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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
LOISLAW.COM, INC.
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(Name of Subject Company)
LOISLAW.COM, INC.
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(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.001 PER SHARE
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(Title of Class of Securities)
541431-10-2
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(CUSIP Number of Class of Securities)
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KYLE D. PARKER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
LOISLAW.COM, INC.
105 NORTH 28TH STREET
VAN BUREN, ARKANSAS 72956
(501) 471-5581
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(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications
on Behalf of the Person(s) Filing Statement)
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WITH COPIES TO:
<TABLE>
<S> <C>
KENN W. WEBB MICHAEL E. DILLARD, P.C.
NOVAKOV DAVIS & MUNCK, P.C. AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
900 THREE GALLERIA TOWER 1700 PACIFIC AVENUE
13155 NOEL ROAD SUITE 4100
DALLAS, TEXAS 75240 DALLAS, TEXAS 75201-4675
(214) 922-9221 (214) 969-2800
</TABLE>
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ITEM 1. SUBJECT COMPANY INFORMATION.
The name of the subject company is Loislaw.com, Inc., a Delaware corporation
(the "Company"), and the address of the principal executive offices of the
Company is 105 North 28th Street, Van Buren, Arkansas 72956. Its telephone
number at that address is (501) 471-5581. The title of the class of equity
securities to which this statement relates is the common stock, par value $.001
per share (the "Company Common Stock" or the "Shares"), of the Company. As of
December 19, 2000, there were 21,244,849 Shares outstanding, 1,299,674 Shares
issuable upon the exercise of outstanding options or warrants and 19,566 Shares
reserved for issuance under the Company's Employee Stock Purchase Plan.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
This Schedule 14D-9 is being filed by the Company. The name, address and
telephone number of the Company are set forth in Item 1 above.
This statement relates to the offer by LL Acquisition Corp., a Delaware
corporation ("Offeror") and an indirect, wholly-owned subsidiary of Wolters
Kluwer U.S. Corporation, a Delaware corporation ("Parent"), disclosed in a
Tender Offer Statement on Schedule TO, dated December 29, 2000 (the
"Schedule TO"), to purchase all of the issued and outstanding Shares, at a price
of $4.3545 per Share, net to the seller in cash, without interest (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"), upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated December 29, 2000 (the
"Offer to Purchase"), and the related Letter of Transmittal (which, together
with the Offer to Purchase and all amendments and supplements thereto,
constitute the "Offer"). Parent is an indirect, wholly-owned subsidiary of
Wolters Kluwer nv, a corporation organized under the laws of the Netherlands.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of December 19, 2000 (the "Merger Agreement"), by and among Parent, Offeror and
the Company. The Merger Agreement provides, among other things, that as soon as
practicable after the satisfaction or waiver of the conditions set forth in the
Merger Agreement, Offeror will be merged with and into the Company (the
"Merger"), and the Company will continue as the surviving corporation (the
"Surviving Corporation"). A copy of the Merger Agreement is filed as Exhibit 1
hereto and is incorporated herein by reference.
As set forth in the Schedule TO, the principal executive offices of Parent
and Offeror are c/o Wolters Kluwer United States Inc., 161 North Clark Street,
48th Floor, Chicago, Illinois 60601.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
CERTAIN TRANSACTIONS
Except as described in this Item 3 and in Exhibit 2 hereto, as of the date
hereof, there are no material contracts, agreements, arrangements or
understandings, or any actual or potential conflicts of interest between the
Company or its affiliates and (i) its executive officers, directors or
affiliates or (ii) Parent, Offeror or their respective officers, directors or
affiliates.
The Company disclosed information regarding certain agreements, transactions
and relationships between the Company and its officers and directors or their
affiliates under the headings "Item 1. Election of Directors--Compensation
Committee Interlocks and Insider Participation," "Executive Compensation" and
"Certain Transactions" in the Proxy Statement filed with the United States
Securities and Exchange Commission (the "Commission") and distributed in
connection with the Company's Annual Meeting held on June 13, 2000. Such
information is filed as Exhibit 2 hereto and is incorporated herein by
reference.
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LOANS FROM STOCKHOLDER
On December 8, 2000, Capital Resource Lenders III, L.P., an entity with
which Robert C. Ammerman, a director of the Company, is affiliated, made a loan
in the principal amount of $500,000 to the Company bearing interest at 12.0% per
annum. On December 15, 2000, that entity made another loan to the Company in the
initial principal amount of $1.0 million bearing interest at 9.5% per annum. The
purpose of these loans was to provide short-term financing to the Company
pending the Company's receipt of additional financing. Each of the promissory
notes evidencing these loans provided that it would be repaid in full upon the
receipt by the Company of additional financing in the amount of at least $2.0
million. These loans were repaid in full on December 28, 2000 with funds
obtained from Parent pursuant to the Note (as hereinafter defined in this
Item 3).
The Company's obligations in connection with these loans were evidenced by a
Promissory Note in the initial principal amount of $500,000 and a related Note
Purchase Agreement, each dated December 8, 2000, which are filed as Exhibit 3
hereto and incorporated herein by reference, and a Promissory Note in the
initial principal amount of $1.0 million and a related Note Purchase Agreement,
each dated December 15, 2000, which are filed as Exhibit 4 hereto and
incorporated herein by reference. The foregoing summary does not purport to be
complete and is qualified in its entirety by reference to the complete text of
such Promissory Notes and Note Purchase Agreements.
Because the loans described above were repaid with funds borrowed by the
Company pursuant to the Note, and the funding of the Note was contingent upon
execution and delivery of the Merger Agreement by the Company, Mr. Ammerman may
be deemed to have an interest in the transactions contemplated by the Merger
Agreement that is in addition to his interests, or the interests of his
affiliates, as stockholders of the Company generally. The Company's Board of
Directors was aware of the potential conflict of interest that may be deemed to
exist as a result of the foregoing and considered such potential conflict of
interest along with the other factors identified in Item 4 in evaluating the
transactions contemplated by the Merger Agreement.
AGREEMENT WITH AND POTENTIAL CONFLICT OF INTEREST OF CEO
The Company's Chairman of the Board and Chief Executive Officer, Kyle D.
Parker, who is also a director of the Company, may be deemed to have an interest
in the transactions contemplated by the Merger Agreement that is in addition to
his interests as a stockholder of the Company generally. It is anticipated that
Mr. Parker will continue to be employed by the Company following the Merger.
