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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
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SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D) (4) OF
THE SECURITIES EXCHANGE ACT OF 1934
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CCH INCORPORATED
(NAME OF SUBJECT COMPANY)
CCH INCORPORATED
(NAME OF PERSON(S) FILING STATEMENT)
CLASS A COMMON STOCK, $1.00 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
124883109
(CUSIP NUMBER OF CLASS OF SECURITIES)
CLASS B COMMON STOCK, $1.00 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
124883208
(CUSIP NUMBER OF CLASS OF SECURITIES)
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OAKLEIGH THORNE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CCH INCORPORATED
2700 LAKE COOK ROAD
RIVERWOODS, ILLINOIS 60015
(NAME, ADDRESS, AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
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COPIES TO:
DEIRDRE M. VON MOLTKE DOUGLAS A. DOETSCH
SIDLEY & AUSTIN MAYER, BROWN & PLATT
ONE FIRST NATIONAL PLAZA 190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603 CHICAGO, ILLINOIS 60603
(312) 853-7000 (312) 782-0600
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is CCH Incorporated, a Delaware corporation
(the "Company"), and the address of its principal executive offices is 2700
Lake Cook Road, Riverwoods, Illinois 60015. The respective titles of the
classes of equity securities to which this statement relates are: the
Company's Class A Common Stock, $1.00 par value per share ("Class A Common
Stock"), and the Company's Class B Common Stock, $1.00 par value per share
("Class B Common Stock," and together with the Class A Common Stock, the
"Common Stock"). At the close of business on November 27, 1995 (i) 16,638,512
shares of Class A Common Stock were issued and outstanding, (ii) 16,397,122
shares of Class B Common Stock were issued and outstanding and (iii) vested
options to purchase 1,217,000 shares of Class B Common Stock were issued and
outstanding.
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer by WK Acquisition Sub, Inc. (the
"Offeror"), a Delaware corporation and a wholly owned subsidiary of Wolters
Kluwer nv, a corporation organized under the laws of The Netherlands (the
"Parent"), to purchase all outstanding shares of Common Stock (collectively,
the "Shares") at $55.50 per Share (the "Offer Price"), net to the seller in
cash without interest, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated December 1, 1995 (the "Offer to Purchase"),
and the related Letters of Transmittal (which together with the Offer to
Purchase and any amendments or supplements thereto constitute the "Offer").
The Offer is disclosed in the Tender Offer Statement on Schedule 14D-1 dated
December 1, 1995 (the "Schedule 14D-1"), as filed by the Offeror and Parent
with the Securities and Exchange Commission (the "Commission"). The Schedule
14D-1 states that the address of the principal executive offices of the
Offeror and Parent is Stadhouderskade 1, 1054 ES Amsterdam, The Netherlands.
The Offer is being made pursuant to the terms of an Agreement and Plan of
Merger (the "Merger Agreement"), dated as of November 27, 1995, among Parent,
the Offeror and the Company, which provides that, following completion of the
Offer, the Offeror will be merged with and into the Company upon the terms and
subject to the conditions set forth in the Merger Agreement (the "Merger"). As
a condition to signing the Merger Agreement, Parent required that the Shares
owned by the Thorne family (which include, in the aggregate, approximately 58%
of the voting Shares) be committed to the Offer upon the terms and subject to
the conditions of the Stock Option and Tender Agreement (the "Option
Agreement"), dated as of November 27, 1995, among Parent, the Offeror, and
Oakleigh B. Thorne, Honore T. Wamsler, Daniel K. Thorne and certain related
parties of such individuals (collectively, the "Stockholders"). Certain terms
and conditions of the Merger Agreement and the Option Agreement are described
below in Item 3. Copies of the Merger Agreement and the Option Agreement are
filed as exhibits to this statement and are incorporated herein by reference.
A copy of the press release issued by the Company on November 27, 1995 is
filed as an exhibit to this statement and incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person filing
this statement, are set forth in Item 1 above, which information is
incorporated herein by reference.
(b)(1) Certain contracts, agreements, arrangements and understandings
between the Company and certain of its directors and executive officers are
described in the Company's Information Statement dated December 1, 1995 under
Directors and Executive Officers of the Company, Executive Compensation,
Options/SAR Grants, Pension Plan, Supplemental Retirement Plan, Shareholder
Return Performance Information, and Stock Ownership of Principal Stockholders,
Nominee Directors, and Management. The Information Statement is attached
hereto as Schedule I, filed as Exhibit 3 to this Schedule 14D-9 and
incorporated herein by reference. In addition, certain contracts, agreements,
arrangements and understandings relating to the Company and/or the Company's
directors and executive officers are contained in the Merger Agreement and are
described below under "Merger Agreement."
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(b)(2) Certain Background Information.
In 1991, in response to declining levels of customer satisfaction, eroding
profit margins and a weakening competitive position, the Company developed a
new strategic direction focused on re-engineering the processes required to
create value for customers, building new capabilities and returning the
Company to a position of financial strength. The Company has invested
approximately $314.7 million in the re-engineering of its business units,
focusing first on CCH Legal Information Services ("CCH LIS"), which offers a
variety of services to assist attorneys in handling corporate, securities,
credit and intellectual property matters, second on Computax, which offers
software and computer services for the processing of tax returns, and last on
U.S. Publishing, a provider of legal and tax information products delivered in
print, CD-ROM and on-line formats. The re-engineering of CCH LIS has resulted
in increased customer satisfaction, sales growth and profitability. The
Company's re-engineering initiative has transformed Computax from a provider
of mainframe-based services to a provider of software-based services and
dramatically improved the operating profits of Computax. The investment
program at U.S. Publishing, which involves the re-engineering of the content
creation, operations, customer management and product management processes as
well as the development of an electronic product development capability, is
nearing completion.
All references to time in the following summary are to New York City time.
In the late spring of 1995, the Chief Executive Officer ("CEO") of the
Company met with the Chairman of the Executive Board ("Chairman") of Parent to
discuss the Company's and Parent's respective businesses and recent
developments in the publishing industry.
In mid-summer, the CEO of the Company was contacted by a senior executive
(the "Senior Executive") of another multi-national publisher ("Entity Two") to
set up a meeting. During the meeting, the Entity Two Senior Executive and the
CEO of the Company discussed a possible business combination and arranged a
meeting for mid-September.
In August, the CEO of the Company discussed with the Board of Directors of
the Company at their regularly scheduled teleconference meeting the contacts
the CEO had had with Parent and Entity Two. The CEO of the Company, in August,
also contacted Goldman, Sachs & Co. ("Goldman Sachs") to discuss an engagement
wherein Goldman Sachs would conduct a study of the Company's strategic
alternatives. Goldman Sachs was asked to present its findings at the Company's
regularly scheduled Board of Directors meeting in mid-September.
In mid-September, Goldman Sachs made a presentation to the Company's Board
of Directors. The presentation included a review of a range of alternatives,
including, but not limited to, operating the business on a stand alone basis
and implementing the Company's re-engineering plans, possible business
combinations, acquisitions and dispositions and a recapitalization. In
addition, legal counsel briefed the Company's Board of Directors about their
duties in considering the alternatives. The Board of Directors of the Company
authorized management to continue discussions with Entity Two and to engage in
discussions with other potential parties.
Following the meeting of the Board of Directors of the Company in mid-
September, the CEO of the Company, another member of the Company's senior
management and a Company consultant met with the Senior Executive and the
Chief Financial Officer ("CFO") of Entity Two to discuss the merits of a
potential business combination. Entity Two indicated that it had an interest
in pursuing a possible acquisition of the Company and that it expected to
provide a preliminary indication of its valuation for the Company.
In October, the CEO of the Company and a representative of Goldman Sachs met
with the Senior Executive and CFO of Entity Two to discuss Entity Two's
valuation of a business combination of the two companies.
Subsequent to the meeting, the CFO and another member of management of
Entity Two arranged to meet a representative of Goldman Sachs to determine how
a business combination between the Company and Entity Two could move forward
and scheduled meetings with the Company for November 7 and 8 to discuss the
Company's business activities and its financial performance.
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At the regularly scheduled meeting of the Board of Directors of the Company
on October 19, the CEO of the Company updated the Company's Board of Directors
on the discussions with Entity Two.
In late October, the Chairman of Parent contacted the CEO of the Company to
invite the CEO of the Company to meet with the Chairman of Parent at Parent's
headquarters to discuss strategic opportunities for the two companies in light
of the current activity in the legal publishing industry.
On October 30, the CEO of the Company, another member of the Company's
senior management and a representative of Goldman Sachs met with members of
the Executive Board and the CFO of Parent. Parent expressed an interest in
pursuing a possible acquisition of the Company and meetings were scheduled
with the Company for November 16 and 17 to discuss the Company's business
activities and its financial performance.
On November 7 and 8, the senior management of the Company conducted the
scheduled meetings with members of senior management of Entity Two and its
financial advisors. A further meeting was planned to review Entity Two's
evaluation of the matters discussed on November 7 and 8.
On November 16 and 17, the senior management of the Company conducted the
scheduled meetings with members of senior management of Parent. A further
meeting was planned to review Parent's evaluation of the matters discussed on
November 16 and 17.
On November 21 and 22, the CEO of the Company, another member of the
Company's senior management and a representative of Goldman Sachs met with the
Senior Executive and the CFO of Entity Two. In the late afternoon of November
21, the CFO of Entity Two presented to a member of the Company's senior
management and a representative of Goldman Sachs a letter preliminarily
outlining the terms of a cash offer for the purchase of the Company.
On the morning of November 22, the parties met again to discuss Entity Two's
offer. Following a discussion of the economic value that a business
combination would create, the Senior Executive of Entity Two agreed to convene
the Executive Board of Entity Two to reconsider its offer. After meeting with
the Executive Board of Entity Two, the Chairman made an increased cash offer
for the purchase of the Company.
In the afternoon of November 22, the CEO of the Company contacted the
Chairman of Parent and indicated that their planned meeting should occur soon
and the Chairman of Parent agreed to give the Company an indication of
Parent's ability to make an offer for the Company following a meeting of
Parent's Supervisory Board on November 23. They tentatively agreed to meet, if
appropriate, on November 24.
In the afternoon of November 23, after Parent's Supervisory Board Meeting,
the Chairman of Parent made a verbal offer of $1.9 billion. Following that
conversation, the CEO of the Company contacted the Senior Executive of Entity
Two to discuss the status of the Entity Two offer. The CEO of the Company then
consulted with the Company's legal and financial advisors and established a
formal process through which written offers would be submitted for evaluation
by the Company's Board of Directors. The process required that offer letters
be sent by Entity Two and Parent to the offices of the Company's legal
advisors by 5pm on November 24. The offers would be presented to the Company's
Board of Directors at a special meeting to be held on November 25.
In the afternoon of November 24, the Chairman of Parent, other members of
Parent's senior management and representatives of Parent's legal and financial
advisors met with the CEO of the Company, a member of Company's senior
management and representatives of Goldman Sachs to discuss the instructions
for submitting an offer.
The Company received offer letters from Parent and Entity Two in the early
evening on November 24.
On November 25, the Company's legal and financial advisors met with the
Board of Directors of the Company by teleconference to discuss the Parent and
Entity Two offers. Both offers were conditioned on the binding agreement of
members of the Thorne family to sell their Shares. The Board of Directors
reviewed the two offers and discussed the terms of the offers and Goldman
Sachs discussed a preliminary financial analysis of the offers. During the
meeting of the Board of Directors, a financial advisor to Entity Two called
and indicated
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to the CEO of the Company and a representative of Goldman Sachs that Entity
Two was in a position to make an improvement to its offer, but could make only
a modest increase. Entity Two was not informed of the amount of Parent's
offer. The Board of Directors authorized senior management to enter into
discussions with Parent regarding a possible transaction. Parent's offer was
conditioned on negotiations being conducted on an exclusive basis.
The CEO of the Company contacted other members of the Thorne family to
discuss a possible transaction involving the sale of their Shares and to
solicit their views of such a transaction.
