limitation, the right to vote the Shares purchased
by it on all matters properly presented to the Company's stockholders or
(5) requires divestiture by the Parent or any of the Parent's subsidiaries or
affiliates of any Shares; provided that the Parent shall have used all
reasonable efforts to cause any such judgment, order or injunction to be vacated
or lifted;
(b) there shall be instituted or pending any action, suit or proceeding by
any governmental entity of competent jurisdiction in the United States, or any
other country in which the Company directly or indirectly has material assets or
operations, that is reasonably likely, directly or indirectly, to result in any
of the consequences referred to in clauses (1) through (5) of paragraph (a)
above; provided, that the Parent shall have used all reasonable efforts to cause
any such action, suit or proceeding to be withdrawn or dismissed;
(c) there has been since the date of the Merger Agreement any event,
occurrence or development or state of circumstances or facts which has had or
would reasonably be expected to have a Company Material Adverse Effect;
(d) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and accurate as of the date of consummation
of the Offer as though made on or as of such date or the Company shall have
breached or failed in any material respect to perform or comply with any
material obligation, agreement or covenant required by the Merger Agreement to
be performed or complied with
32
<PAGE>
by it except, (i) those representations and warranties that address matters only
as of a particular date or only with respect to a specified period of time,
which need only be true and accurate as of such date or with respect to such
period or (ii) where the failure of such representations and warranties to be
true and accurate, or the breach, non-performance or non-compliance with such
obligations, agreements or covenants, do not have, individually or in the
aggregate, or would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect;
(e) the Merger Agreement shall have been terminated in accordance with its
terms;
(f) the Company shall have entered into a definitive agreement or agreement
in principle with any person with respect to an Alternative Proposal; or
(g) the Company Board shall have withdrawn, or modified or changed in a
manner adverse to the Parent or to us (including by amendment of the
Schedule 14D-9) its recommendation of the Offer, the Merger Agreement, or the
Merger, or recommended an Alternative Proposal, or shall have resolved to do any
of the foregoing;
which in our reasonable judgment or the reasonable judgment of the Parent, in
any such case, and regardless of the circumstances giving rise to such
condition, makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment or payments.
The foregoing conditions are for our sole benefit and the sole benefit of
the Parent and may, subject to the terms of the Merger Agreement, be waived by
us or the Parent in whole or in part at any time and from time to time in our
sole discretion or in the sole discretion of the Parent.
15. CERTAIN LEGAL MATTERS. Except as set forth in this Section 15, we are
not aware of any approval or other action by any governmental or administrative
agency which would be required for the acquisition or ownership of Shares as
contemplated herein. Should any such approval or other action be required, it
will be sought, but we have no current intention to delay the purchase of Shares
tendered pursuant to the Offer pending the outcome of any such matter, subject,
however, to our right to decline to purchase Shares if any of the conditions
specified in Section 14--"Certain Conditions to Our Obligations" shall have
occurred. 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 adverse consequences might not result to the Company's business or that
certain parts of the Company's business might not have to be disposed of if any
such approvals were not obtained or other action taken.
U.S. ANTITRUST. Under the provisions of the HSR Act applicable to the
Offer, the acquisition of Shares under the Offer may be consummated following
the expiration of a 15-day waiting period following the filing by Wolters Kluwer
of a Premerger Notification and Report Form with respect to the Offer, unless we
receive a request for additional information or documentary material from the
U.S. Department of Justice, Antitrust Division (the "Antitrust Division") or the
Federal Trade Commission (the "FTC") or unless early termination of the waiting
period is granted. Wolters Kluwer, our ultimate parent entity, made such a
filing on December 22, 2000, and, accordingly, the initial waiting period will
expire on January 6, 2001. If, within the initial 15-day waiting period, either
the Antitrust Division or the FTC requests additional information or documentary
material concerning the Offer, the waiting period will be extended through the
tenth day after the date of substantial compliance with such request by Wolters
Kluwer. Complying with a request for additional information or documentary
material can take a significant amount of time.
The Antitrust Division and the FTC frequently scrutinize the legality under
U.S. antitrust laws of transactions such as our proposed acquisition of the
Company. At any time before or after our acquisition of Shares pursuant to the
Offer, the Antitrust Division or the FTC could take such action under the
antitrust laws as either deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or the
consummation of the Merger, or seeking the divestiture of Shares we acquired or
the divestiture of substantial assets of the Company or of the Parent's
subsidiaries.