Pursuant to his Employment Agreement with the Company dated June 17, 1999, as
amended (the "Employment Agreement"), Mr. Parker would be entitled to a lump sum
payment equal to two times his base annual compensation (which is defined to
include salary and bonus), plus certain insurance benefits and expense
reimbursements, upon the termination of his employment by the Company or any
successor within 12 months after a change in control (as defined in the
Employment Agreement) of the Company. The consummation of the Offer and the
Merger will constitute a change in control for purposes of the Employment
Agreement. This amount would be payable as a result of (a) any termination of
Mr. Parker's employment by the Company or any successor in such 12-month period
other than a termination for cause (as defined) or as a result of Mr. Parker's
disability (as defined) or death, or (b) a termination by Mr. Parker of his
employment during such 12-month period as a result of his demotion, in title or
responsibility, or a decrease in his compensation or benefits. The Employment
Agreement also provides for an adjustment in the amount payable in such
circumstances if the adjustment would be necessary to avoid the incurrence of
certain federal excise taxes payable on certain severance payments and the total
amount received by Mr. Parker after the adjustment would exceed the amount that
he would receive if the adjustment were not made and the excise tax were
incurred. In the absence of a change in control of the Company, a termination of
Mr. Parker's employment under similar circumstances would entitle Mr. Parker
only to an amount equal to 12 months' base salary, payable in installments over
a 12-month period following termination rather than
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in a lump sum. The Employment Agreement and the amendment thereto are filed as
Exhibits 5 and 6, respectively, hereto and incorporated herein by reference. The
foregoing summary does not purport to be complete and is qualified in its
entirety by reference to the complete text of those documents.
The Company's Board of Directors was aware of the potential conflict of
interest that may be deemed to exist as a result of Mr. Parker's continued
employment and the provisions of his Employment Agreement described above and
considered such potential conflict of interest along with the other factors
identified in Item 4 in evaluating the transactions contemplated by the Merger
Agreement.
ARRANGEMENTS WITH PARENT, OFFEROR OR THEIR AFFILIATES
CONFIDENTIALITY AGREEMENT
The following is a summary of certain material provisions of the
Confidentiality Agreement dated June 6, 2000, between the Company and Parent
(the "Confidentiality Agreement"). This summary does not purport to be complete
and is qualified in its entirety by reference to the complete text of the
Confidentiality Agreement, a copy of which is filed as Exhibit 7 hereto and is
incorporated herein by reference. Capitalized terms not otherwise defined below
shall have the meanings set forth in the Confidentiality Agreement.
The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, Parent agreed to keep confidential all nonpublic and
confidential information furnished to it by the Company relating to the Company,
subject to certain exceptions (the "Confidential Information"), and to use the
Confidential Information solely for the purpose of evaluating a possible
business relationship or transaction involving the Company and Parent. Parent
agreed in the Confidentiality Agreement not to engage in any transaction in the
Company's securities while in possession of any material nonpublic information
regarding the Company.
THE MERGER AGREEMENT, THE OPTION AGREEMENT, THE NOTE AND THE SECURITY
AGREEMENT
Concurrently with the execution of the Merger Agreement, certain
stockholders of the Company (each a "Stockholder" and collectively, the
"Stockholders") beneficially owning, in the aggregate, approximately 63.28% of
the outstanding Shares on a fully diluted basis, entered into a Stock Option and
Tender Agreement dated as of December 19, 2000 (the "Option Agreement") with
Parent and Offeror. As described more fully below, pursuant to the Option
Agreement, the Stockholders have, among other things, agreed to tender into the
Offer (and not withdraw except in certain limited circumstances) all the
Stockholders' Shares then outstanding and have granted to Parent or Offeror, as
Parent shall designate, a conditional option to purchase the Stockholders'
Shares. In addition, on December 19, 2000, the Company executed a Grid
Promissory Demand Note (the "Note") in favor of Parent in the amount of
$7.0 million. The amount borrowed under the Note, in the aggregate, may not
exceed $5.0 million prior to April 19, 2001, or $7.0 million on or after
April 19, 2001. On December 26, 2000, the Company borrowed $3.0 million from
Parent pursuant to the Note. As security for the Company's performance of its
obligations under the Note, the Company and Parent have entered into a Security
Agreement dated as of December 19, 2000 (the "Security Agreement") pursuant to
which the Company has granted to Parent a first priority security interest in
the accounts and general intangible assets of the Company, as described more
fully below. 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 filed as Exhibits 1, 8, 9 and 10, respectively, hereto and
are incorporated herein by reference. 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 the following summaries
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and not otherwise defined in this Schedule 14D-9 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. The Offer is conditioned upon there having
been validly tendered by the Expiration Date (as defined below) and not
withdrawn that number of Shares that would constitute at least two-thirds of the
Shares outstanding on a fully diluted basis (the "Minimum Condition"). Offeror's
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 under the heading "Certain Conditions to Offeror's
Obligations" below. The Merger Agreement provides that Offeror 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 under the heading
"Certain Conditions to Offeror's Obligations" below, 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, Offeror shall be entitled to extend the
Offer, without the consent of the Company, if at the initial expiration of the
Offer, which will be 20 business days following commencement of the Offer, or
any extension thereof (as so extended, the "Expiration Date"), any condition to
the Offer is not satisfied or waived, and at the Company's request, Offeror
shall extend the Offer from time to time, until June 19, 2001 if at the then
scheduled 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
Offeror reasonably believes will be necessary so that the Offer conditions will
be satisfied. In addition, Offeror may, without the consent of the Company,
extend any then scheduled 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 Shares have been validly
tendered and not withdrawn as of any Expiration Date, Offeror 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
Securities Exchange Act of 1934, as amended (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 20 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 of the
Merger (the "Effective Time"), Offeror shall be merged with and into the
Company. Following the Merger, Offeror's separate corporate existence shall
cease and the Company shall continue as the Surviving Corporation and shall
succeed to and assume all of Offeror's rights and obligations in accordance with
the Delaware General Corporation Law, as amended (the "Delaware GCL").
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At the Effective Time, the Certificate of Incorporation of the Company shall
be the Certificate of Incorporation of the Surviving Corporation and the Bylaws
of Offeror shall be the Bylaws of the Surviving Corporation. Offeror's 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 Parent, Offeror, or any other
wholly-owned subsidiary of Parent, which shall be cancelled, and Shares held by
stockholders who have properly exercised appraisal rights under the Delaware
GCL) shall acquire the right to receive the Offer Price without interest as
consideration for the conversion of each Share. Each share of stock of Offeror
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 shares of stock of Offeror, 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 Parent and Offeror, 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.
Parent and Offeror 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 and
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 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, and seek to preserve 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 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;
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(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 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's rules and regulations or incurred in the ordinary course of
business consistent with past practice, or waive any 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
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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 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 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 Company's 1996
Stock Option Plan, the 1999 Nonqualified Stock Option Plan for Nonemployee
Directors and the Loislaw.com, Inc. 2000 Stock Option Plan (collectively, 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
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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, 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. 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 a
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 Parent shall
make proper provision so that the successors and assigns of Parent and Offeror
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 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, 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 Parent.