On November 25 and November 26, the legal and financial advisors to the
Company met with those of Parent to negotiate the Merger Agreement and legal
advisors to the Thorne family met with those of Parent to negotiate the Option
Agreement. In the evening of November 26, the Board of Directors met with its
financial and legal advisors. Representatives of Goldman Sachs provided a
fairness opinion orally to the Board of Directors. The Company's legal
advisors briefed the Board of Directors on the terms of the Merger Agreement
and Option Agreement. Based on the factors described below in Item 4, the
Board of Directors approved the transaction.
In the late morning of November 27, the trustees with voting power over the
Thorne family shares executed the Option Agreement. The Merger Agreement was
finalized and executed in the early afternoon of November 27. Goldman Sachs
confirmed its oral fairness opinion in writing. Public announcements were made
in the United States and The Netherlands immediately after the execution of
the Merger Agreement.
(b)(3) Merger Agreement.
The following summary of the Merger Agreement, a copy of which is filed as
an Exhibit hereto and incorporated by reference herein, is qualified by
reference to the text of the Merger Agreement.
The Offer. Pursuant to the terms of the Merger Agreement, the Offeror is
required to commence the Offer no later than December 1, 1995 and to keep the
Offer open until 5:00 p.m. (EDT) January 4, 1996. The obligations of the
Offeror to accept for payment, and pay for, any Shares tendered pursuant to
the Offer are subject to the conditions that (i) all waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), applicable to the purchase of Shares pursuant to the Offer shall have
expired or been terminated, (ii) there shall have been validly tendered and
not withdrawn prior to the expiration of the Offer such number of Shares that
would constitute a majority of the voting power of the outstanding shares
(determined on a fully diluted basis) of Class A Common Stock (the "Minimum
Condition"), and (iii) on or after the date of the Merger Agreement none of
the following conditions, exist or shall occur and remain in effect:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted or issued, by any domestic (federal or state) court, commission,
governmental body, regulatory agency, authority or tribunal which (i)
prohibits or limits or seeks to prohibit or materially limit Parent's or
Offeror's (x) ownership, or seeks to impose material limitations on the
ability of Parent or Offeror to acquire or hold, or exercise full rights of
ownership of, any Shares accepted for payment pursuant to the Offer,
including, without limitation, the right to vote such Shares or (y)
operation of all or a material portion of the Company's business or assets,
or compels Parent to dispose of or hold separate all or a material portion
of the Company's business or assets as a result of the Offer or the Merger,
or (ii) prohibits, or limits or seeks to prohibit or materially limit, or
makes illegal, the acceptance for payment, purchase or payment for Shares
or the consummation of the Offer or the Merger and such statute, rule,
regulation, judgment, order or injunction shall remain in effect for a
period of fifteen business days after the issuance thereof; provided,
however, that in order to invoke this condition with respect to any such
statute, rule, regulation, judgment, order or injunction Parent shall have
used its reasonable best efforts to prevent such statute, rule, regulation,
judgment, order or injunction or ameliorate the effects thereof; provided,
further, that if any such order or injunction is a temporary restraining
order or preliminary injunction, Parent may not, for a period of 30 days,
by virtue of this condition alone, amend or terminate the Offer, but may
only extend the Offer and thereby postpone acceptance for payment or
purchase of Shares;
(b) the Merger Agreement shall have been terminated in accordance with
its terms;
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(c) the Company shall have breached any of its representations and
warranties set forth in the Merger Agreement (other than any matters that,
in the aggregate, would not have a material adverse effect on the Company);
(d) the Company shall have failed in any material respect to perform any
material obligation or covenant required by the Merger Agreement to be
performed or complied with by it;
(e) the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to Parent or Offeror its approval or
recommendation of the Offer, the Merger or the Merger Agreement, or
approved or recommended any Takeover Proposal (as hereinafter defined); or
(f) there shall have occurred and continued to exist for at least three
business days (i) any general suspension of trading in, or limitation on
prices for, securities on a national securities exchange in the United
States or (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or The Netherlands;
which, in the reasonable judgment of Offeror, makes it inadvisable to proceed
with the Offer or with such acceptance for payment or payment.
The foregoing conditions may be waived by Offeror, in whole or part, at any
time and from time to time, in the sole discretion of Offeror. The failure by
Offeror at any time to exercise any of the foregoing rights will not be deemed
a waiver of any right and each right will be deemed an ongoing right which may
be asserted at any time and from time to time.
Company Actions. Pursuant to the Merger Agreement, the Company has agreed
that on the date of the commencement of the Offer, subject to the fiduciary
duties of the Board of Directors of the Company under applicable law as
determined by the Board of Directors of the Company in good faith after
consultation with the Company's outside counsel, 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 that the
holders of shares of Class A Common Stock approve the Merger.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the General
Corporation Law of the State of Delaware, as amended (the "DGCL"), the Offeror
shall be merged with and into the Company at the effective time of the Merger
(the "Effective Time"). Following the Merger, the separate corporate existence
of the Offeror shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of the Offeror in accordance with the DGCL. The
Certificate of Incorporation and Bylaws of the Offeror shall become the
Certificate of Incorporation and Bylaws of the Surviving Corporation. The
directors of the Offeror shall become the initial directors of the Surviving
Corporation and the officers of the Company shall become the initial officers
of the Surviving Corporation.
Conversion of Securities. At the Effective Time, each Share issued and
outstanding immediately prior thereto shall be cancelled and extinguished and
each Share (other than Shares held by the Company as treasury shares, Shares
owned by any wholly owned subsidiary of the Company, Shares owned by Parent,
the Offeror or any wholly owned subsidiary of Parent, and Dissenting Shares
(as defined below)) shall, by virtue of the Merger and without any action on
the part of the Offeror, Parent, the Company or the holders of the Shares, be
converted into and represent the right to receive in cash, without interest,
the per Share consideration paid in the Offer (the "Merger Consideration").
Each share of common stock of the 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 Offeror, Parent, the Company
or the holders of Shares, be converted into and shall thereafter evidence one
validly issued and outstanding share of common stock of the Surviving
Corporation.
Dissenting Shares. If required by the DGCL, Shares which are held by holders
who have properly exercised appraisal rights with respect thereto in
accordance with Section 262 of the DGCL ("Dissenting
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Shares") will not be exchangeable for the right to receive the Merger
Consideration, and holders of such Shares will be entitled to receive payment
of the appraisal value of such Shares unless such holders fail to perfect or
withdraw or lose their right to appraisal and payment under the DGCL.
Merger Without a Meeting of Stockholders. In the event that the Offeror, or
any other direct or indirect subsidiary of Parent, shall acquire at least 90%
of the outstanding Shares, the parties agree to take all necessary and
appropriate actions to cause the Merger to become effective without a meeting
of stockholders of the Company, in accordance with Section 253 of the DGCL, as
soon as practicable after the expiration of the Offer, but in no event later
than six business days thereafter.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Offeror,
including, but not limited to, representations and warranties relating to the
Company's organization and qualification, capitalization, its authority to
enter into the Merger Agreement and carry out the related transactions,
filings made by the Company with the Commission under the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of
1934, as amended (the "Exchange Act") (including financial statements included
in the documents filed by the Company under the Securities Act and the
Exchange Act), required consents and approvals, the absence of certain
material adverse changes or events, approval by the Board of Directors of the
Merger Agreement and the Option Agreement for all purposes under Section 203
of the DGCL, payment of taxes, compliance with applicable laws, litigation,
material liabilities of the Company and its subsidiaries, employee benefit
plans, intellectual property and environmental matters.
The Offeror and Parent have also made customary representations and
warranties to the Company, including, but not limited to, representations and
warranties relating to the Offeror's and Parent's organization and
qualification, capitalization, authority to enter into the Merger Agreement
and carry out the related transactions, required consents and approvals and
the availability of sufficient funds to consummate the Offer.
Covenants Relating to the Conduct of Business. The Company has agreed that
it will, and will cause its subsidiaries to, in all material respects, carry
on their respective businesses in, and not enter into any material transaction
other than in accordance with, the regular and ordinary course and, to the
extent consistent therewith, use their reasonable best efforts to preserve
intact their current business organizations, keep available the services of
their current officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with them. The
Company has agreed that, except as contemplated by the Merger Agreement or as
disclosed by the Company to the Parent pursuant to the Merger Agreement, it
shall not, and shall not permit any of its significant subsidiaries (a
"Subsidiary") to, without the prior written consent of the Parent:
(a) declare, set aside or pay any dividends on, or make any other actual,
constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to stockholders of the Company in
their capacity as such, other than (1) ordinary quarterly dividends by the
Company consistent with past practice in an amount not in excess of $0.17
1/2 per quarter per share of Shares, provided that the record date for any
such dividend to be paid for the fourth quarter of 1995 shall not be
earlier than January 16, 1996 or (2) dividends declared prior to the date
of the Merger Agreement,
(b) issue, deliver, sell, pledge, dispose of or otherwise encumber, or
authorize the issuance, delivery, sale, pledge, disposition or other
encumbrance of, any shares of its capital stock, any other voting
securities or equity equivalent or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting securities
or convertible securities or equity equivalent (other than, in the case of
the Company, the issuance of Shares during the period from the date of the
Merger Agreement through the Effective Time upon the exercise of Company
stock options outstanding on the date of the Merger Agreement in accordance
with their current terms);
(c) amend its Certificate of Incorporation or Bylaws;
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(d) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof;
(e) other than in the ordinary course of business consistent with past
practice, sell, lease or otherwise dispose of or agree to sell, lease or
otherwise dispose of, any of its assets;
(f) incur, assume or prepay any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others, except for borrowings or
guarantees incurred in the ordinary course of business consistent with past
practice;
(g) alter through merger, liquidation, reorganization, restructuring or
in any other manner the corporate structure or ownership of any subsidiary
of the Company;
(h) enter into or adopt any employee benefit plans or programs (which, if
currently existing, would come within the definition of Benefit Plan under
Section 4.12 of the Merger Agreement), or amend any existing Benefit Plan,
agreement or arrangement, make any contribution to any Benefit Plan which
is disproportionately large when compared to prior contributions made to
such Benefit Plan or enter into or amend any employee benefit plan or
employment or consulting agreement except (x) for certain stay bonuses,
merit bonuses and severance payments under the Company's severance policy
or as otherwise permitted by Section 7.11 of the Merger Agreement or (y)
bonuses or compensation increases associated with Benefit Plans, promotions
and reviews in the ordinary course of business;
(i) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
practices or principles used by it;
(j) make any tax election or settle or compromise any federal, state,
local or foreign tax liability;
(k) settle or compromise any pending or threatened material suit, action
or claim;
(l) enter into any material contracts or modify, amend, terminate any
material contracts;
(m) take or offer or propose to take, or agree to take in writing or
otherwise any of the actions described above or any action which would make
any of the representations or warranties of the Company contained in the
Merger Agreement untrue or incorrect as of the date when made if such
action had been taken, or would result in any of the Offer conditions not
being satisfied.
During the period from the date of the Merger Agreement through the
Effective Time, the Offeror shall not engage in any activities of any nature
except as provided in or contemplated by the Merger Agreement.