33
<PAGE>
Private parties may also bring legal action under these antitrust laws under
certain circumstances. There can be no assurance that a challenge to the Offer
or to the consummation of the Merger on antitrust grounds will not be made, or,
if such a challenge is made, of the result thereof.
If any applicable waiting period under the HSR Act has not expired or been
terminated prior to the Expiration Date, the Offeror will not be obligated to
proceed with the Offer or the purchase of any Shares not theretofore purchased
pursuant to the Offer. See Section 14--"Certain Conditions to Our Obligations".
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company would
have certain rights under the Delaware GCL to dissent and demand appraisal of,
and payment in cash of the fair value of, their Shares. Such rights, if the
statutory procedures are complied with, could lead to a judicial determination
of the fair value (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their Shares. Any such judicial determination of the fair
value of Shares could be based upon considerations other than or in addition to
the price paid in the Offer and the market value of the Shares, including asset
values and the investment value of the Shares. The value so determined could be
more or less than the purchase price per Share pursuant to the Offer or the
consideration per Share to be paid in the Merger.
DELAWARE STATE TAKEOVER LAWS. Under the Delaware GCL and the Company's
Certificate of Incorporation, if we acquire less than 90% of the outstanding
Shares, the Merger would require, among other things, the affirmative vote of
the holders of at least two-thirds of all the outstanding Shares. If we acquire,
pursuant to the Offer or otherwise, including pursuant to the Option Agreement
or pursuant to a subsequent offering period as contemplated by Rule 14d-11 of
the Exchange Act, voting power with respect to at least two-thirds of the
outstanding Shares, which would be the case if the Minimum Condition is
satisfied, we will have the voting power to effect the merger without the vote
of any other stockholder, which we intend to do. The Delaware GCL also provides
that if a parent company owns at least 90% of each class of stock outstanding of
a subsidiary, the parent company can effect a merger with the subsidiary without
the authorization of the other stockholders of the subsidiary. Accordingly, if
we acquire 90% or more of the outstanding Shares pursuant to the Offer and the
Option Agreement or otherwise, we could, and intend to, consummate the Merger
without the approval of the Board of Directors or any other stockholders of the
Company.
In addition, several decisions by Delaware courts have held that, in certain
instances, a controlling stockholder of a corporation involved in a merger has a
fiduciary duty to the other stockholders that requires the merger to be fair to
such other stockholders. In determining whether a merger is fair to minority
stockholders, the Delaware courts have considered, among other things, the type
and amount of consideration to be received by the stockholders and whether there
were fair dealings among the parties. The Delaware Supreme Court has indicated
in recent decisions that in most cases the remedy available in a merger that is
found not to be "fair" to minority stockholders is the right to appraisal
described above or a damages remedy based on essentially the same principles.
Delaware GCL Section 203 prohibits business combination transactions
involving a Delaware corporation and an "interested stockholder" (defined
generally as any person that directly or indirectly beneficially owns 15% or
more of the outstanding voting stock of the subject corporation) for three years
following the date such person became an "interested stockholder," unless
certain exceptions apply, including that prior to such date the corporation's
board of directors approved either the business combination or the transaction
which resulted in such person becoming an interested stockholder. As set forth
below, the Company's Board of Directors has taken actions to make Delaware GCL
Section 203 inapplicable to the Parent and us in connection with the Offer, the
Merger and the Option Agreement.
34
<PAGE>
In the Merger Agreement, the Company represented that the Company's Board of
Directors has unanimously approved the Merger Agreement and the Option Agreement
and the transactions contemplated thereby, including the Offer and the Merger,
for purposes of Delaware GCL Section 203, such approval occurring prior to the
time we became an "interested stockholder" as defined in Delaware GCL
Section 203, so that the provisions thereof are not applicable to such
transactions.
OTHER STATE TAKEOVER LAWS. A number of other states have adopted laws and
regulations applicable to attempts to acquire securities of corporations which
are incorporated, or have substantial assets, stockholders, principal executive
offices or principal places of business, or whose business operations otherwise
have substantial economic effects in such states. In EDGAR V. MITE CORP., in
l982, the Supreme Court of the United States (the "U.S. Supreme Court")
invalidated on constitutional grounds the Illinois Business Takeover statute,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987, in CTS CORP. V.