BOARD REPRESENTATION. The Merger Agreement provides that promptly after
such time as Offeror acquires Shares pursuant to the Offer, 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 Parent equal to the aggregate voting power of
the Shares owned by Offeror, Parent or any of their respective affiliates;
provided, however, until the Effective Time, the Company's Board of Directors
shall have at least two directors who are directors on the date of the Merger
Agreement (the "Company Designees"), provided, that subsequent to the purchase
of and payment for Shares pursuant to the Offer, Parent shall always have its
designees represent at least a majority of the entire Board of Directors. From
and after the time that 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, Parent will cause to be elected to the Company's
Board of Directors two persons who shall not be stockholders, affiliates or
associates of Parent or Offeror, 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
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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 Parent and
Offeror shall vote all of their 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 any 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 Parent, Offeror and the Company.
(b) By either the Company or 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, the failure of Parent or
Offeror 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 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
Parent or Offeror, 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 Parent, Offeror or
their 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 Parent,
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Offeror or their 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 Parent or Offeror
in the Merger Agreement shall not have been true and correct in all
material respects when made, or Parent or Offeror 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 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 Parent or Offeror shall have terminated the Offer, or the
Offer shall have expired, without Parent or Offeror, 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 the Company is in material breach of the Merger Agreement;
(iii) if Parent, Offeror or any of their 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 Note, 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 Parent or Offeror:
(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 "Certain Conditions to Offeror's
Obligations" below), Parent, Offeror or any of their 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
announcement of the Offer; provided that neither Parent nor Offeror may
terminate the Merger Agreement for the reasons set forth in this
paragraph if Parent or Offeror 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 Parent or Offeror, 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 Parent, Offeror or their
respective
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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 Parent, Offeror or any of their 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, Parent and Offeror shall give prompt written
notice to the Company of such misrepresentation or breach of warranty or
failure to observe or perform; provided, further, that Parent and Offeror
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).
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
Parent or Offeror terminates 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 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.
CERTAIN CONDITIONS TO OFFEROR'S OBLIGATIONS. Notwithstanding any other term
of the Offer, and in addition to (and not in limitation of) Offeror's rights to
extend and amend the Offer at any time in its sole discretion (subject to the
provisions of the Merger Agreement) Offeror 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 Offeror's 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, Parent's or Offeror's
ownership or operation of all or a material portion of the
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businesses or assets of Parent and its subsidiaries, taken as a whole, or of the
business or assets of the Company, or compels Parent or any of 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 Parent and Parent's
subsidiaries, taken as a whole, or requires the Company, Parent or Offeror 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 the ability of Offeror or Parent effectively to 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 Parent or any of Parent's subsidiaries or affiliates
of any Shares; provided that 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 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 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's Board of Directors shall have withdrawn, or modified or
changed in a manner adverse to Parent or Offeror (including by amendment of this
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 the reasonable judgment of Parent or Offeror, 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 the sole benefit of Offeror and Parent and
may, subject to the terms of the Merger Agreement, be waived by Parent or
Offeror in whole or in part at any time and from time to time in the sole
discretion of Parent or Offeror.
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THE OPTION AGREEMENT
GENERAL. As a condition of Parent's willingness to enter into the Merger
Agreement, Parent required that each of the Stockholders set forth therein enter
into the Option Agreement. The Stockholders who are parties to the Option
Agreement own, in the aggregate, 14,279,590 Shares. The Stockholders and the
number of Shares owned by each of them are as follows: Kyle D. Parker (1,119,200
Shares), KDP Investments, Limited Partnership (2,000,000 Shares), The Parker
Trust, of which Kyle D. Parker is trustee (219,500 Shares), Douglas W. Parker,
Sr. (479,600 Shares), DWP & LAP Investments, Limited Partnership (1,000,000
Shares), Melissa A. Parker (559,600 Shares), Melissa Investments, Limited
Partnership (1,000,000 Shares), Capital Resource Lenders III, L.P. (5,659,542
Shares), CRP Investment Partners III, L.L.C. (4,628 Shares), Sandler Capital
Partners IV, L.P. (1,587,360 Shares) and Sandler Capital Partners IV, FTE, L.P.
(650,160 Shares). W. Clark Wigley, who has an option to purchase the 219,500
shares owned by The Parker Trust, is also a party to the Option Agreement.
AGREEMENT TO TENDER. Pursuant to the Option Agreement, the Stockholders
severally (and not jointly) have agreed to tender and sell to Offeror 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 the 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 Parent or Offeror without any Shares being purchased
thereunder.
OPTION TO PURCHASE. Each Stockholder has also severally granted to Parent
or Offeror, as 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 Parent or Offeror 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 20 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 Parent and Offeror, 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
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regulations. The Option Agreement also contains customary representations and
warranties by Parent and Offeror, including those relating to authority to enter
into the Option Agreement, the sufficiency of funds of 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 Parent or Offeror. 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 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 grant
Voting Proxies in furtherance of such Stockholder's obligations under the Voting
Agreement section of the Option Agreement.
COVENANTS OF PARENT AND OFFEROR. Each of Parent and Offeror has agreed not
to sell, offer to sell or otherwise dispose of the Shares in violation of the
Securities Act of 1933, as amended. Each of Parent and Offeror has also agreed
to perform in all material respects all of its 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 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 Parent
or Offeror, vote any of such Shares in favor of any actions requiring
stockholder approval which are described in the covenant section of the Merger
Agreement,
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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 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 the obligations or materially increase the rights of Parent or
Offeror 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) Parent or
Offeror 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 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 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
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. Parent may demand the payment of all loans outstanding
under the Note within five (5) business days of written notice of such demand to
the Company, provided, however, that Parent cannot make 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 Parent or Offeror 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 Parent or Offeror, then
following such termination or material breach Parent will not make 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 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 Parent pursuant to 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
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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 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 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 Parent 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 behalf of the Company in the
Note, the Merger Agreement or in any other certificate, agreement, instrument,
or statement delivered to 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 60 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 60 days, then 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 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 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
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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.
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"). 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) 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) Parent is not obligated or liable under any such
Collateral by reason of the Security Agreement, nor is 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 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 Parent's 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
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.
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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 Parent not less than 30 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 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 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.
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 Parent may modify the terms of payment or of a release, all
without incurring responsibility to, or discharging or otherwise affecting
any liability to 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 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 Parent and make it available to Parent at a
place to be designated by 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 Parent,
for cash, on credit or for future delivery, and at such price or prices and
upon such other terms as Parent may deem commercially reasonable. The
Company has also agreed that 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 Parent's possession to payment of any of the Obligations.
The Company granted to 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 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 Parent in respect of any sale of, collection
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from or other realization upon all or any part of the Collateral will, after
payment of any amounts payable to Parent pursuant to the indemnity (as described
below), be applied against the obligations in such order as Parent elects, and
any balance left will be returned to the Company.