No Solicitation. The Company has agreed in the Merger Agreement that the
Company, its affiliates and their respective officers, directors, employees,
representatives and agents shall immediately cease any existing discussions or
negotiations, if any, with any parties conducted heretofore 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. The Company
has agreed in the Merger Agreement that, from and after the date of the Merger
Agreement, the Company will not, directly or indirectly, solicit or initiate
any Takeover Proposal from any person, or engage in discussions or
negotiations relating thereto (including by way of furnishing information);
provided, however, that (i) the Company may engage in discussions or
negotiations with a third party who seeks to initiate such discussions or
negotiations or may furnish such third party information concerning the
Company and its business, properties, assets, operating results and prospects,
in each case only in response to a request for such information or access to
any person made after the date hereof which was not encouraged, solicited or
initiated by the Company or any of its affiliates or any of its or their
respective officers, directors, employees, representatives or agents after the
date hereof, pursuant to appropriate confidentiality agreements, (ii) the
Company's Board of Directors may take and disclose to the Company's
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act and (iii) following receipt of a Takeover Proposal or offer the
Board of Directors of the Company may withdraw or modify its recommendation to
the stockholders, but in each case referred to in the foregoing clauses (i)
through
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(iii) only to the extent that the Board of Directors of the Company shall
conclude in good faith after consultation with the Company's outside counsel
that such action is appropriate in order for the Board of Directors of the
Company to act in a manner which is consistent with its fiduciary obligations
under applicable law. The Company also agreed to promptly notify Parent of its
receipt of any proposal or offer. As used in the Merger Agreement, "Takeover
Proposal" means any proposal or offer, other than a proposal or offer by Parent
or any of its affiliates, for a tender or exchange offer, a merger,
consolidation or other business combination involving the Company or any
Subsidiary of the Company or any proposal to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets of, the
Company or any of its Subsidiaries or any other transaction the consummation of
which could reasonably be expected to impede, interfere with, prevent or
materially delay the Offer or the Merger or which would reasonably be expected
to dilute materially the benefits to Parent of the transactions contemplated by
the Merger Agreement.
Company Stock Options; Tax Gross-Up. Pursuant to the Merger Agreement,
immediately upon the consummation of the Offer, all outstanding employee stock
options, whether or not then fully exercisable or vested, to purchase shares of
Common Stock (a "Company Stock Option") theretofore granted under the Company's
Long-Term Incentive Plan shall become fully exercisable and vested, and,
pursuant to the terms of the Long Term Incentive Plan, the Company Stock
Options, shall, upon their surrender to the Company by the holders thereof, be
cancelled by the Company, and the holders thereof shall receive a cash payment
from the Company in an amount equal to the number of shares of Common Stock
subject to each surrendered option multiplied by the difference between the
exercise price per share of Common Stock covered by the option and the Merger
Consideration. No additional awards shall be granted under the Long-Term
Incentive Plan. Parent acknowledged that the Company has resolved to "gross-up"
certain executives for excise taxes due on any "excess parachute payment" as a
result of the acceleration of the vesting of the Company Stock Options (subject
to a maximum "gross-up" amount of $6,000,000) and agreed to undertake to make
such payments to the extent due after the Effective Time.
Reasonable Best Efforts to Effect Merger. Upon the terms and subject to the
conditions set forth in the Merger Agreement, each of Parent, Offeror and the
Company has agreed to use its reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner practicable, the
Merger, and the other transactions contemplated by the Merger Agreement,
provided, however, that the Company shall be under no obligation to take any
action to the extent that the Board of Directors shall conclude in good faith,
after consultation with the Company's outside counsel, that such action could
be inconsistent with the Board of Directors' fiduciary obligations under
applicable law.
Indemnification. Pursuant to the Merger Agreement, Parent has agreed that,
from and after the Effective Time, it will cause the Surviving Corporation to
indemnify and hold harmless all past and present officers, directors, employees
and agents of the Company and of its Subsidiaries to the full extent such
persons may be indemnified by the Company pursuant to the Company's Certificate
of Incorporation and Bylaws as in effect as of the date of the Merger Agreement
for acts and omissions occurring at or prior to the Effective Time and shall
advance reasonable litigation expenses incurred by such persons in connection
with defending any action arising out of such acts or omissions in accordance
with the terms and provisions of such Certificate of Incorporation and Bylaws.
In addition, Parent will maintain in effect for a period of six years the
Company's current directors' and officers' liability insurance covering those
persons who are currently covered by such policy; provided, however, Parent
shall not be required to expend in any one year an amount in excess of 150% of
the annual premiums currently paid by the Company for such insurance, but if
the annual premiums of such insurance coverage exceed such amount, Parent shall
be obligated to obtain a policy with the greatest coverage available for a cost
not exceeding such amount.
Employee Benefits. Until at least December 31, 1996, Parent shall maintain or
cause to be maintained employee benefits and programs for retirees, directors,
officers and employees of the Company and its Subsidiaries that are no less
favorable in the aggregate than those being provided to such retirees,
directors, officers and employees on the date of the Merger Agreement. On or
after January 1, 1997, the retirees, directors, officers and employees of the
Company and its Subsidiaries shall be eligible for employee benefits and
programs
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(including but not limited to incentive compensation, deferred compensation,
pension, life insurance, medical, profit sharing (including 401(k)),
severance, salary continuation and fringe benefits) which are no less
favorable in the aggregate than those generally available to similarly
situated retirees, directors, officers and employees of Parent and its
Subsidiaries in the relevant geographic regions. For purposes of eligibility
to participate in and vesting in all benefits provided to retirees, directors,
officers and employees of the Company and its Subsidiaries will be credited
with their years of service with the Company and its Subsidiaries and years of
service with prior employers to the extent service with prior employers is
taken into account under plans of the Company. Upon termination of any medical
plan of the Company, individuals who were directors, officers or employees of
the Company or its Subsidiaries at the Effective Time shall become eligible to
participate in the medical plan of Parent, provided that no condition that was
eligible for coverage under any medical plan of the Company at the time of
such termination shall be excluded from coverage under the medical plan of
Parent as a pre-existing condition. Amounts paid before the Effective Time by
retirees, directors, officers and employees of the Company under any medical
plans of the Company shall after the Effective Time be taken into account in
applying deductibles and maximum out-of-pocket limits applicable under the
medical plan of Parent provided as of the Effective Time to the same extent as
if such amounts had been paid under such medical plan of Parent.
Parent agreed that the following principles shall apply for purposes of
determining bonuses for 1995 under the Company's Short Term Incentive Plan for
1995: (1) the Compensation Committee's determination to pay certain persons
who are employees of the Company or any of its Subsidiaries and who are
covered by such plan (other than employees whose employment is terminated for
any reason for cause on or prior to December 31, 1995); (2) whether any
bonuses are payable under such plan to other employees and, if so, the amounts
thereof shall be determined as if the transactions contemplated by the Merger
Agreement had not occurred and the Company had remained an independent,
publicly-owned company through December 31, 1995, taking into account to the
extent reasonably applicable the limitations imposed by Section 6.1(a) of the
Merger Agreement; and (3) any bonuses payable pursuant to clause (2) above
shall be paid by February 28, 1996. The Company has estimated that the total
amount of such bonuses will not exceed $3,000,000.
Parent agreed to fulfill any obligations that may arise under any Welfare
Plan to provide health benefits to retirees or other arrangements to provide
health benefits to retirees, in either case, entered into prior to the date of
the Merger Agreement.
Merit Bonuses; Severance Policy. Pursuant to the Merger Agreement, from the
date of the Merger Agreement up to the Effective Time, the Company shall be
permitted to offer and pay bonuses, in addition to any bonuses or payments
pursuant to any existing bonus or incentive plans of the Company, payable to
officers and employees whose performance and dedication to the Company or its
significant subsidiaries merits, in the discretion of the CEO of the Company,
special compensation ("Merit Bonuses"); provided, however, that the aggregate
amount paid by the Company pursuant to such Merit Bonuses shall be no greater
than $1,000,000.
With respect to officers and employees who are or will be terminated, Parent
has agreed to maintain the Company's severance policy as in effect on the date
of the Merger Agreement, or shall replace such policy with a policy providing
equal or more favorable compensation, for a period of at least one year from
the Effective Time.
Parent has agreed to honor or cause to be honored all existing severance
policies with the Company's officers and employees.
Parent has agreed that it and its Subsidiaries will provide reasonable and
customary outplacement services ("Outplacement Services") to officers of the
Company and its Subsidiaries who are terminated as a result of, or within
eighteen months following the Merger, which Outplacement Services provided to
such officer and employees shall include one-on-one counseling and assistance.
Management Contracts. The Company has agreed to use its reasonable best
efforts to cause the key members of its senior management to enter into
employment arrangements with the Surviving Corporation on
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terms and conditions satisfactory to Parent and pursuant to which they shall
remain as employees of the Surviving Corporation following the Effective Time.
Company Stockholder Approval; Proxy Statement. The Company has agreed that
if approval of the Merger by the holders of Class A Common Stock ("Class A
Holders") is required by applicable law, the Company shall either (i) call a
meeting of its Class A Holders (the "Stockholder Meeting") for the purpose of
voting upon the Merger and shall use its reasonable best efforts to obtain
Class A Holder approval of the Merger or (ii) if the holders of a majority of
the outstanding shares of Class A Common Stock intend to act by written
consent, comply with the requirements of Rule 14c-2 promulgated under the
Exchange Act. The Stockholder Meeting, if necessary, shall be held as soon as
practicable following the purchase of Shares pursuant to the Offer and the
Company will, through its Board of Directors, but subject to the fiduciary
duties of its Board of Directors under applicable law as determined by the
Board of Directors in good faith after consultation with the Company's outside
counsel, recommend to its Class A Holders the approval of the Merger and not
rescind its declaration that the Merger is advisable. The record date for the
Stockholder Meeting shall be a date subsequent to the date Parent or the
Offeror becomes a record holder of Shares purchased pursuant to the Offer.
If required by applicable law, the Company will, as soon as practicable
following the expiration of the Offer, prepare and file a preliminary Proxy
Statement or Information Statement (each as defined in the Merger Agreement),
as the case may be, with the Commission and will use its reasonable best
efforts to respond to any comments of the Commission or its staff and to cause
the Proxy Statement to be mailed to the Class A Holders. The Company will
notify Parent of the receipt of any comments from the Commission or its staff
and of any request by the Commission or its staff for amendments or
supplements to the Proxy Statement or for additional information and will
supply Parent with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the Commission or its staff, on the
other hand, with respect to the Proxy Statement or the Merger. If at any time
prior to the approval of this Agreement by the Class A Holders at the
Stockholder Meeting, if necessary, there shall occur any event that should be
set forth in an amendment or supplement to the Proxy Statement, the Company
will prepare and mail to its stockholders such an amendment or supplement.
Parent agreed to cause all shares of Class A Common Stock purchased pursuant
to the Offer and all other shares of Class A Common Stock owned by Offeror or
any other Subsidiary of Parent to be voted in favor of the approval of the
Merger.
Access to Information. The Company has agreed that it shall, and shall cause
each of its Subsidiaries to, afford to Parent, and to Parent's accountants,
counsel, financial advisors and other representatives, reasonable access and
permit them to make such inspections as they may reasonably require during
normal business hours during the period from the date of the Merger Agreement
through the Effective Time to all their respective properties, books,
contracts, commitments and records (including the availability of an office at
the Company's corporate headquarters where Parent's representatives may work
on a day-to-day basis) and, during such period, the Company shall, and shall
cause each of its Subsidiaries to, furnish certain information promptly to
Parent; provided that, in no event shall the Company be requested to supply to
Parent, or to Parent's accountants, counsel, financial advisors or other
representatives, any information relating to indications of interest from, or
discussions with, any other potential acquirors of the Company which were
received or conducted prior to the date of the Merger Agreement, except to the
extent necessary for use in the Offer Documents (as defined in the Merger
Agreement), the Schedule 14D-9 (as defined in the Merger Agreement) and the
Proxy Statement and/or the Information Statement. Except as required by law,
Parent will hold, and will cause its affiliates, associates and
representatives to hold, any nonpublic information in confidence until such
time as such information otherwise becomes publicly available and shall use
its reasonable best efforts to ensure that such affiliates, associates and
representatives do not disclose such information to others without the prior
written consent of the Company. In the event of termination of the Merger
Agreement for any reason, Parent shall promptly return or destroy all
nonpublic documents so obtained from the Company or any of its Subsidiaries
and any copies made of such documents for Parent.