DYNAMICS CORP. OF AMERICA, the U.S. Supreme Court held that the State of Indiana
may, as a matter of corporate law and, in particular, with respect to those
aspects of corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders. The state law before the U.S. Supreme
Court was by its terms applicable only to corporations that had a substantial
number of stockholders in the state and were incorporated there.
The Company conducts business in a number of states throughout the United
States, some of which have enacted takeover laws. We do not know whether any of
these laws will, by their terms, apply to the Offer or the Merger and we have
not attempted to comply with any such laws. Should any person seek to apply any
state takeover law, we will take such action as then appears desirable, which
may include challenging the validity or applicability of any such statute in
appropriate court proceedings. In the event it is asserted that one or more
state takeover laws is applicable to the Offer or the Merger, and an appropriate
court does not determine that such laws are inapplicable or invalid as applied
to the Offer, we might be required to file certain information with, or receive
approvals from, the relevant state authorities. In addition, if enjoined, we
might be unable to accept for payment any Shares tendered pursuant to the Offer,
or be delayed in continuing or consummating the Offer and the Merger. In such
case, we may not be obligated to accept for payment any Shares tendered. See
Section 14--"Certain Conditions to the Our Obligations."
16. FEES AND EXPENSES. Neither we nor the Parent, nor any officer,
director, stockholder, agent or other representative of the Parent or us, will
pay any fees or commissions to any broker, dealer or other person (other than
the Dealer Manager and the Information Agent) for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
and other nominees will, upon request, be reimbursed by us for customary mailing
and handling expenses incurred by them in forwarding materials to their
customers.
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") is
acting as the Dealer Manager in connection with the Offer and as financial
advisor to Wolters Kluwer in connection with our proposed acquisition of the
Company, for which services Merrill Lynch will receive customary compensation,
including a fee not to exceed $1.25 million. Wolters Kluwer also has agreed to
reimburse Merrill Lynch for its out-of-pocket expenses, including the fees and
expenses of legal counsel and other advisors, incurred in connection with its
engagement, and to indemnify Merrill Lynch and certain related persons against
certain liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws. In the ordinary course of
business, Merrill Lynch and its affiliates may actively trade the debt and
equity securities of Wolters Kluwer and the equity securities of the Company for
their own account and for the accounts of customers and, accordingly, may at any
time hold a long or short position in such securities.
We have retained Georgeson Shareholder Communications Inc., as Information
Agent, and Morgan Guaranty Trust Company of New York, as Depositary, in
connection with the Offer. The Information
35
<PAGE>
Agent and the Depositary will receive reasonable and customary compensation for
their services hereunder and reimbursement for their reasonable out-of-pocket
expenses. The Information Agent and the Depositary will also be indemnified by
us against certain liabilities in connection with the Offer. The Information
Agent may contact holders of Shares by mail, telex, telegraph and personal
interviews and may request brokers, dealers and other nominee stockholders to
forward materials relating to the Offer to beneficial owners of Shares.
17. MISCELLANEOUS. The Offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of Shares residing in any jurisdiction in
which the making or acceptance thereof would not be in compliance with the
securities, blue sky or other laws of 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 our behalf by
the Dealer Manager or one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on our behalf other than as contained in this Offer to Purchase
or in the Letter of Transmittal and, if any such information or representation
is given or made, it should not be relied upon as having been authorized.
We have filed with the Commission (i) a Schedule TO, pursuant to Section
14(d)(1) of the Exchange Act and Rule 14d-3 promulgated thereunder, furnishing
certain information with respect to the Offer and (ii) a Schedule 13D, pursuant
to Section 13(d)(1) of the Exchange Act. Such Schedule TO and Schedule 13D, and
any amendments thereto, including exhibits, may be examined and copies may be
obtained at the same places and in the same manner as set forth with respect to
the Company in Section 8--"Certain Information Concerning the Company" (except
that they will not be available at the regional offices of the Commission).
LL ACQUISITION CORP.