INDEMNITY AND EXPENSES. In the Security Agreement, the Company agrees to
indemnify 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 Parent's gross negligence or willful
misconduct.
The Company will also upon demand pay Parent the amount of any and all
reasonable expenses (including the reasonable fees and disbursements of its
counsel) which 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 Parent's rights under the Security Agreement.
SECURITY INTERESTS ABSOLUTE. The Security Agreement establishes that all of
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 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 Parent's rights and remedies pursuant to the Security Agreement, to the
benefit of Parent and Parent's successors, transferees and assigns.
INDEMNIFICATION PROVISIONS
The Company's Certificate of Incorporation and Bylaws provide that its
directors and officers will be indemnified by the Company to the fullest extent
authorized by Delaware law, as it now exists or may in the future be amended,
against all expenses and liabilities reasonably incurred in connection with
their service for or on behalf of the Company. In addition, the Certificate of
Incorporation provides that directors will not be personally liable for monetary
damages to the Company or its stockholders for breaches of their fiduciary duty
as directors, unless they violated their duty of loyalty to the Company or its
stockholders, acted in bad faith, knowingly or intentionally violated the law,
authorized illegal dividends or redemptions or derived an improper personal
benefit from their action as directors. Further, the Company has entered into
indemnification agreements with its officers and directors in which it has
agreed to indemnify them in addition to the indemnification provided for in the
Certificate of Incorporation and Bylaws. These agreements indemnify the
Company's directors and officers for expenses (including attorneys' fees and
associated legal expenses), judgments, fines and amounts paid in settlement,
actually and reasonably incurred by them in connection with services as a
director or officer of the Company. In order to receive the indemnification, the
director or officer must have acted in good faith and in a manner which he or
she reasonably believed to be in or not opposed to the best interests of the
Company or, with respect to any criminal proceeding, must have had reasonable
cause to believe that his or her conduct was lawful. The Company also maintains
insurance that insures its directors and officers against specified losses and
that insures the Company against specific obligations to indemnify its directors
and officers.
The Merger Agreement provides that the Company's officers and directors will
have continued rights to indemnification and insurance, as described under "The
Merger Agreement--Indemnification," above.
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ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(A) RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS
The Company's Board of Directors has unanimously approved the Merger
Agreement, the Offer and the Merger, and has 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 in the Offer.
A letter to the Company's stockholders communicating the recommendation of
the Company's Board of Directors and a press release (U.S. and the Netherlands
versions) announcing the execution of the Merger Agreement are filed as
Exhibits 11, 12 and 13 hereto and are incorporated herein by reference.
(B) BACKGROUND; REASONS FOR THE RECOMMENDATION OF THE BOARD OF DIRECTORS
The on-line legal information market is intensely competitive. This market
is dominated by the two largest providers of on-line legal information, West
Group, a division of The Thomson Corporation, and LEXIS-NEXIS, which is owned by
Reed-Elsevier plc. One of the most critical competitive factors in this industry
is the comprehensiveness of the legal databases offered to subscribers. The
production of databases of statutes, court decisions and other legal information
is very capital intensive. The Company has incurred significant database
production costs in recent periods, and anticipates significant future costs in
connection with the development of databases and the updating of existing
databases. During 1999 and the early part of 2000, the Company accelerated the
production of its databases in order to offer a comprehensive product to its
subscribers and improve its ability to compete with its larger competitors on a
national basis. More than half of the Company's state law databases have been
completed since the beginning of 1999.
The Company also incurred significant costs during the last quarter of 1999
and during 2000 in connection with its efforts to upgrade and expand its
marketing function. In addition to increasing the size of its marketing staff,
the Company entered into several joint marketing or similar agreements with
third parties. Although the Company's subscriber base and gross revenues have
continued to increase, neither its internal efforts nor its marketing
relationships with third parties have produced results to the extent desired by
the Company's Board of Directors and management.
At the time of the Company's initial public offering in September 1999, and
during most of 2000, management of the Company anticipated that the Company's
operations would generate positive cash flow by the end of 2000. However,
largely because the Company has continued to incur significant costs,
particularly with respect to database production, that have not been offset by
improvements in operating results, it has recently become apparent to management
that the Company would not become cash flow positive until sometime in mid to
late 2001. In addition, the Company's operating losses have depleted its cash
reserves, including substantially all the cash generated by the Company's
September 1999 initial public offering.
In the first quarter of 2000, the Company decided to explore the possibility
of acquiring companies offering complementary products or services as a
strategic initiative in order to increase market share and to expand its
customer base. The Company made contact with several potential acquisition
candidates during the first half of 2000, and in the second quarter of 2000
entered into preliminary discussions with two companies that management of the
Company identified as potential acquisition candidates. The Company engaged
U.S. Bancorp Piper Jaffray to assist it in connection with one of these
potential transactions. However, these efforts did not result in any
acquisitions by the Company and, by the time the Company began discussions
regarding the proposed Offer and Merger with Parent in the fall of 2000, it had
no significant prospects for making an acquisition.
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During the spring of 2000, the Company also attempted to identify potential
strategic partners. Company management contacted a number of companies to
determine if they might have an interest in entering into a strategic business
relationship with the Company. The Company's Chief Executive Officer, Kyle
Parker, contacted Wolters Kluwer nv by letter dated April 27, 2000 for this
purpose. U.S. Bancorp Piper Jaffray also contacted Wolters Kluwer nv in
May 2000. As a result of these contacts and several subsequent telephone
conversations, the Company entered into a Confidentiality Agreement with Parent
on June 6, 2000 pursuant to which certain information would be exchanged by the
parties on a confidential basis.
On June 9, 2000, members of the Company's senior management team made a
presentation to a member of Parent's senior management and several members of
the senior management of Aspen Publishers, Inc., a wholly-owned subsidiary of
Parent and the direct parent of Offeror ("Aspen"). 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 nv or one of its affiliates, and the Company's
Chief Executive Officer indicated that the Company would be willing to entertain
such discussions.
These conversations with Parent and others did not result in any agreements
or relationships that the Company's Board considered likely to have a
significant positive impact on the Company's financial condition or prospects.
Based in part on its discussions with U.S. Bancorp Piper Jaffray and its own
internal financial review, management recommended that the Company initiate a
process of exploring the possible sale of all or a substantial portion of the
equity interest in or assets of the Company. On July 11, 2000, the Company
retained U.S. Bancorp Piper Jaffray as its financial advisor in connection with
the possible sale of all or a portion of the Company. Shortly thereafter, U.S.
Bancorp Piper Jaffray and Company management identified a list of potential
candidates that might be expected to have an interest in purchasing the Company.