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Conditions Precedent. The respective obligations of each of Parent, the
Offeror and the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Effective Time of the following conditions: (a)
if approval of the Merger by the Class A Holders is required by applicable
law, the Merger shall have been approved by the requisite vote of such
holders; (b) Offeror shall have accepted for payment and paid for the Shares
properly tendered pursuant to the Offer; provided, however, that this
condition will be deemed satisfied with respect to the obligations of Parent
and Offeror if Offeror fails to accept for payment and pay for any Shares
pursuant to the Offer in violation of the terms of the Merger Agreement or the
Offer; (c) no Governmental Entity (as defined in the Merger Agreement) or
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree or
injunction prohibiting the consummation of the Merger; provided, however, that
the Company, Parent and the Offeror shall use their reasonable best efforts to
have any such order, decree or injunction vacated and (d) the applicable
waiting period under the HSR Act shall have expired or been terminated.
Termination. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time, whether prior to or after approval by the
stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by the Company if (i) the Offer has not been timely commenced in
accordance with the Merger Agreement; or (ii) the Offer shall expire or is
terminated without any Shares being purchased thereunder due to the
conditions set forth in Exhibit A (other than the Minimum Condition)
(herein referred to as the "Exhibit A Conditions") failing to be met; or
(iii) there is an offer to acquire all of the outstanding Shares or
substantially all of the assets of the Company for consideration that
provides stockholders of the Company a value per Share which, in the good
faith judgment of the Board of Directors of the Company, provides a higher
value per Share than the consideration per Share pursuant to the Offer or
the Merger and as a result of which, the Board of Directors of the Company
is obligated in accordance with its fiduciary duty under applicable law, as
advised by its counsel, to terminate the Merger Agreement; or (iv) there
has been (y) a material breach by Parent or the Offeror of any
representation or warranty that is not qualified as to materiality or (z) a
breach by Parent or the Offeror of any representation or warranty that is
qualified as to materiality, in each case which breach has not been cured
within five business days following receipt by Parent or the Offeror of
notice of the breach; or (v) Parent or the Offeror fails to comply in any
material respect with any of its material obligations or covenants
contained in the Merger Agreement which failure to perform is incapable of
being cured or has not been cured within five business days following
receipt by Parent or the Offeror of written notice of the failure to
perform;
(c) by either Parent or the Company if (i) the Merger has not been
effected on or prior to the close of business on May 31, 1996; provided,
however, that the right to terminate the Merger Agreement pursuant to such
provision shall not be available (y) to Parent if the Offeror or any
affiliate of the Offeror acquires Shares pursuant to the Offer, or (z) to
any party whose failure to fulfill any obligation of the Merger Agreement
has been the cause of, or resulted in, the failure of the Merger to have
occurred on or prior to the aforesaid date; or (ii) any court of competent
jurisdiction or any governmental, administrative or regulatory authority,
agency or body shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting
the transactions contemplated by the Merger Agreement and such order,
decree, ruling or other action shall have become final and nonappealable;
or (iii) if the stockholders of the Company fail to give any approval
required by applicable law; or (iv) if as the result of the failure of any
of the Exhibit A Conditions (except for the Minimum Condition), the Offer
shall have terminated or expired in accordance with its terms without the
Offeror having purchased any Shares pursuant to the Offer or pursuant to
the Option Agreement in accordance with its terms; provided, however, that
the right to terminate the Merger Agreement pursuant to Section 9.1(c)(iv)
of the Merger Agreement shall not be available to any party whose failure
to fulfill any of its obligations under the Merger Agreement results in the
failure of any such condition;
(d) by Parent if the Board of Directors of the Company shall have failed
to recommend, or withdrawn, modified or amended in any material respect its
approval or recommendations of the Offer or the Merger or shall have
resolved to do any of the foregoing.
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Fees and Expenses. 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 costs and
expenses.
The foregoing description of the terms and provisions of the Merger Agreement
is qualified in its entirety by reference to the text of the Merger Agreement,
which is filed as an exhibit hereto and is incorporated herein by reference.
(b)(4) Option Agreement.
The following summary of the Option Agreement, a copy of which is filed as an
Exhibit hereto and incorporated by reference herein, is qualified by reference
to the text of the Option Agreement.
General. As a condition of Parent entering into the Merger Agreement, Parent
required that each of the Stockholders enter into the Option Agreement. The
Stockholders include trusts for the benefit of certain members of the Thorne
family and individual members of the Thorne family.
Agreement to Tender. Pursuant to the Option Agreement, the Stockholders
severally (and not jointly) have agreed to tender pursuant to the Offer, a
total of 9,568,967 shares of Class A Common Stock owned by the Stockholders,
representing approximately 58% of the outstanding Class A Common Stock, and
9,497,701 shares of Class B Common Stock owned by the Stockholders,
representing approximately 58% of the outstanding Class B Common Stock. Each
Stockholder severally has agreed to deliver to the depositary for the Offer, no
later than the tenth business day following the date of the Offer to Purchase,
the Letter(s) of Transmittal together with the certificates for such
Stockholder's Shares, if available, or a "Notice of Guaranteed Delivery," if
the Stockholder's Shares are not available; provided, that each Stockholder has
agreed to use all reasonable efforts to make such deliveries within five
business days following the date of the Offer to Purchase. Each of the
Stockholders has also severally agreed not to withdraw any Shares tendered into
the Offer.
Option to Purchase. Each Stockholder has also severally granted to the
Offeror an irrevocable option (the "Stock Option") to purchase all of such
Stockholder's Shares legally and/or beneficially owned by such
Stockholder at a purchase price equal to $55.50 per Share. The exercise period
for the Stock Option commences on the later of January 2, 1996 and the
termination or expiration of the Offer and ends ten business days after the
later of such dates; provided, however, if the Merger Agreement terminates
solely by reason of an offer for the Company being made for consideration that
provides the stockholders of the Company a per Share value which, in the good
faith judgment of the Board of Directors of the Company, provides a higher
value per Share than the consideration per Share pursuant to the Offer or the
Merger and as a result of which the Board of Directors of the Company, in
accordance with its fiduciary duties under applicable law, as advised by
counsel, terminates the Merger Agreement (a "Fiduciary Duty Termination"), such
exercise period for the Stock Option would commence on the date of termination
of the Merger Agreement and end ten business days thereafter.
Conditions To Delivery of the Shares. The Option Agreement provides that the
obligation of the Stockholders to deliver the Stockholders' 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 having expired or been
terminated, (ii) there being no preliminary or 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 Shares in
respect of such exercise, and (iii) the Offer having expired or terminated
without any Shares being purchased thereunder and without any violation of the
Offer by Parent or the Offeror.
Representations and Warranties. The Option Agreement contains customary
representations and warranties by each Stockholder, including those relating to
(i) authority to enter into the Option Agreement and sell Shares owned by such
Stockholder, (ii) no options, warrants or other purchase rights existing as to
such Shares, (iii) good and marketable title to the Shares owned by such
Stockholder free and clear of all liens, claims, encumbrances and security
interests, (iv) legality, validity and binding effect of the Option Agreement,
and (v) no violation of agreements, judgments, laws, rules and regulations. The
Option Agreement also contains various
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customary representations and warranties by Parent and the 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 Shares and No Acquisition of Shares. In the Option
Agreement, each Stockholder severally has agreed that, except as contemplated
by the Option Agreement, such Stockholder will, and none would offer or agree
to, sell, transfer or otherwise dispose of, or create any security interest,
pledge, option, right of first refusal, limitation on such Stockholder's
voting rights or other encumbrance with respect to, such Stockholder's Shares.
Each such Stockholder has also agreed that it will not, and will not offer to
agree to, acquire any additional Shares or options, warrants or other rights
to acquire Shares, without the prior written consent of the Offeror.
Covenants of Parent and the Offeror. Each of Parent and the Offeror has
agreed that it will not sell, offer to sell or otherwise dispose of the Shares
in violation of the Securities Act. Each of Parent and the Offeror also has
agreed that it will perform in all material respects all of its respective
obligations under the Merger Agreement. Pursuant to the Option Agreement,
Parent and the Offeror have agreed that if Parent and the Offeror exercise the
Stock Option or any of their other rights under the Option Agreement at a time
when the Merger Agreement has terminated, Parent and the Offeror will effect a
merger pursuant to which each outstanding Share (other than those held by
Parent, the Offeror, the Company or any subsidiary of the Company) shall be
converted into the right to receive not less than $55.50 per Share, net to
the Stockholder, in cash at the earliest practicable date after the closing of
the Stock Option.
No Solicitation. Each Stockholder has agreed in the Option Agreement that it
shall immediately cease any existing discussions or negotiations, if any, with
any parties conducted heretofore 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 or offer from any
person, or engage in discussions or negotiations relating thereto (including
by way of furnishing information). Each Stockholder will promptly notify
Parent of its receipt of any
takeover proposal. The definition of "Takeover Proposal" in the Option
Agreement is the same as in the Merger Agreement.
Voting Agreement and Proxy. The Option Agreement provides that during the
time the Option Agreement is in effect, each Stockholder will vote all such
Stockholder's Shares (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 agreed that, if the Merger Agreement
terminates by reason of a Fiduciary Duty Termination, such Stockholder will
(i) attend or otherwise participate in all stockholder meetings or actions by
written consent, (ii) vote such Stockholder's Shares to enlarge the Board of
Directors of the Company to enable the Offeror to nominate a majority of the
members of the Board of Directors, and (iii) vote such Stockholder's Shares so
as to prevent the Company from taking certain actions provided for in the
Merger Agreement. The Option Agreement further provides that in the event any
Stockholder fails to vote any of such Stockholder's shares in the manner
irrevocably prescribed in this paragraph, such Stockholder will be deemed to
have appointed the Offeror as the proxy of such Stockholder pursuant to
Section 212 of the DGCL to vote and otherwise act (by written consent or
otherwise) with respect to all of such Stockholder's Shares (other than to
reduce the price paid pursuant to the Offer or the Merger or to otherwise
modify or amend the Merger Agreement to reduce the rights or benefits of the
Company or any stockholders of the Company under the Offer or the Merger
Agreement or to reduce the obligations of Parent or the Offeror thereunder).
This irrevocable proxy expires if (x) the Offer expires or terminates without
any Shares being purchased thereunder in violation of the terms of the Offer
or (y) Parent or the Offeror is in violation of the terms of the Option
Agreement.
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Termination. The Option Agreement shall terminate, without any action by any
of the parties, on the date on which the Merger Agreement terminates in
accordance with its terms, except with respect to the exercise of the Stock
Option. The Stock Option may be exercised after termination of the Merger
Agreement on the terms described above under "Stock Option".
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) The Board of Directors of the Company, at a meeting held on November
26, 1995, determined that the Merger is advisable and that the terms of the
Offer and the Merger are fair to, and in the best interests of, the
Company's stockholders, and acted unanimously to approve the Offer and the
Merger and the execution and delivery of the Merger Agreement, approve the
Merger Agreement and the Option Agreement for all purposes under Section
203 of the DGCL, and recommend that the Company's stockholders accept the
Offer and (if required by applicable law or otherwise) approve the Merger
Agreement and the Merger. A copy of the Company's letter to stockholders
dated December 1, 1995, is filed as an exhibit to this statement and is
incorporated herein by reference.
(b) In reaching the determinations described in paragraph (a) above, the
Board of Directors of the Company considered a number of factors, including
the following:
(1) The financial condition and results of operations of the Company.
(2) The projected financial condition, results of operations,
prospects and strategic objectives of the Company, as well as the risks
involved in achieving those prospects and objectives in the publishing
industry with the current economic and market conditions.
(3) Presentations to the Board of Directors by Goldman Sachs, which
included valuation analyses of the Company.
(4) The fact that the $55.50 per Share to be received by the
Company's stockholders in both the Offer and Merger represents a
substantial premium over the respective closing market prices of $27.75
per share of Class A Common Stock and $26.00 per share of Class B
Common Stock on November 24, 1995 (the last trading day prior to the
Board of Directors meeting referred to in paragraph (a) of this Item
4); and the fact that the $55.50 per Share to be received by the
Company's stockholders in both the Offer and the Merger represents a
56% premium over the ten-year high per share market price of the Class
A Common Stock.