December 29, 2000
36
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
WOLTERS KLUWER, THE PARENT, ASPEN AND THE OFFEROR
1. MEMBERS OF THE SUPERVISORY BOARD AND EXECUTIVE BOARD AND EXECUTIVE
OFFICERS OF WOLTERS KLUWER. The following tables set forth the name, business
address and present principal occupation or employment and material occupations,
positions, offices or employments for the past five years of each member of the
Supervisory Board and Executive Board and each Executive Officer of Wolters
Kluwer. Unless otherwise indicated, each such person is a citizen of the
Netherlands. Neither Wolters Kluwer nor any of the individuals listed below has
been convicted in a criminal proceeding in the past five years. In addition,
neither Wolters Kluwer nor any of the individuals listed below was a party to
any judicial or administrative proceeding during the past five years that
resulted in a judgment, decree or final order enjoining that person from future
violations of, or prohibiting activities subject to federal or state securities
laws, or a finding of any violation of federal and state securities laws.
SUPERVISORY BOARD
<TABLE>
<CAPTION>
INDIVIDUAL PRINCIPAL OCCUPATION OR
NAME AND BUSINESS ADDRESS OFFICE EMPLOYMENT (PRESENT/PAST)
------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
H. de Ruiter...................... Chairman, Member since 1994 Chairman of Supervisory Board of
Prins Frederiklaan 16 Koninklijke Ahold NV, Beers NV,
2243 HW WASSENAAR Koninklijke Hrogovens NV, and
Koninklijke Pakhoed NV, Vice
Chairman of Supervisory Board Of
AEGON NV and Member of Supervisory
Board of Heineken NV and NV
Koninklijke Nederlandse Petroleum
Maatschappij
J.V.H. Pennings................... Deputy Chairman, Member since 1995 Chairman of the Executive Board of
Casinoweg 170 Oce NV
5915 ER VENLO Chairman of Supervisory Board of
Koninklijke Grolsch NV and
Koninklijke IBC
Member of Supervisory Board of De
Nederlandsche Bank NV and Tulip
Computers
B.H. ter Kuile.................... Secretary, Member since 1986 Emeritus Prof. European Law,
Neuhuyskade 4 Erasmus University of Rotterdam
2596 XL DEN HAAG Member and secretary of
Supervisory Board of NV Verenigd
Streekvervoer Nederland
Deputy-Justice Court of Justice of
The Hague
A.H.C.M. Walravens................ Member since 1978 Professor and consultant
Oude Delft 130 Chairman of Supervisory Board of
2611 CG DELFT Tauw Beheer and NV Verenigd
Streekvervoer Nederland
Member of Supervisory Board of
Achmea Holding, Bull Benelux and
CSM
Member Monitoring Committee
Deloitte & Touche
N.J. Westdijk..................... Member since 1993 Chairman Executive Board of Royal
Nieuwe Gracht 161 Pakhoed NV
3512 LL UTRECHT Member of Supervisory Board of De
Nationale Investeringsbank NV and
Fortis AMEV NV
K.A.L.M. van Miert................ Member since 2000 President Nyenrode University
Member of Supervisory Board of
Royal Phillips Electronics
Prior to April, 2000 Member of
European Commission
</TABLE>
37
<PAGE>
EXECUTIVE BOARD
The names of the members of the Executive Board of Wolters Kluwer, whose
present principal occupations are serving as such members and whose present
business address is, unless otherwise indicated, c/o Wolters Kluwer, Apollolaan
153, 1070 AE Amsterdam, the Netherlands, are:
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS OFFICE
------------------------- ------------------------------------------------------------
<S> <C>
Robert Pieterse................ Member since 1987.
Peter W. van Wel............... Member since 1993; President and Chief Executive Officer of
the Parent from 1996 to 1999.
J.M. Detailleur................ Member since 1999; Chief Executive Officer of Wolters Kluwer
(Citizen of France) France S.A.
H.J. Yarrington................ Member since 1999; President and Chief Executive Officer of
c/o Wolters Kluwer the Parent from 1999 to the Present; President and Chief
United States Inc. Financial Officer of CCH Incorporated from 1996 to 1999.