On July 11, 2000, the Company also entered into an agreement with Dublind
Partners Inc., a financial advisory firm, pursuant to which that firm agreed to
provide such assistance as U.S. Bancorp Piper Jaffray might reasonably request
in connection with any negotiations with certain entities with which Dublind
Partners Inc. had relationships or significant contacts. Dublind Partners Inc.
agreed not to initiate further communications with any such entities and to
refer any inquiries from such entities to U.S. Bancorp Piper Jaffray. The
agreement provided for certain fees to be paid to Dublind Partners Inc. only in
the event of consummation of an acquisition of the Company by one of the
entities specified in the agreement. Because Parent and its affiliates were not
so specified, the Company has not incurred any obligation to pay any amounts to
Dublind Partners Inc. pursuant to such agreement.
From July through December 2000, U.S. Bancorp Piper Jaffray and
representatives of the Company contacted approximately 20 entities, some of
which had previously advised the Company that they had a potential interest in a
transaction with the Company. Between July and September 2000, certain of these
entities executed confidentiality agreements with the Company, were given
additional information concerning the Company and held further discussions with
U.S. Bancorp Piper Jaffray and with other representatives of the Company.
Certain of these discussions continued throughout the fall of 2000 and into
early December 2000. None of these entities, other than Parent, submitted a
formal proposal to acquire the Company.
During June, July and August, 2000, the Company's senior management and
senior management of 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, senior management of the Company met with a member of
Parent's senior management and several members of Aspen's senior management to
prepare for a presentation to be made to the Executive Board of Wolters Kluwer
nv.
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On August 30, 2000, senior management of the Company, Parent and Aspen made
a presentation to the Executive Board of Wolters Kluwer nv via teleconference.
The purpose of this meeting was to provide information about the Company and its
operations to Wolters Kluwer nv 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, senior management of the Company met with Parent's
senior management 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 through November 8, 2000, senior management of the Company
met with senior management of Aspen in New York City, 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 Company received an oral offer from Parent to
acquire 100% of the equity interest in the Company for approximately
$90.0 million (the "Initial Proposal"). The representative of Parent who made
the offer indicated that it had been approved by the Executive Board of Wolters
Kluwer nv but was subject to approval by the Supervisory Board of Wolters
Kluwer nv.
On December 5, 2000, the Company rejected the Initial Proposal based on the
determination by its Board of Directors that the price per share to be offered
to the Company's stockholders was insufficient.
Beginning in September 2000, the Company had also begun discussions with
Capital Resource Lenders III, L.P. and Sandler Capital Management, each of which
or its affiliates is an existing stockholder of the Company, regarding a
possible equity investment in the Company. Robert C. Ammerman and Hannah C.
Stone, directors of the Company, are affiliated with Capital Resource
Lenders III, L.P. and Sandler Capital Management, respectively. The parties
discussed various possible investment structures, including the issuance of a
new series of convertible preferred stock by the Company. In connection with
those discussions, the Company engaged the financial advisory firm of Houlihan
Lokey Howard & Zuken to render an opinion as to the fairness, from a financial
point of view, of any transaction that might be entered into with those parties.
However, the parties never reached agreement on the terms of such a proposed
investment, and the Company terminated its negotiations with Capital Resource
Lenders III, L.P. and Sandler Capital Management on December 13, 2000. Its
engagement letter entered into on December 5, 2000 with Houlihan Lokey Howard &
Zuken provided that the Company would pay to that firm fees of up to $100,000
plus reasonable expenses.
By the beginning of December 2000, management of the Company determined that
it was advisable for the Company to obtain interim financing in order to address
its cash needs. On December 8, 2000, the Company obtained a loan in the initial
principal amount of $500,000 from Capital Resource Lenders III, L.P. On
December 15, 2000, the Company obtained an additional $1,000,000 loan from
Capital Resource Lenders III, L.P. The Note Purchase Agreements with respect to
each of these loans specified that the Company would repay the loans in full if
the Company obtained additional financing in the amount of $2.0 million or more.
These loans were repaid on December 28, 2000 with funds obtained from Parent
pursuant to the Note.
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On December 11, 2000, the Company received an oral offer from Parent to
acquire 100% of the equity interest in the Company for approximately
$95.0 million (the "Revised Proposal"). The representative of Parent who made
the offer indicated that it had been approved by the Executive Board of Wolters
Kluwer nv but was subject to approval by the Supervisory Board of Wolters
Kluwer nv.
On December 13 and December 14, 2000, the Company, Parent and their
respective financial advisors and legal counsel met near Dallas, Texas to
negotiate the terms and conditions of the proposed acquisition of the Company by
Parent. The Company was represented at such meetings by Mr. Parker, a director
and the Company's Chief Executive Officer, and R. Randy Laney, an independent
director of the Company. On December 13, 2000, Mr. Parker and Mr. Laney,
together with the Company's financial and legal advisors, had several telephone
conferences with the other directors of the Company to discuss the status of the
negotiations and the principal terms of the Revised Proposal and the proposed
transaction. The Company's directors determined that it was advisable to
continue discussions with Parent regarding an acquisition on the proposed terms
and instructed Mr. Parker and Mr. Laney to continue the negotiations. On the
evening of December 13, 2000, Mr. Parker advised Parent 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. At the
conclusion of the meetings on December 14, 2000, Parent delivered preliminary
drafts of the Merger Agreement and Option Agreement to the Company, its legal
counsel and financial advisors.
On the morning of December 16, 2000, a telephonic meeting of the Company's
Board of Directors was held to discuss the proposed transaction with Parent and
the drafts of the Merger Agreement and Option Agreement. U.S. Bancorp Piper
Jaffray made a presentation to the Board at that meeting regarding its
preliminary financial analysis of the consideration proposed to be paid in the
proposed transaction to the Company's stockholders. Legal counsel for the
Company made presentations at this meeting regarding the terms of the draft
Merger Agreement and Option Agreement and the status of negotiations, as well as
relevant provisions of Delaware law. The Board authorized Mr. Parker and the
Company's financial and legal advisors to continue negotiations with Parent, and
asked U.S. Bancorp Piper Jaffray to prepare an opinion as to the fairness, from
a financial point of view, of the consideration proposed to be paid in the
transaction for delivery upon completion of the negotiations. Throughout the
remainder of December 16 and December 17, 2000, the Company's representatives
and Parent's representatives continued to negotiate the terms of the Merger
Agreement and the Option Agreement. During this period, the Company and Parent
and their representatives also negotiated the terms and conditions of the Note
and the Security Agreement.
On the morning of December 18, 2000, negotiations regarding the terms of the
proposed transactions and related documents continued. Among other things,
Parent agreed to increase the maximum amount that it would lend to the Company
pursuant to the Note from $5.0 million to $7.0 million if the Offer and Merger
were not consummated before April 19, 2001.