(5) The relationship of the Offer Price to the respective historical
market prices of the shares of Class A Common Stock and Class B Common
Stock and to the Company's book value and the respective net asset
values per share of Class A Common Stock and Class B Common Stock.
(6) Discussions (described in Item 3 above under "Certain Background
Information") with other parties as to possible transactions.
(7) The Board's view, after consultation with management and Goldman
Sachs regarding the likelihood of the existence of other viable buyers
on terms as favorable as those in the Offer and Merger.
(8) Developments relating to the consolidation in the professional
publishing industry.
(9) The oral opinion of Goldman Sachs (subsequently confirmed in
writing as of November 27, 1995) that, as of such date, the proposed
consideration to be received by the holders of Shares pursuant to the
Offer and the Merger is fair to such holders. The full text of the
written opinion of Goldman Sachs, which sets forth assumptions made,
procedures followed, matters considered and limits on the review
undertaken, is attached as Exhibit 6 to this statement and is
incorporated herein by reference. THE COMPANY'S STOCKHOLDERS ARE URGED
TO READ THIS OPINION IN ITS ENTIRETY.
(10) The availability of appraisal rights under Section 262 of the
DGCL for Dissenting Shares.
(11) The terms and conditions of the Merger Agreement and the course
of the negotiations resulting in the execution thereof (including the
terms of the Merger Agreement that permit the
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Company's Board of Directors, in the exercise of its fiduciary duties,
to furnish information to or enter into discussions or negotiations
with any third party that requests such information or initiates such
discussions or negotiations, pursuant to appropriate confidentiality
agreements, in connection with any proposal or offer for a tender or
exchange offer, a merger, consolidation or other business combination
involving the Company or any proposal to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets
of, the Company (although the Company is not permitted by the Merger
Agreement to initiate, solicit or encourage any such third party
proposal or offer or discussions or negotiations regarding the same),
and under certain circumstances to terminate the Merger Agreement).
(12) The likelihood that the proposed acquisition would be
consummated, including the likelihood of satisfaction of the regulatory
approvals required pursuant to, and the other conditions to, the Offer
and the Merger contained in the Merger Agreement, the experience,
reputation and financial condition of the Parent and the risks to the
Company if the acquisition were not consummated.
(13) The requirement by each of Parent and Entity Two, as a condition
to a transaction, that the Stockholders enter into a binding agreement
for the sale of their Shares; the stated desire of the Stockholders to
proceed with the Merger; and the decision of the Stockholders to enter
into the Option Agreement.
(14) The recommendation of the Company's management with respect to
the proposed transaction.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Pursuant to its letter agreement dated September 26, 1995 with the Company,
Goldman Sachs is entitled to a transaction fee of approximately 0.70% of the
aggregate consideration (as defined in the letter agreement) paid in
connection with the Offer and the Merger (less any amounts previously paid by
the Company in connection with the Company's retention of Goldman Sachs),
which shall become payable upon the purchase of 50% or more of the Class A
Common Stock or the Common Stock. The Company has also agreed to reimburse
Goldman Sachs for certain out-of-pocket expenses. In addition, the Company has
agreed to indemnify and hold harmless Goldman Sachs and its affiliates and
their respective directors, officers, employees and controlling persons
against certain liabilities and expenses, including liabilities under the
federal securities laws, arising out of or in connection with its engagement.
Goldman Sachs from time to time provides financial advisory services for the
Company and has received fees for the rendering of these services.
Neither the Company nor any person acting on its behalf currently intends to
employ, retain or compensate any person to make solicitations or
recommendations to security holders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Company's knowledge, no transactions in Shares have
been effected during the past 60 days by the Company or by any executive
officer, director, affiliate or subsidiary of the Company except as follows:
(i) pursuant to the Option Agreement described in Item 3 above under "Option
Agreement," members of the Thorne family and certain trusts with Thorne family
members as beneficiaries have agreed to tender their shares (including an
aggregate of approximately 58% of the outstanding voting Shares (i.e., Class A
Common Stock)) into the tender offer and to vote such shares in favor of the
Merger, and have granted an option to Parent to purchase such shares; and
(ii) certain executive officers of the Company (some of whom are directors)
participate in the CCH Employees' Profit Sharing Plan (which includes the CCH
Stock Fund) pursuant to elections made prior to October 1, 1995.
(b) To the best of the Company's knowledge, all of its executive officers
and directors currently intend to tender to the Offeror, pursuant to the
Offer, all Shares which are held of record or beneficially owned by such
persons except for certain Shares purchasable upon exercise of options, which
options will be cancelled pursuant to the Merger Agreement in exchange for the
cash payment as described in Item 3 above.
16
<PAGE>
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in Items 3 and 4, none.
(b) None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NO.
1. Agreement and Plan of Merger, dated as of November 27, 1995, among Wolters
Kluwer N.V., WK Acquisition Sub, Inc. and CCH Incorporated.
2. Stock Option and Tender Agreement, dated as of November 27, 1995, among
Wolters Kluwer nv, WK Acquisition Sub, Inc. and Oakleigh B. Thorne, Honore
T. Wamsler, Daniel K. Thorne and certain related parties of such
individuals.
3. The Company's Information Statement pursuant to Section 14(f) of the
Securities Exchange Act of 1934 and Rule 14f-1 thereunder.
4. Press Release of CCH Incorporated issued on November 27, 1995.
5. Letter to Stockholders of CCH Incorporated dated December 1, 1995.*
6. Opinion of Goldman, Sachs & Co.*
- --------
* Included in copies mailed to stockholders.
17
<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.
CCH Incorporated
/s/ Oakleigh Thorne
By: _________________________________
Oakleigh Thorne
President and Chief Executive
Officer
Dated: December 1, 1995
18
<PAGE>
SCHEDULE I
CCH INCORPORATED
2700 Lake Cook Road
Riverwoods, Illinois 60015
----------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about December 1, 1995 as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") to holders of the Shares of the Company. Capitalized terms
used and not otherwise defined herein shall have the meaning set forth in the
Schedule 14D-9. You are receiving this Information Statement in connection
with the possible election of persons designated by Offeror to a majority of
the seats on the Board of Directors of the Company (the "Board").
Pursuant to the Merger Agreement, on December 1, 1995, the Offeror commenced
the Offer. The Offer is scheduled to expire at 5:00 P.M., New York City time,
on January 4, 1996, unless extended.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934 and Rule 14f-1 thereunder. You are urged to read this
Information Statement carefully. You are not, however, required to take any
action.
The information contained in this Information Statement (including
information incorporated by reference) concerning Parent and the Offeror and
the Designees (as defined herein) has been furnished to the Company by Parent
and the Offeror and the Company assumes no responsibility for the accuracy or
completeness of such information.
GENERAL INFORMATION REGARDING THE COMPANY
GENERAL
The Class A Common Stock is the only class of voting securities of the
Company outstanding. Each share of Class A Common Stock has one vote. As of
November 27, 1995, (i) there were 16,638,512 shares of Class A Common Stock
outstanding, (ii) 16,397,122 shares of Class B Common Stock outstanding and
(iii) outstanding employee stock options granted under the Company's 1993
Long-Term Incentive Plan to purchase an aggregate of 1,217,000 shares of Class
B Common Stock. The Board currently consists of eight members and there are
currently no vacancies on the Board. Each director serves a term of one year
or until his successor is duly elected and qualified or until his earlier
death, resignation or removal.
DESIGNEES
Pursuant to the Option Agreement the Stockholders severally agreed that, if
the Merger Agreement shall terminate solely by reason of the Company's
Fiduciary Duty Termination, and for as long as the Exercise Period (as defined
in the Merger Agreement) has not ended, the Stockholders shall vote the Shares
owned by such Stockholders to enlarge the Board to provide the Offeror with a
majority of members of the Board elected by the Offeror (the "Designees").
Offeror has informed the Company that it will choose the Designees from the
directors and executive officers listed in the section herein entitled
"Information With Respect to Designees." Offeror has informed the Company that
each of the directors and executive officers listed in such section has
consented to act as a director, if so designated. The business address of
Parent and Offeror is Stadhouderskade 1, 1054 ES Amsterdam, The Netherlands.
I-1
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
DIRECTORS OF THE COMPANY
The names of the current directors, their ages as of March 2, 1995 and
certain other information about them are set forth below.
<TABLE>
<CAPTION>
YEAR FIRST POSITION WITH THE COMPANY OR
ELECTED A PRINCIPAL OCCUPATION DURING THE PAST FIVE
NAME OF DIRECTOR AGE DIRECTOR YEARS
- ---------------- --- ---------- -------------------------------------------
<S> <C> <C> <C>
John C. Burton...... 62 1979 John C. Burton has been a Director of the
Company since 1979. Mr. Burton has been
Ernst & Young Professor of Accounting and
Finance at Columbia University, New York,
New York, since 1962 except from 1976 to
1977, when he served as Deputy Mayor for
Finance for the City of New York, and from
1972 to 1976, when he served as Chief Ac-
countant of the Securities and Exchange
Commission. Mr. Burton is also a director
of Scholastic, Inc., Manville Corporation,
CPAC, Inc., and Salomon Swapco, a wholly-
owned subsidiary of Salomon Brothers Inc,
and was a Governor at Large for the Na-
tional Association of Securities Dealers
from 1991 to 1994.
William C. Egan 49 1993 Mr. Egan has served as the Executive Vice
III................ President of Consumer Products Worldwide of
Johnson & Johnson Inc. since January 1995.
He also served as the President of the Arm
& Hammer Division of Church & Dwight, Inc.,
and Chairman of Church & Dwight, Ltd. (Can-
ada) from 1990 to 1991.
Robert H. Mundheim.. 62 1981 Mr. Mundheim has served as Executive Vice
President and General Counsel for Salomon,
Inc. and a Managing Director and member of
the Executive Committee of Salomon Brothers
Inc since 1992. He served as Co-Chairman of
the law firm of Fried, Frank, Harris,
Shriver and Jacobson from 1989 to 1992 and
University Professor of Law and Finance
Emeritus, University of Pennsylvania Law
School. Mr. Mundheim has been a member of
the faculty of the University of Pennsylva-
nia since 1965, except for the period from
1977 to 1980, when he served as General
Counsel of the Treasury Department. He also
served the National Association of Securi-
ties Dealers as Governor at Large from 1988
to 1991 and Vice Chairman-Finance, 1990-
1991.
Daniel K. Thorne.... 43 1977 Mr. Thorne is a private investor and a Di-
rector of Imperial Holly Corporation.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST POSITION WITH THE COMPANY OR
ELECTED A PRINCIPAL OCCUPATION DURING THE PAST FIVE
NAME OF DIRECTOR AGE DIRECTOR YEARS
- ---------------- --- ---------- -------------------------------------------
<S> <C> <C> <C>
Edward L. Massie.... 65 1981 Edward L. Massie served as President, Chief
Executive Officer and a member of the Exec-
utive Committee of the Company from 1991 to
April, 1995. Mr. Massie also served as Ex-
ecutive Vice President of the Company from
1980 to 1991.
Oakleigh B. Thorne.. 62 1959 Oakleigh B. Thorne has served as Chairman
of the Company since 1973. Mr. Thorne is
also a Director of the Bank of Millbrook
and Fiduciary Trust Company International.
Oakleigh Thorne..... 37 1988 Oakleigh Thorne has served as President and
Chief Executive Officer since April, 1995,
as a member of the Company's Executive Com-
mittee since 1992 and as Executive Vice
President of the Company from 1991 to 1992.
Mr. Thorne also served as the President of
CCH Legal Information Services, Inc. from
1988 to 1992.
Ralph C. Whitley.... 52 1993 Ralph C. Whitley has been a member of the
Company's Executive Committee since 1992.
Mr. Whitley also served as the President of
CCH Computax, Inc. ("Computax") from 1992
to 1994 and Executive Vice President of
Computax from 1978 to 1992.