161 N. Clark Street
48th Floor
Chicago, IL 60601
(U.S. Citizen)
</TABLE>
EXECUTIVE OFFICERS
The names of the Executive Officers of Wolters Kluwer, whose present
principal occupations are serving as such officers and whose present business
address is, unless otherwise indicated, c/o Wolters Kluwer, Apollolaan 153, 1070
AE Amsterdam, the Netherlands, are:
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS OFFICE
------------------------- ------------------------------------------------------------
<S> <C>
J.E.M. van Dinter.............. Chief Financial Officer and Senior Vice President for more
than five years.
A.S.F. Kuipers................. Corporate Director Strategy and Competence for more than
five years.
M.H. Sanders................... Corporate Director Human Resources for more than five years.
P.C. Koojmans.................. Corporate Director Accounting & Operations Control;
Executive Vice President Accounting & Control of the Parent
from 1996 to 1999.
C. Seigle...................... Chief Technology Officer; Chief Technology Officer of CCH
c/o Wolters Kluwer Incorporated in the past.
United States Inc.
333 7th Avenue
New York, NY 10001
(U.S. Citizen)
P.C.J. Hendricks............... Secretary Executive Board; prior thereto and for more than
five years, staff member of Wolters Kluwer.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT. The following table sets
forth the name, business address and present principal occupation or employment
and material occupations, positions, offices or employments for the past five
years of each Director and Executive Officer of the Parent. Unless otherwise
indicated, each such person is a citizen of the Netherlands, each occupation set
forth opposite an individual's name refers to employment with the Parent and the
business address of each such person is c/o Wolters Kluwer, Apollolaan 153, 1070
AE Amsterdam, the Netherlands. Neither the Parent nor any of the individuals
listed below has been convicted in a criminal proceeding in the past five years.
In addition, neither the Parent nor any of the individuals listed below was a
party to any judicial or administrative proceeding during the past five years
that resulted in a judgment, decree or final order enjoining that person from
future violations of, or prohibiting
38
<PAGE>
activities subject to federal or state securities laws, or a finding of any
violation of federal and state securities laws.
<TABLE>
<CAPTION>
INDIVIDUAL PRINCIPAL OCCUPATION OR
NAME AND BUSINESS ADDRESS OFFICE EMPLOYMENT (PRESENT/PAST)
------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Peter W. van Wel.................. Director Member of the Executive Board of
Wolters Kluwer since 1993;
R. Pieterse....................... Chairman of the Board Member of the Executive Board of
Wolters Kluwer since 1987.
Hugh J. Yarrington................ Director Member of Executive Board;
c/o Wolters Kluwer President and Chief Executive
United States Inc. Officer of the Parent from 1999 to
161 N. Clark Street the present; President and Chief
48th Floor Executive Officer of CCH
Chicago, IL 60601-3221 Incorporated from 1996 to 1999.
(U.S. Citizen)
Bruce C. Lenz..................... Executive Vice President, Chief Executive Vice President, Chief
c/o Wolters Kluwer Financial Officer, Secretary and Financial Officer, Secretary and
United States Inc. Treasurer Treasurer of the Parent for more
161 N. Clark Street than five years.
48th Floor
Chicago, IL 60601-3221
(U.S. Citizen)
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF ASPEN. The following table sets
forth the name, business address and present principal occupation or employment
and material occupations, positions, offices or employments for the past five
years of each Director and Executive Officer of Aspen. Unless otherwise
indicated, each such person is a citizen of the United States, and each each
occupation set forth opposite an individual's name refers to employment with
Aspen. Neither Aspen nor any of the individuals listed below has been convicted
in a criminal proceeding in the past five years. In addition, neither Aspen nor
any of the individuals listed below was a party to any judicial or
administrative proceeding during the past five years that resulted in a
judgment, decree or final order enjoining that person from future violations of,
or prohibiting activities subject to federal or state securities laws, or a
finding of any violation of federal and state securities laws.
<TABLE>
<CAPTION>
INDIVIDUAL PRINCIPAL OCCUPATION OR
NAME AND BUSINESS ADDRESS OFFICE EMPLOYMENT (PRESENT/PAST)
------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Jean Marc Detailleur.............. Director Member of Executive Board of
c/o Wolters Kluwer Wolters Kluwer since 1999; Chief
Apollolaan 153 Executive Officer of Wolters
1070 AV Amsterdam Kluwer France S.A.
(Citizen of France)
Edward T. Latta................... Director, President and Chief Director, President and Chief
200 Orchard Ridge Road Executive Officer Executive Officer, for more than
Suite 200 five years.