On the afternoon of December 18, 2000, the Company's Board of Directors met
to consider the transactions proposed between the Company and Parent. At this
meeting, the Company's legal counsel made a presentation regarding the
negotiations and revisions to the various transaction documents since the last
Board meeting. A lengthy discussion followed regarding the terms of the Offer,
the Merger Agreement, the Option Agreement, the Note and the Security Agreement.
Also at this meeting, U.S. Bancorp Piper Jaffray made a presentation regarding
its analysis of the fairness, from a financial point of view, of the
consideration proposed to be paid in the Offer and the Merger, including a
review of the materials it had presented in preliminary form at the meeting of
the Company's Board of Directors on December 16, 2000 and certain additional
information reviewed by U.S. Bancorp Piper Jaffray. A lengthy discussion
followed this presentation, after which U.S. Bancorp Piper Jaffray orally
delivered its opinion, which was confirmed in writing, that as of such date the
consideration to be
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received by the Company's stockholders in connection with the Offer and Merger
was fair to the Company's stockholders from a financial point of view. At the
conclusion of the meeting, the Company's Board of Directors unanimously approved
the Offer, the Merger, the Merger Agreement, the Note, and the Security
Agreement and the transactions contemplated thereby.
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, Parent and Offeror commenced the Offer.
In approving the Offer, the Merger, the Merger Agreement and the other
transactions contemplated thereby and recommending that all holders of Shares
accept the Offer and tender their Shares pursuant to the Offer, the Company's
Board of Directors considered a number of factors, including:
1. The presentations and views expressed by management of the Company
at the meetings of the Board of Directors held on December 16 and
December 18, 2000, and at previous meetings of the Board, regarding, among
other things: (a) the business, operating results, financial condition,
financing capacity, strategic objectives and prospects of the Company, as
well as the risks involved in achieving those prospects and objectives under
current industry, economic and market conditions, including the risks
associated with continuing to operate as a stand-alone entity; (b) the
possible alternatives to the Merger available to the Company, including
raising additional capital and possible acquisitions, as well as the results
of the Company's previous efforts in that regard; (c) the fact that in view
of the discussions held with various parties, as well as the efforts by U.S.
Bancorp Piper Jaffray to determine whether third parties might have an
interest in acquiring the Company, management of the Company believed it was
unlikely that any other party would propose an acquisition or strategic
business combination that would be more favorable to the Company and its
stockholders than the Offer and the Merger; and (d) the recommendation of
the Offer and the Merger by management of the Company.
2. The presentations of U.S. Bancorp Piper Jaffray at the meetings of
the Company's Board of Directors held on December 16 and December 18, 2000,
and the opinion of U.S. Bancorp Piper Jaffray, expressed orally at the
December 18, 2000 meeting (and confirmed in writing later that day) to the
effect that, as of December 18, 2000, the $4.3545 per share in cash to be
received by the Company's stockholders in the Offer and the Merger was fair
from a financial point of view to the Company's stockholders. The full text
of the written opinion of U.S. Bancorp Piper Jaffray, dated December 18,
2000, which sets forth assumptions made, matters considered and limitations
on the review undertaken in connection with the opinion, is attached as
Annex A and is incorporated herein by reference. The opinion of U.S. Bancorp
Piper Jaffray referred to herein does not constitute a recommendation as to
whether or not any holder of Shares should tender such shares in connection
with the Offer or as to how such stockholder should vote with respect to the
Merger. All stockholders are urged to, and should, read the opinion of U.S.
Bancorp Piper Jaffray carefully in its entirety.
3. The historical market prices and the recent limited trading activity
of the Shares, including the fact that the Offer Price represents a premium
of approximately 190.3% over the closing price of the Shares on the Nasdaq
National Market at December 18, 2000 ($1.50), the day before the public
announcement of the Offer.
4. The arm's-length negotiations between the Company and Parent leading
to the belief by the Company's Board of Directors that $4.3545 per Share
represented the highest price per Share that could be negotiated with
Parent.
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5. That the Offer and the Merger provide for a prompt cash offer for
all Shares to be followed by a merger for the same consideration, thereby
enabling the Company's stockholders to obtain the benefits of the
transaction in exchange for their Shares at the earliest possible time.
6. The business reputation and capabilities of Parent and its
management, and Parent's financial strength, including its ability to fund
the Offer.
7. The terms, conditions and possible consequences to the Company of
the Option Agreement, including the grant of the Stock Option and the
possible adverse impact of the Stock Option on the willingness of others to
make alternative proposals to acquire the Company prior to the closing of
the Offer.
The foregoing discussion of information and factors considered and given
weight by the Company's Board of Directors is not intended to be exhaustive. In
view of the variety of factors considered in connection with its evaluation of
the Offer and the Merger, the Board of Directors did not find it practicable to,
and did not, quantify or otherwise assign relative weights to the specific
factors considered in reaching its determinations and recommendations. In
addition, individual members of the Company's Board of Directors may have given
different weights to different factors.
(C) INTENT TO TENDER
To the best knowledge of the Company, all of its executive officers,
directors and affiliates currently intend to tender pursuant to the Offer all
Shares held of record or beneficially owned by them (other than Shares issuable
upon exercise of stock options). The Company's Chief Executive Officer and
certain other stockholders of the Company have entered into the Option Agreement
pursuant to which they have, among other things, agreed to tender their Shares
in the Offer, as described in Item 3 above. These stockholders, in the
aggregate, hold approximately 63.28% of the outstanding Shares.
ITEM 5. PERSON/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
Pursuant to the terms of a letter agreement dated July 11, 2000 (the
"Engagement Letter"), the Company retained U.S. Bancorp Piper Jaffray Inc. to
act as its financial advisor in connection with the possible sale of all or a
portion of the Company, and to render a fairness opinion to the Company in
connection with the sale of more than 40% of the Company Common Stock, the sale
of substantially all of its assets, a merger or a similar transaction. Pursuant
to the terms of the Engagement Letter, the Company has agreed to pay U.S.
Bancorp Piper Jaffray a fee of $750,000 in connection with the delivery of its
fairness opinion relating to any such transaction or proposed transaction. The
Company also agreed to pay U.S. Bancorp Piper Jaffray a transaction fee upon
consummation of the Offer, and the fee payable in connection with the delivery
of the fairness opinion will be credited against the transaction fee. Based upon
the aggregate consideration to be received by the Company's stockholders and
option holders in the Offer and the Merger, the fee payable to U.S. Bancorp
Piper Jaffray will be not more than $1.6 million. The Company has also agreed to
reimburse U.S. Bancorp Piper Jaffray for its reasonable out-of-pocket expenses,
including attorney's fees, up to a maximum of $75,000, and to indemnify U.S.
Bancorp Piper Jaffray and certain related persons against certain liabilities,
including certain liabilities under the federal securities laws.
Except as disclosed herein, neither the Company nor any person acting on its
behalf has employed, retained or compensated any person to make solicitations or
recommendations to the Company's stockholders with respect to the Offer or the
Merger.