</TABLE>
Each of the directors has been engaged in the principal occupation(s)
described above during the past five (5) years. Oakleigh B. Thorne and Daniel
K. Thorne are brothers and Oakleigh Thorne is a son of Oakleigh B. Thorne.
William C. Egan III is a cousin (by marriage) of Oakleigh B. Thorne.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During 1994 there were 11 meetings of the Board. The Board has an Audit
Committee and a Compensation Committee. The Board does not have a standing
nominating committee or any committee serving similar functions, nor is there
an executive committee of the Board. The Executive Committee of the Company
mentioned above is an executive management committee responsible for day-to-day
operations, but it cannot act in lieu of the Board.
The Audit Committee of the Board consists of John C. Burton (Chairman),
Robert H. Mundheim and Daniel K. Thorne and met two times during 1994. The
principal functions of the Audit Committee of the Board are to recommend
independent auditors to be engaged by the Board, to review with the auditors
the scope and results of the audit engagement, to review the Company's
financial statements, financial accounting policies, and decisions embodied in
the annual financial statements, and to exercise general oversight with respect
to the Company's internal accounting control systems.
The Compensation Committee consists of Robert H. Mundheim (Chairman), John C.
Burton and William C. Egan, III, and met five times during 1994. The principal
function of the Compensation Committee is to determine the compensation of all
executive officers of the Company, to recommend to the Board the terms of
principal compensation plans requiring stockholder approval or benefiting
executive officers, and to administer the plans.
I-3
<PAGE>
Each non-employee director is entitled to receive $30,000 annually for
serving as a director of the Company. Employee directors receive $250 for each
meeting of the Board they attend. The directors who chair the Audit Committee
and the Compensation Committee each receive an additional $5,000 annually for
such services, and directors serving on those committees receive $500 for each
Audit or Compensation Committee meeting they attend. Each non-employee director
made a one-time irrevocable election in 1993 (or, if later, when such non-
employee director began serving on the Board) to substitute phantom units of
Class B Common Stock for all or a portion of such director's next ten years of
cash compensation for services as a director. Such phantom units will be
settled ten years after the deferral election was made or the director's
retirement from the Board, whichever is earlier, in an amount equal to the then
fair market value of the corresponding Class B Common Stock.
The number of phantom stock units credited to a director's account is
determined by dividing the amount of the director's deferred compensation by an
amount equal to 75% of the price of the Class B Common Stock on February 11,
1993, in the case of a director elected on March 15, 1993, or, in the case of a
director joining the Board thereafter, by an amount equal to 75% of the price
of the Class B Common Stock on the date the director becomes eligible to
participate in the plan. In addition, each director's phantom stock account is
credited with phantom dividends in the form of additional phantom stock. The
amount of phantom stock so credited is calculated by dividing the amount of
dividends that would have been paid on the phantom shares already credited to
the director's account had those phantom shares been actual Class B Common
Stock by a amount equal to 75% of the price of Class B Common Stock on February
11, 1993, in the case of a director elected on March 15, 1993, or, in the case
of a director joining the Board thereafter, by an amount equal to 75% of the
price of the Class B Common Stock on the date the director becomes eligible to
participate in the plan.
In addition, non-employee directors who do not have benefits under any other
employee retirement plan of the Company are entitled to a retirement annuity
ranging from 50% (for 10 years of service) to 100% (for 20 years of service) of
the amount payable to such directors for services during the final year of
service. Benefits under this plan will normally begin at the later of the
attainment of age 70 or retirement from the Board. The retired director will
receive full benefits for life or for the number of years of service on the
Board, whichever is less.
EXECUTIVE OFFICERS OF THE COMPANY
The following individuals currently serve as executive officers of the
Company:
<TABLE>
<CAPTION>
NAME POSITION(S) HELD
- ---- ----------------
<S> <C>
Edward L. Massie*......................... President and Chief Executive Officer
Jonathan Copulsky......................... Senior Officer, Product/Customer Mgt.
Richard G. Honor.......................... Senior Officer, International
Oakleigh B. Thorne........................ Chairman of the Board
Oakleigh Thorne*.......................... Member of Executive Committee
Ralph C. Whitley.......................... Member of Executive Committee
Hugh J. Yarrington........................ Senior Officer, Knowledge
</TABLE>
- --------
*In April, 1995 Oakleigh Thorne was elected President and Chief Executive
Officer.
I-4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or paid
to the Company's President and Chief Executive Officer and each of the
Company's six most highly compensated Executive Officers (other than the
President and Chief Executive Officer) whose total annual salary and bonus
exceeded $100,000 for all services rendered in all capacities to the Company
and its subsidiaries for the Company's fiscal year ended December 31, 1994.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS PAYMENTS
--------------------------------------- --------------------- --------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION(1)
POSITION YEAR SALARY($) BONUS($) ($) ($) SARS(#) ($) $
------------------ ---- --------- -------- ------------ ---------- ---------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EDWARD L. MASSIE*
President and Chief
Executive Officer...... 1994 405,962 196,800 -- -- 35,000 -- 6,400
President and Chief
Executive Officer...... 1993 391,546 153,734 -- -- 120,000 -- 7,613
President and Chief
Executive Officer...... 1992 380,000 110,000 -- -- -- -- 13,459
JONATHAN COPULSKY
Sr. Officer,
Product/Customer Mgt... 1994 202,308 87,571 -- -- 20,000 -- 2,824
Sr. Officer,
Product/Customer Mgt... 1993 191,538 63,677 9,742(2) -- 60,000 -- 2,585
Sr. Officer,
Product/Customer Mgt... 1992 180,000 25,000 34,882(3) -- -- -- --
RICHARD G. HONOR
Sr. Officer, Interna-
tional................. 1994 210,923 81,408 36,000(4) -- 3,750 -- 3,475
Sr. Officer, Interna-
tional................. 1993 206,154 29,515 36,571(5) -- 30,000 -- 4,157
Sr. Officer, Interna-
tional................. 1992 180,870 6,250 11,778(6) -- -- -- 1,491
OAKLEIGH B. THORNE
Chairman of the Board... 1994 290,000 0 -- -- 0 -- 4,661
Chairman of the Board... 1993 200,000 90,000 -- -- 0 -- 4,315
Chairman of the Board... 1992 200,000 90,000 -- -- -- -- 7,084
OAKLEIGH THORNE*
Member of Executive Com-
mittee................. 1994 224,077 110,400 -- -- 35,000 -- 791
Member of Executive Com-
mittee................. 1993 206,154 80,954 -- -- 100,000 -- 4,099
Member of Executive Com-
mittee................. 1992 200,000 65,000 -- -- -- -- 7,084
RALPH C. WHITLEY
Member of Executive Com-
mittee................. 1994 235,962 115,200 12,500(2) -- 35,000 -- 3,850
Member of Executive Com-
mittee................. 1993 229,717 129,909(7) 41,367(3) -- 100,000 -- 4,264
Member of Executive Com-
mittee................. 1992 216,000 69,000 -- -- -- -- 7,604
HUGH J. YARRINGTON(8)
Sr. Officer, Knowledge.. 1994 207,308 87,539 3,013(2) -- 20,000 -- 1,280
Sr. Officer, Knowledge.. 1993 73,077 26,520 28,932(3) -- 60,000 -- 262
</TABLE>
- --------
(1) The totals in this column reflect the value of the CCH contributions to the
CCH Employees' Profit-Sharing Plan. The 1994 amounts include additional
1994 Plan contributions that have been estimated because the contribution
is not calculable at this time. The estimate is expected to be accurate to
within ^ 5%. The 1993 contributions shown here are actual, whereas in last
year's proxy statement they were estimated.
(2) Represents reimbursements for taxes incurred as a result of relocation in
the previous year.
(3) Represents reimbursements for relocation expenses.
(4) Represents automobile and housing allowances.
(5) Of this amount, $36,000 was for automobile and housing allowances, $207 was
for relocation expenses, and $364 represents reimbursement for taxes
incurred as a result of relocation expense reimbursement in the previous
year.
(6) Of this amount, $9,692 was for automobile and housing allowances and
$11,778 was for relocation.
(7) Of this amount, $42,339 was for payment of accrued vacation upon transfer
from Computax to CCH.
(8) Hired August 16, 1993.
* In April, 1995 Oakleigh Thorne was elected President and Chief Executive
Officer.
I-5
<PAGE>
OPTIONS/SAR GRANTS
The following tables set forth information pertaining to grants of stock
options to the Executive Officers during 1994 as well as to stock options held
by the Executive Officers at the end of 1994. All such options were granted
under the 1993 Long-Term Incentive Plan and relate to Class B Common Stock. No
stock appreciation rights were granted during 1994. None of the Executive
Officers exercised any stock options during 1994.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/ EMPLOYEES OR BASE GRANT DATE
SARS IN FISCAL PRICE EXPIRATION PRESENT
NAME GRANTED YEAR ($/SH) DATE(1) VALUE ($)(2)
---- ---------- ---------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Edward L. Massie........ 35,000 13.1% 17.000 2/10/04 173,950
Jonathan Copulsky....... 20,000 7.5% 17.000 2/10/04 99,400
Richard G. Honor........ 3,750 1.4% 17.000 2/10/04 18,638
Oakleigh B. Thorne...... 0 0 -- -- 0
Oakleigh Thorne......... 35,000 13.1% 17.000 2/10/04 173,950
Ralph C. Whitley........ 35,000 13.1% 17.000 2/10/04 173,950
Hugh J. Yarrington...... 20,000 7.5% 17.000 2/10/04 99,400
</TABLE>
- --------
(1) In general, the options granted in 1994 to all executive officers (other
than the Chief Executive Officer and Richard G. Honor) become exercisable
at the rate of one half on the second anniversary of the grant date and one
quarter on the third and fourth anniversaries of the grant date. For Mr.
Massie and Mr. Honor, all of their 1994 options become exercisable on the
second anniversary of the date of grant. Under the terms of the 1993 Long-
Term Incentive Plan, in the event of a change of control, as defined in the
Plan, all options become immediately vested and exercisable.
(2) The Black-Scholes option pricing model has been used to calculate present
value as of the date of grant, February 10, 1994. The present value as of
the date of grant, calculated using the Black-Scholes model, is based on
assumptions about future interest rates, stock price volatility, and
dividend yield. The Black-Scholes model is a complicated mathematical
formula widely used to value exchange-traded options. However, stock
options granted by CCH to its executive officers differ from exchange-
traded options in three key respects: CCH's options are long-term, non-
transferable, and subject to vesting restrictions, while exchange-traded
options are short-term and can be exercised or sold immediately in a liquid
market. There is no assurance that the assumptions used, as described below
will prove to be true in the future. Consequently, the grant date present
values set forth in the table are only theoretical values and may not
accurately determine present value. The actual value, if any, that may be
realized by each individual will depend on the market price of Class B
Shares on the date of exercise. The following key assumptions were used in
the calculation: a risk-free rate of return equal to the interest rate on a
U.S. Treasury security with a maturity date corresponding to that of the
option term (5.923%); a 9-month volatility of 25% as reported in Bloomberg
Financial Services as of February 28, 1994; a dividend yield of 3.20%; and
time of exercise of 10 years (exercisable only at maturity).
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)
-------------------- -------------------
SHARES ACQUIRED VALUED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------ -------------------- -------------------
<S> <C> <C> <C> <C>
Edward L. Massie........ -- -- 0/155,000 0/0
Jonathan Copulsky....... -- -- 0/80,000 0/0
Richard G. Honor........ -- -- 0/33,750 0/0
Oakleigh B. Thorne...... -- -- 0/0 0/0
Oakleigh Thorne......... -- -- 0/135,000 0/0
Ralph C. Whitley........ -- -- 0/135,000 0/0
Hugh J. Yarrington...... -- -- 0/80,000 0/0
</TABLE>
I-6
<PAGE>
PENSION PLAN
CCH maintains an integrated pension plan (the "Pension Plan") that provides
for defined benefits to eligible officers and employees of CCH and its
participating subsidiaries upon retirement at a specified age. These benefits
are based on the participant's number of years of service, final average pay
(the individual's highest average pay in any 60 consecutive months in his or
her last 120 months of service), and the individual's "excess final average
pay" (the portion, if any, of final average pay that exceeds the average amount
of pay subject to Social Security tax). Under the Pension Plan, a participant's
pay includes base salary, overtime, commissions, and bonuses (subject to
certain limitations under the Code). CCH also maintains an unfunded
supplemental employee retirement plan, described more fully below (the "SERP").