Gaithersburg, MD 20878
Hugh J. Yarrington................ Director and Chairman of the Board Member of Executive Board of
c/o Wolters Kluwer Wolters Kluwer since 1999;
United States Inc. President and Chief Executive
161 N. Clark Street Officer of the Parent from 1999 to
48th Floor the present; President and Chief
Chicago, IL 60601-3221 Executive Officer of CCH
Incorporated from 1996 to 1999.
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
INDIVIDUAL PRINCIPAL OCCUPATION OR
NAME AND BUSINESS ADDRESS OFFICE EMPLOYMENT (PRESENT/PAST)
------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Bruce C. Lenz..................... Secretary and Treasurer Executive Vice President, Chief
c/o Wolters Kluwer Financial Officer, Secretary and
United States Inc. Treasurer of the Parent for more
161 N. Clark Street than five years.
48th Floor
Chicago, IL 60601-3221
Michael McIntyre.................. Vice President and Chief Financial Vice President and Chief Financial
200 Orchard Ridge Road Officer Officer, for more than five years.
Suite 200
Gaithersburg, MD 20878
Ernest Manzella................... Senior Vice President Senior Vice President, for more
200 Orchard Ridge Road than five years.
Suite 200
Gaithersburg, MD 20878
</TABLE>
4. DIRECTORS AND EXECUTIVE OFFICERS OF THE OFFEROR. The following table
sets forth the name, business address and present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of each Director and Executive Officer of the Offeror. Unless
otherwise indicated, each such person is a citizen of the United States. Neither
the Offeror nor any of the individuals listed below has been convicted in a
criminal proceeding in the past five years. In addition, neither the Offeror nor
any of the individuals listed below was a party to any judicial or
administrative proceeding during the past five years that resulted in a
judgment, decree or final order enjoining that person from future violations of,
or prohibiting activities subject to federal or state securities laws, or a
finding of any violation of federal and state securities laws.
<TABLE>
<CAPTION>
INDIVIDUAL PRINCIPAL OCCUPATION OR
NAME AND BUSINESS ADDRESS OFFICE EMPLOYMENT (PRESENT/PAST)
------------------------- ---------------------------------- ----------------------------------
<S> <C> <C>
Richard H. Kravtiz................ Director and President Senior Vice President of Aspen Law
c/o Aspen Law & Business/ Panel and Business, a division of Aspen,
Publishers for more than five years.
1185 Avenue of the Americas
37th Floor
New York, NY 10036
Bruce C. Lenz..................... Director, Secretary and Treasurer Executive Vice President, Chief
c/o Wolters Kluwer Financial Officer, Secretary and
United States Inc. Treasurer of the Parent for more
161 North Clark Street than five years.
48th Floor
Chicago, IL 60601
</TABLE>
40
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates evidencing
Shares and any other required documents should be sent or delivered by each
stockholder or its broker, dealer, commercial bank or other nominee to the
Depositary as follows:
THE DEPOSITARY FOR THE OFFER IS:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY MAIL: BY HAND:
Morgan Guaranty Trust Company of New York Morgan Guaranty Trust Company of New York
Corporate Reorganization c/o Securities Transfer & Reporting
P.O. Box 43006 Services
Providence, RI 02940-3006 100 William Street, Galleria
New York, NY 10038
</TABLE>
<TABLE>
<S> <C>
BY OVERNIGHT COURIER: BY FACSIMILE TRANSMISSION:
Morgan Guaranty Trust Company of New York (781) 575-4826
c/o Colbert Management Corporate Reorganization
40 Campanelli Drive CONFIRM BY TELEPHONE:
Braintree, MA 02184 (781) 575-4816
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent or the Dealer Manager and will be furnished promptly at the
Offeror's expense. A stockholder may also contact its broker, dealer, commecial
bank or trust company for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
17 State Street, 10th Floor
New York, New York 10004
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL FREE: (800) 223-2064
THE DEALER MANAGER FOR THE OFFER IS:
MERRILL LYNCH & CO.
Four World Financial Center
New York, New York 10080
Call Collect: (212) 236-3790