25
<PAGE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Except for the Stock Option described in the Option Agreement and the grant
of the stock options listed below, no transactions in the Shares have been
effected during the past 60 days by the Company or, to the best of the Company's
knowledge, by any executive officer, director, affiliate or subsidiary of the
Company.
OPTIONS GRANTED IN PAST 60 DAYS
<TABLE>
<CAPTION>
OPTIONEE NUMBER OF SHARES EXERCISE PRICE GRANT DATE
-------- ---------------- -------------- ----------
<S> <C> <C> <C>
Michael Romanies......................................... 100,000* $1.00 11/28/00
Tony Fisher.............................................. 10,000 1.00 11/28/00
Randell L. Sisemore...................................... 100,000 1.00 11/28/00
Jay Scott Thompson....................................... 100,000 1.00 11/28/00
Sam Sexton, III.......................................... 85,000 1.00 11/28/00
Paul E. Dickson.......................................... 10,000 1.00 11/28/00
Cornelia M. Schardt...................................... 5,000 1.00 11/28/00
Barbara P. Jetton........................................ 5,000 1.00 11/28/00
Kathy Lairamore.......................................... 5,000 1.00 11/28/00
Darren Brewer............................................ 5,000 1.00 11/28/00
Todd S. Cytron........................................... 7,000 1.00 11/28/00
Nanci Anderson........................................... 2,000 1.00 11/28/00
Mark O'Leary............................................. 6,000 1.00 11/28/00
James C. Welch........................................... 6,000 1.00 11/28/00
William C. Lippold....................................... 5,000 1.00 11/28/00
Michael J. Sofio......................................... 1,000 1.00 11/28/00
Richard B. Eberhart...................................... 1,000 1.00 11/28/00
Margaret S. Fitzpatrick.................................. 1,000 1.00 11/28/00
Julie D. Fry............................................. 1,000 1.00 11/28/00
Kenneth D. Boyett........................................ 1,000 1.00 11/28/00
Isaac J. Farmer.......................................... 1,000* 1.00 11/28/00
Bill J. Norton........................................... 1,000* 1.00 11/28/00
Deborah K. Swint......................................... 1,000 1.00 11/28/00
Gregory C. Branson....................................... 1,000* 1.00 11/28/00
Linda J. Tabor........................................... 1,000 1.00 11/28/00
Gordon L. Campbell....................................... 5,000 1.00 11/28/00
John L. Johnson.......................................... 1,000 1.00 11/28/00
Michaelle E. d'Arcy...................................... 5,000 1.00 11/28/00
Antoinette L. Holohan.................................... 2,500 1.00 11/28/00
Mark E. Myers............................................ 3,000 1.00 11/28/00
Dorothy S. Rogers........................................ 1,000 1.00 11/28/00
Michael J. Haskins....................................... 5,000 1.00 11/28/00
Jeff Voth................................................ 3,000 1.00 11/28/00
Kyle D. Parker........................................... 38,000 1.00 12/5/00
Randy Laney.............................................. 40,000 1.00 11/28/00
Hannah Stone............................................. 40,000 1.00 11/28/00
Robert Ammerman.......................................... 40,000 1.00 11/28/00
Allan Duncan............................................. 75,000 2.25 11/21/00
George Ellis............................................. 75,000 2.25 11/21/00
</TABLE>
--------------------------
* The options granted to Mr. Romanies, Mr. Farmer, Mr. Norton and Mr. Branson
expired without vesting in connection with the termination of the employment
relationships between the Company and such persons.
26
<PAGE>
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result in
(i) a tender offer for or other acquisition of securities by or of the Company,
(ii) an extraordinary transaction, such as a merger, reorganization or
liquidation, involving the Company or any subsidiary of the Company; (iii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; or (iv) any material change in the present
capitalization, indebtedness or dividend policy of the Company.
(b) Except as described in Item 3 and Item 4 above (the provisions of which
are hereby incorporated by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred to
in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION.
PARENT'S DESIGNATION OF PERSONS TO BE ELECTED TO THE BOARD OF DIRECTORS
The Company intends to file with the Commission and furnish to stockholders
an Information Statement pursuant to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder in connection with the possible designation by
Parent, pursuant to the Merger Agreement, of certain persons to be appointed to
the Company's Board of Directors other than at a meeting of the Company's
stockholders.
APPRAISAL RIGHTS
No appraisal rights are available in connection with the Offer. However, if
the Merger is consummated, stockholders of the Company 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
Offeror acquires 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 Offeror acquires, 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 under 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, Offeror will have
the voting power to effect the Merger without the vote of any other stockholder.
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 board of directors
or other stockholders of the subsidiary (a "short-form merger"). Accordingly, if
Offeror acquires 90% or more of the outstanding Shares pursuant to the Offer and
the Option Agreement or otherwise, it could consummate the Merger without the
approval of any other stockholders of the Company. Parent and Offeror have
advised the Company that they intend to effect a short-form merger if permitted
to do so under the Delaware GCL, pursuant to which Offeror will be merged with
and into the Company.
27
<PAGE>
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 Parent and Offeror in connection with the Offer, the
Merger and the Option Agreement.
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 Offeror 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 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. The Company does not know
whether any of these laws will, by their terms, apply to the Offer or the
Merger. Parent and Offeror have informed the Company that they have not
attempted to comply with any such laws, and that should any person seek to apply
any state takeover law, Parent and Offeror will take such action as then appears
desirable, and that 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, Parent and Offeror might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, Parent and Offeror 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,
Parent and Offeror may not be
28
<PAGE>
obligated to accept for payment any Shares tendered. See "The Merger
Agreement--Certain Conditions to the Offeror's Obligations" in Item 3, above.
ANTITRUST MATTERS
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 nv of a Premerger
Notification and Report Form with respect to the Offer, unless Wolters Kluwer nv
receives a request for additional information or documentary material from the
United States 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. Parent has advised the Company
that Wolters Kluwer nv, the ultimate parent entity of Offeror and Parent, 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 nv. 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 Parent's proposed acquisition of the
Company. At any time before or after Offeror's 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 acquired by
Offeror or the divestiture of substantial assets of the Company or of the
Parent's subsidiaries. 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 "The Merger Agreement--Certain Conditions to
Offeror's Obligations" in Item 3, above.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
Exhibit 1. Agreement and Plan of Merger dated as December 19, 2000, by
and among the Company, Parent and Offeror (incorporated by
reference to Exhibit (d)(1) to the Schedule TO filed on
December 29, 2000 by Offeror, Parent, Aspen and Wolters
Kluwer nv).
Exhibit 2. Information contained under the headings "Item 1. Election
of Directors--Compensation Committee Interlocks and Insider
Participation," "Executive Compensation" and "Certain
Transactions" in the Company's proxy statement for its
annual meeting of stockholders held on June 13, 2000 and
filed with the Commission (File No. 0-27463) (incorporated
by reference to such filing).