The estimated aggregate benefits payable upon retirement under the Pension Plan
and the SERP to persons in specified final average pay and years of service
classifications are listed in the table below. The normal retirement pension at
age 65 is shown in the table below in the form of a straight life annuity
(although other options, including lump sum and a joint and survivor annuity
option, are available) for different levels of earnings and years of service.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
AVERAGE ANNUAL
EARNINGS 15 20 25 30 35 40
-------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 25,000.............. $ 4,417 $ 5,939 $ 7,462 $ 8,837 $ 10,112 $ 11,362
$ 50,000.............. 11,205 15,030 18,874 21,624 24,174 26,674
$100,000.............. 24,780 33,239 41,699 47,199 52,299 57,299
$250,000.............. 65,505 87,839 110,174 123,924 136,674 149,174
$500,000.............. 133,380 178,839 224,299 251,799 277,299 302,299
$750,000.............. 201,255 269,839 338,424 379,674 417,924 455,424
</TABLE>
As of January 1, 1995, each Named Executive Officer had the following number
of years of service under the Pension Plan and the SERP:
<TABLE>
<CAPTION>
YEARS OF
SERVICE
--------
<S> <C>
Edward L. Massie 40
Jonathan Copulsky 3
Richard G. Honor(/1/) 2
Oakleigh B. Thorne 33
Oakleigh Thorne 8
Ralph C.Whitley 26
Hugh J. Yarrington 1
</TABLE>
The Pension Plan formula provides that a participant's annual benefit will
equal the sum of (a) 1.2% of final average pay multiplied by the participant's
years of service prior to 1989 plus 1.1% of final average pay multiplied by the
participant's years of service after 1988 (up to 25 years of service), (b) 1%
of final average pay multiplied by the participant's years of service over 25,
and (c) .65% of "excess final average pay" multiplied by the participant's
years of service up to 25.
The Pension Plan is integrated with Social Security. However, benefit amounts
are not subject to deduction for Social Security benefits or other offset
amounts.
SUPPLEMENTAL RETIREMENT PLAN
The SERP provides benefits to certain "highly compensated" employees (as
declined in Section 414(q)(1)(B) of the Code) equal to the excess, if any, of
the benefit they would have received under the Pension Plan formula as it
existed on December 31, 1988, without regard to certain limitations contained
in the Code that generally are applicable under the Pension Plan, over the
benefit they receive under the Pension Plan. The Pension Plan formula as of
December 31, 1988 provided that a participant's annual benefit would equal the
sum of (a) 2% of final average pay multiplied by the participant's years of
service up to 25 and (b) 1% of final average pay multiplied by the
participant's years of service over 25, reduced by (c) 2% of the participant's
estimated primary Social Security benefit multiplied by the participant's years
of service up to 25.
Under the SERP, a participant's pay generally is the same as his or her pay
under the Pension Plan but is not subject to any limitations imposed on the
Pension Plan by the Code. The benefit under the SERP is integrated with Social
Security, and the formula incorporates a deduction for Social Security
benefits.
- --------
(/1/) Mr. Honor retired under the pension plan of CCH Australia in 1992 prior to
relocating to the United States to establish the International
Organization for the parent company.
I-7
<PAGE>
SHAREHOLDER RETURN PERFORMANCE INFORMATION
Set forth below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on the Class A Common Stock against the
change in the cumulative total return of the Russell 2500 market index and the
Information Industry Bulletin 45 U.S. Cumulative Total Return Index for the
five-year period that commenced January 1, 1990 and ended December 31, 1994.
Russell 2500
The Company believes that the companies listed in the S&P 500 are too large
to be representative of the market influences on the Company's stock. The
Company is not within the S&P 500 Stock Index. The Russell 2500 index is made
up of the next 2500 largest companies by market capitalization after the S&P
500. The Company believes that the Russell 2500 is more representative than the
S&P 500 because the average market capitalization of the companies comprising
the Russell 2500 approximates that of the Company.
Peer Group
The Company has chosen the Information Industry Bulletin 45 U.S. Index for
its peer group index. The IIB 45, a published and readily available index,
tracks companies that derive at least 50% of their annual revenues from
information activities. The Company believes that the industry factors and
market conditions faced by the IIB 45 companies are similar to those
encountered by the Company. Moreover, since this group consists of domestic
companies only, it provides an index that is not subject to the fluctuations of
overseas stock markets.
[CHART]
Five-Year Cumulative Return Comparison*
CCH Class A, Russell 2500 Index and IIB 45 U.S. Index
CCH Class A, IIB 45 and Russell 2500 Indicies, Trailing
Twelve Months
December 31, 1994
CCH Russell 2500 IIB 45 Index
Annual Indexed Index Annual Indexed Index
Annual Indexed Index
Year Return Return Value Return Return Value
Return Return Value
1989 100.00 100.00 100.00
1990 6.74% 1.0674 106.74 (14.87%) 0.8513 85.13
(17.00%) 0.8300 83.00
1991 (4.72%) 0.9528 101.70 46.68% 1.4668
124.87 23.00% 1.2300 102.09
1992 (7.56%) 0.9244 94.01 16.17% 1.1617
145.06 12.20% 1.1220 114.54
1993 3.84% 1.0384 97.62 16.54% 1.1654
169.05 16.50% 1.1650 133.44
1994 (3.10%) 0.9690 94.60 (1.60%) 0.9840
166.35 (8.15%) 0.9185 122.57
- --------
*Total return assumes reinvestment of dividends.
**Returns are based on information from outside sources. Stocks in the index
are selected from the Information Industry Bulletin's index for domestic
companies.
I-8
<PAGE>
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS, NOMINEE DIRECTORS, AND MANAGEMENT
The following table shows the number of shares of Class A Common Stock and
Class B Common Stock beneficially owned and the percentage of the outstanding
shares of Class A Common Stock and Class B Common Stock so owned, as of
February 10, 1995, as to (1) each person known to the management of the Company
to be the beneficial owner of more than five percent of the outstanding shares
of Class A Common Stock or Class B Common Stock, (2) each nominee director, and
(3) the Named Executive Officers. Unless otherwise indicated, the Shares owned
are less than 1% of the indicated class. Unless otherwise indicated, the owner
has sole voting and investment power with respect to the listed Shares.
<TABLE>
<CAPTION>
CLASS A PERCENT OF CLASS B PERCENT OF
BENEFICIAL OWNER COMMON STOCK CLASS A COMMON STOCK CLASS B
AND ADDRESS(1) OWNED COMMON STOCK OWNED(2) COMMON STOCK
---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Ariel Capital Management 1,429,585 8.4% 0
Inc.(3)..................
307 North Michigan Avenue
Chicago, Illinois
David L. Babson & Co., 0 1,259,110 7.4%
Inc.(4)..................
One Memorial Drive
Cambridge, Massachusetts
John C. Burton............ 2,000 2,000
Jonathan Copulsky......... 245 7,782
William C. Egan, III...... 0 0
Richard G. Honor.......... 1,000 15,000
Edward L. Massie.......... 13,545 75,391
Robert H. Mundheim........ 500 2,000
Daniel K. Thorne.......... 1,546,852 9.0% 1,546,852 9.2%
Oakleigh B. Thorne(5)..... 8,017,427 47.0% 8,021,272 47.4%
Oakleigh Thorne........... 1,370 14,042
Ralph C. Whitley.......... 4,249 17,373
Hugh J. Yarrington........ 0 0
All Executive Officers and
Directors as a group (18
persons)................. 9,581,973 56.2% 9,750,933 57.2%
All Executive Officers and
Directors as a group (16
persons) other than
Oakleigh B. and
Daniel K. Thorne......... 27,694 182,809 1.1%
</TABLE>
- --------
(1) Address of 5% stockholders is 2700 Lake Cook Road, Riverwoods, IL, except
where specified.
(2) Shares of Class B Common Stock owned includes shares issuable upon the
exercise of options that will be exercisable within 60 days as follows:
Edward L. Massie, 60,000; Jonathan Copulsky, 7,500; Richard G. Honor,
15,000; Oakleigh Thorne, 12,500; Ralph Whitley, 12,500; all other executive
officers and directors as a group, 43,750; all executive officers and
directors as a group, 151,250.
(3) Based on the most recent report on Schedule 13G filed with the SEC, Ariel
Capital Management Inc. reported sole voting power with respect to 940,150
shares of Class A Common Stock, shared voting power with respect to 91,975
shares of Class A Common Stock, and sole investment discretion for
1,429,585 shares of Class A Common Stock.
(4) Based on the most recent report on Schedule 13G filed with the SEC, David
L. Babson & Co., Inc. reported sole voting power with respect to 568,370
shares of Class B Common Stock, shared voting power with respect to 690,740
shares of Class B Common Stock, and sole investment discretion for
1,259,110 shares of Class B Common Stock.
(5) Includes 7,673,945 Shares held by certain trusts over which Oakleigh B.
Thorne has sole or shared voting and investment authority and 200,009
Shares held by a charitable foundation of which Oakleigh B. Thorne is a co-
trustee. Chemical Banking Corporation and its subsidiary, Chemical Bank,
277 Park Avenue, New York, New York, have advised the Company that they
have shared voting authority over 1,912,852 Shares, sole voting authority
over 3,000 shares of Class A Common Stock, and shared investment authority
over 1,912,852 Shares (11.2% and 11.3% of shares of Class A Common Stock
and shares of Class B Common Stock, respectively). Oakleigh B. Thorne has
advised CCH that substantially all of the Shares that are held by various
trusts of which he is co-trustee with Chemical Bank are included in the
table above. CCH has been advised that an additional 1,268,816 Shares (7.4%
and 7.5% of shares of Class A Common Stock and shares of Class B Common
Stock, respectively) included in the table above are held by Oakleigh B.
Thorne and John Akin of Seattle, Washington, as co-trustees under a trust
in which voting authority over such shares of Class A Common Stock is held
by Mr. Thorne and investment authority over all such Common Stock is shared
with Mr. Akin.
I-9
<PAGE>
INFORMATION WITH RESPECT TO DESIGNEES
Set forth below is the name, age, business address, principal occupation or
employment and five year employment history of the persons who will be the
Parent Designees. Unless otherwise indicated, each such person has held the
occupation listed opposite his name for at least the past five years and each
occupation refers to employment with the Parent. Unless otherwise indicated,
the business address of all persons listed below is c/o Wolters Kluwer nv,
Stadhouderskode 1, 1054 ES Amsterdam, The Netherlands. Unless otherwise
indicated, all persons listed below are citizens of The Netherlands. None of
the persons listed below owns any Shares.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
BUSINESS ADDRESS AGE EMPLOYMENT HISTORY
---------------- --- ----------------------------
<S> <C> <C>
C. J. Brakel.......................... 58 Chairman of the Executive Board since 1995;
Member of Executive Board since 1987
C. H. van Kempen...................... 50 Member of the Executive Board since 1993;
Chief Executive Officer of Wolters Kluwer
Italy, an indirect wholly owned subsidiary
of Wolters Kluwer nv from 1990 through
1993
Robert Pieterse....................... 53 Member of the Executive Board since 1987
Peter W. van Wel...................... 49 Member of the Executive Board since 1993;
Chief Executive Officer of Wolters Kluwer
U.S. Corporation, an indirect wholly owned
subsidiary of Wolters Kluwer nv ("Wolters
Kluwer U.S.") from 1990 through 1993
Hans E. M. van Dinter................. 50 Chief Financial Officer for more than the
past five years
Bruce C. Lenz......................... 52 Executive Vice President and Chief
c/o Wolters Kluwer U.S. Corporation Financial Officer of Wolters Kluwer U.S.