Exhibit 3. Promissory Note in the initial principal amount of $500,000
made by the Company in favor of Capital Resource Lenders
III, L.P. and related Note Purchase Agreement, each dated
December 8, 2000, between the Company and such entity.
</TABLE>
29
<PAGE>
<TABLE>
<S> <C>
Exhibit 4. Promissory Note in the initial principal amount of
$1,000,000 made by the Company in favor of Capital Resource
Lenders III, L.P. and related Note Purchase Agreement, each
dated December 15, 2000, between the Company and such
entity.
Exhibit 5. Form of Employment Agreement between the Company and
Kyle D. Parker dated as of June 17, 1999 (incorporated by
reference to Exhibit 10.2 to the Registration Statement of
the Company on Form S-1 (Registration No. 333-81107) filed
with the Commission on June 18, 1999).
Exhibit 6. First Amendment to Employment Agreement between the Company
and Kyle D. Parker dated as of December 19, 2000.
Exhibit 7. Confidentiality Agreement dated June 6, 2000 between the
Company and Parent.
Exhibit 8. Stock Option and Tender Agreement, dated as of December 19,
2000, by and among Parent, Offeror and the Stockholders
identified therein (incorporated by reference to
Exhibit (d)(2) to the Schedule TO filed on December 29, 2000
by Offeror, Parent, Aspen and Wolters Kluwer nv).
Exhibit 9. Grid Promissory Demand Note, dated as of December 19, 2000,
in the face amount of $7,000,000, by the Company in favor of
Parent (incorporated by reference to Exhibit (d)(3) to the
Schedule TO filed on December 29, 2000 by Offeror, Parent,
Aspen and Wolters Kluwer nv).
Exhibit 10. Security Agreement, dated as of December 19, 2000, by and
between the Company and Parent (incorporated by reference to
Exhibit (d)(4) to the Schedule TO filed on December 29, 2000
by Offeror, Parent, Aspen and Wolters Kluwer nv).
Exhibit 11. Letter to Stockholders of the Company, dated December 29,
2000.*
Exhibit 12. Text of Joint Press Release issued by the Company and
Wolters Kluwer nv on December 19, 2000 (U.S.) (incorporated
by reference to Exhibit (a)(1)(vii) to the Schedule TO filed
on December 29, 2000 by Offeror, Parent, Aspen and Wolters
Kluwer nv).
Exhibit 13. Text of Joint Press Release issued by the Company and
Wolters Kluwer nv on December 19, 2000 (the Netherlands)
(incorporated by reference to Exhibit (a)(1)(viii) to the
Schedule TO filed on December 29, 2000 by Offeror, Parent,
Aspen and Wolters Kluwer nv).
Exhibit 14. Opinion of U.S. Bancorp Piper Jaffray dated December 18,
2000 (attached hereto as Annex A).*
</TABLE>
------------------------
* Included in copies of the Schedule 14D-9 mailed to stockholders.
30
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 29, 2000
<TABLE>
<S> <C> <C>
LOISLAW.COM, INC.
By: /s/ KYLE D. PARKER
--------------------------------------
Name: Kyle D. Parker
Title: CHAIRMAN AND CHIEF EXECUTIVE OFFICER
</TABLE>
31
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
----------- -----------
<S> <C>
Exhibit 1. Agreement and Plan of Merger dated as December 19, 2000, by
and among the Company, Parent and Offeror (incorporated by
reference to Exhibit (d)(1) to the Schedule TO filed on
December 29, 2000 by Offeror, Parent, Aspen and Wolters
Kluwer nv).
Exhibit 2. Information contained under the headings "Item 1. Election
of Directors--Compensation Committee Interlocks and Insider
Participation," "Executive Compensation" and "Certain
Transactions" in the Company's proxy statement for its
annual meeting of stockholders held on June 13, 2000 and
filed with the Commission (File No. 0-27463) (incorporated
by reference to such filing).
Exhibit 3. Promissory Note in the initial principal amount of $500,000
made by the Company in favor of Capital Resource Lenders
III, L.P. and related Note Purchase Agreement, each dated
December 8, 2000, between the Company and such entity.
Exhibit 4. Promissory Note in the initial principal amount of
$1,000,000 made by the Company in favor of Capital Resource
Lenders III, L.P. and related Note Purchase Agreement, each
dated December 15, 2000, between the Company and such
entity.
Exhibit 5. Form of Employment Agreement between the Company and
Kyle D. Parker dated as of June 17, 1999 (incorporated by
reference to Exhibit 10.2 to the Registration Statement of
the Company on Form S-1 (Registration No. 333-81107) filed
with the Commission on June 18, 1999).
Exhibit 6. First Amendment to Employment Agreement between the Company
and Kyle D. Parker dated as of December 19, 2000.
Exhibit 7. Confidentiality Agreement dated June 6, 2000 between the
Company and Parent.
Exhibit 8. Stock Option and Tender Agreement, dated as of December 19,
2000, by and among Parent, Offeror and the Stockholders
identified therein (incorporated by reference to
Exhibit (d)(2) to the Schedule TO filed on December 29, 2000
by Offeror, Parent, Aspen and Wolters Kluwer nv).
Exhibit 9. Grid Promissory Demand Note, dated as of December 19, 2000,
in the face amount of $7,000,000, by the Company in favor of
Parent (incorporated by reference to Exhibit (d)(3) to the
Schedule TO filed on December 29, 2000 by Offeror, Parent,
Aspen and Wolters Kluwer nv).
Exhibit 10. Security Agreement, dated as of December 19, 2000, by and
between the Company and Parent (incorporated by reference to
Exhibit (d)(4) to the Schedule TO filed on December 29, 2000
by Offeror, Parent, Aspen and Wolters Kluwer nv).
Exhibit 11. Letter to Stockholders of the Company, dated December 29,
2000.*
Exhibit 12. Text of Joint Press Release issued by the Company and
Wolters Kluwer nv on December 19, 2000 (U.S.) (incorporated
by reference to Exhibit (a)(1)(vii) to the Schedule TO filed
on December 29, 2000 by Offeror, Parent, Aspen and Wolters
Kluwer nv).
Exhibit 13. Text of Joint Press Release issued by the Company and
Wolters Kluwer nv on December 19, 2000 (the Netherlands)
(incorporated by reference to Exhibit (a)(1)(viii) to the
Schedule TO filed on December 29, 2000 by Offeror, Parent,
Aspen and Wolters Kluwer nv).
Exhibit 14. Opinion of U.S. Bancorp Piper Jaffray dated December 18,
2000 (attached hereto as Annex A).*
</TABLE>
------------------------
* Included in copies of the Schedule 14D-9 mailed to stockholders.