1185 Avenue of the Americas for more than the past five years
New York, New York 10036
(United States citizen)
F. H. Simons.......................... 47 Head of Legal Department for more than the
past five years
John Marozsan......................... 54 President of Aspen Publishers, Inc., an
c/o Aspen Publishers, Inc. indirect wholly owned subsidiary of
1185 Avenue of the Americas Parent, for more than the past five years
New York, New York 10036
(United States citizen)
Paul C. Kooijmans..................... 47 Director of Accounting and Control for more
than the past five years
</TABLE>
I-10
<PAGE>
EXHIBIT 1
Execution Copy
-----------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
WOLTERS KLUWER N.V.,
WK ACQUISITION SUB, INC.
AND
CCH INCORPORATED
-----------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
Parties and Recitals.................................. 1
ARTICLE I
THE OFFER
---------
Section 1.1 The Offer................................ 3
Section 1.2 Company Actions.......................... 4
ARTICLE II
THE MERGER
----------
Section 2.1 The Merger............................... 6
Section 2.2 Effective Time........................... 7
Section 2.3 Effects of the Merger.................... 7
Section 2.4 Certificate of Incorporation and Bylaws.. 7
Section 2.5 Directors and Officers................... 7
Section 2.6 Conversion of Securities................. 7
Section 2.7 Exchange of Certificates................. 8
Section 2.8 Dissenting Company Common Shares......... 10
Section 2.9 Merger Without Meeting of Stockholders... 10
Section 2.10 No Further Ownership Rights in Common
Stock.................................. 10
Section 2.11 Closing of Company Transfer Books........ 11
Section 2.12 Further Assurances....................... 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
----------------------------------------
Section 3.1 Organization, Standing and Power......... 11
Section 3.2 Authority; Non-Contravention............. 12
Section 3.3 Offer Documents and Proxy Statement...... 14
Section 3.4 Financing................................ 14
Section 3.5 Brokers.................................. 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
Section 4.1 Organization, Standing and Power......... 15
Section 4.2 Capital Structure........................ 15
Section 4.3 Authority; Non-Contravention............. 16
Section 4.4 SEC Documents............................ 18
-i-
<PAGE>
Section 4.5 Offer Documents and Proxy Statement...... 18
Section 4.6 Absence of Certain Events................ 19
Section 4.7 Section 203 of the DGCL.................. 19
Section 4.8 Taxes.................................... 19
Section 4.9 Compliance with Applicable Law........... 20
Section 4.10 Litigation............................... 21
Section 4.11 No Undisclosed Liabilities............... 21
Section 4.12 Benefit Plans............................ 22
Section 4.13 Trademarks, Patents and Copyrights....... 22
Section 4.14 Environmental Matters.................... 23
Section 4.15 Brokers.................................. 24
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING SUB
--------------------------------------------
Section 5.1 Organization and Standing................ 24
Section 5.2 Capital Structure........................ 24
Section 5.3 Authority; Non-Contravention............. 25
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
Section 6.1 Conduct of Business by the Company
Pending the Merger..................... 26
Section 6.2 No Solicitation.......................... 28
Section 6.3 Conduct of Business of Sub Pending the
Merger................................. 29
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
Section 7.1 Company Stockholder Approval; Proxy
Statement.............................. 29
Section 7.2 Access to Information.................... 30
Section 7.3 Fees and Expenses........................ 31
Section 7.4 Company Stock Options.................... 31
Section 7.5 Reasonable Best Efforts.................. 32
Section 7.6 Public Announcements..................... 32
Section 7.7 Real Estate Transfer and Gains Taxes..... 33
Section 7.8 State Takeover Laws...................... 33
Section 7.9 Indemnification; Directors and Officers
Insurance.............................. 33
Section 7.10 Employee Benefits........................ 34
Section 7.11 Merit Bonuses; Severance Policy.......... 35
Section 7.12 Management Contracts..................... 36
-ii-
<PAGE>
ARTICLE VIII
CONDITIONS PRECEDENT
--------------------
Section 8.1 Conditions to Each Party's Obligation
to Effect the Merger................... 36
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 9.1 Termination.............................. 37
Section 9.2 Effect of Termination.................... 39
Section 9.3 Amendment................................ 39
Section 9.4 Waiver................................... 40
ARTICLE X
GENERAL PROVISIONS
------------------
Section 10.1 Non-Survival of Representations and
Warranties............................ 40
Section 10.2 Notices................................. 40
Section 10.3 Interpretation.......................... 41
Section 10.4 Counterparts............................ 41
Section 10.5 Entire Agreement; No Third-Party
Beneficiaries......................... 42
Section 10.6 Governing Law........................... 42
Section 10.7 Assignment.............................. 42
Section 10.8 Severability............................ 42
Section 10.9 Enforcement of this Agreement........... 43
EXHIBIT A Conditions of the Offer
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
AGREEMENT AND PLAN OF MERGER, dated as of November 27, 1995 (this
"Agreement"), among Wolters Kluwer N.V., a corporation organized under the laws
of The Netherlands ("Parent"), WK Acquisition Sub, Inc., a Delaware corporation
("Sub") and a wholly owned subsidiary of Parent, and CCH Incorporated, a
Delaware corporation (the "Company") (Sub and the Company being hereinafter
collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
--------------------
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have unanimously approved the acquisition of the Company by Parent
pursuant to a tender offer (the "Offer") by Sub for all of the outstanding
shares of Class A Common Stock, par value $1.00 per share (the "Class A Common
Stock"), of the Company and all of the outstanding shares of Class B Common
Stock, par value $1.00 per share (the "Class B Common Stock" and, together with
the Class A Common Stock, the "Common Stock") of the Company, at a price of
$55.50 per share of Common Stock, net to the seller in cash, followed by a
merger (the "Merger") of Sub with and into the Company upon the terms and
subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has (i) determined that
the consideration to be paid for each share of Common Stock in the Offer is fair
to and in the best interests of the stockholders of the Company, (ii) approved
and adopted this Agreement and the transactions contemplated hereby, and (iii)
adopted resolutions unanimously approving the Offer and the Merger and
recommending that the Company's stockholders accept the Offer and approve and
adopt the Merger Agreement;
WHEREAS, Parent has informed the Company that Parent has required as a
condition to entering into this Agreement that certain stockholders of the
Company (collectively, "Stockholders") enter into a Stock Option and Tender
Agreement (the "Option Agreement") pursuant to which Stockholders have agreed,
among other things, (i) to tender all of the shares of Common Stock that
Stockholders now own or hereafter acquire (the "Stockholder Shares") into the
Offer, (ii) to grant Parent the
<PAGE>
option to purchase all of the Stockholder Shares, (iii) to appoint Parent under
certain circumstances as Stockholders' proxy to vote the Stockholder Shares that
are Class A Shares, and (iv) with respect to certain questions put to
stockholders of the Company for a vote, to vote such Stockholder Shares that are
Class A Shares, in each case, in accordance with the terms and conditions of the
Option Agreement; and
WHEREAS, pursuant to the Merger, each issued and outstanding share of
Common Stock not owned directly or indirectly by Parent or the Company will be
converted into the right to receive the per share consideration paid pursuant to
the Offer.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:
-2-
<PAGE>
ARTICLE I
THE OFFER
---------
Section 1.1 The Offer. (a) Subject to the provisions of this
---------
Agreement, as promptly as practicable but in no event later than five business
days after the date hereof, Sub shall, and Parent shall cause Sub to, commence
the Offer. The obligation of Sub to, and of Parent to cause Sub to, commence
the Offer and accept for payment, and pay for, any shares of Common Stock
tendered pursuant to the Offer shall be subject only to the conditions set forth
in Exhibit A. Without the prior written consent of the Company, Sub shall not
(i) waive the Minimum Condition (as defined in Exhibit A), (ii) reduce the
number of shares of Common Stock subject to the Offer, (iii) reduce the price
per share of Common Stock to be paid pursuant to the Offer, (iv) modify or add
to the conditions set forth in Exhibit A (other than to waive any conditions to
the extent permitted by this Agreement), (v) extend the Offer if all of the
Offer conditions are satisfied or waived or, in the case of any single
extension, extend the offer for more than 3 business days, (vi) change the form
of consideration payable in the Offer, or (vii) otherwise amend, add or waive
any term or condition of the Offer in any manner that would adversely affect the
Company or its stockholders. The Offer shall not expire prior to January 4,
1996. So long as this Agreement is in effect and the Offer conditions have not
been satisfied or waived, Sub shall, and Parent shall cause Sub to, cause the
Offer not to expire. Subject to the terms and conditions of the Offer, Sub
shall, and Parent shall cause Sub to, pay for all shares of Common Stock validly
tendered and not withdrawn pursuant to the Offer as soon as practicable after
the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the Securities and Exchange Commission (the "SEC") a Tender Offer
Statement on Schedule 14D-1 with respect to the Offer, which shall contain an
offer to purchase and a related letter of transmittal and summary advertisement
(such Schedule 14D-1 and the documents therein pursuant to which the Offer will
be made, together with any supplements or amendments thereto, the "Offer
Documents"). The Company and its counsel shall be given an opportunity to
review and comment upon the Offer Documents prior to the filing thereof with the
SEC.
-3-
<PAGE>
The Offer Documents shall comply as to form in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (including the
rules and regulations promulgated thereunder, the "Exchange Act"), and on the
date filed with the SEC and on the date first published, sent or given to the
Company's stockholders, the Offer Documents shall not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is made by Parent or Sub with respect to information supplied by
the Company for inclusion in the Offer Documents. Each of Parent, Sub and the
Company agrees promptly to correct any information provided by it for use in the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and each of Parent and Sub further
agrees to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and to be disseminated to the Company's stockholders,
in each case as and to the extent required by applicable Federal securities
laws. Parent and Sub agree to provide the Company and its counsel in writing
with any comments Parent, Sub or their counsel may receive from the SEC or its
staff with respect to the Offer Documents.
(c) Prior to the expiration of the Offer, Parent shall provide or
cause to be provided to Sub all of the funds necessary to purchase any shares of
Common Stock that Sub becomes obligated to purchase pursuant to the Offer.
Section 1.2 Company Actions. (a) The Company hereby approves of and
---------------
consents to the Offer and represents that the Board of Directors of the Company
has duly adopted resolutions unanimously approving this Agreement, the Offer and
the Merger, determining that the Merger is advisable and that the terms of the
Offer and Merger are fair to, and in the best interests of, the Company's
stockholders and recommending that the Company's stockholders accept the Offer
and that the holders of Class A Common Stock approve the Merger. The Company
represents that its Board of Directors has received the opinion of Goldman,
Sachs & Co. (the "Financial Advisor") that the proposed consideration to be
received by the holders of shares of Common Stock pursuant to the Offer and the
Merger is fair to such holders. The Company
-4-
<PAGE>
has been authorized by the Financial Advisor to permit, subject to prior review
and consent by such Financial Advisor (unless such consent is innappropriate
under the circumstances), the inclusion of such fairness opinion and a reference
thereto in the Schedule 14D-9 referred to below, and the Proxy Statement
referred to in Section 7.1 and the Information Statement referred to in Section
3.3. The Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the Company's Board of Directors described in this Section
1.2(a).
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") and shall mail the Schedule 14D-9 to the
stockholders of the Company. Subject to the fiduciary duties of the Board of
Directors of the Company under applicable law as determined by the Board of
Directors in good faith after consultation with the Company's outside counsel,
and subject to the terms of this Agreement, the Schedule 14D-9 shall contain the
recommendations described in paragraph (a) above. Parent and its counsel shall
be given an opportunity to review and comment upon the Schedule 14D-9 prior to
the filing thereof with the SEC. The Schedule 14D-9 shall comply as to form in
all material respects with the requirements of the Exchange Act and, on the date
filed with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representation is
made by the Company with respect to information supplied by Parent or Sub for
inclusion in the Schedule 14D-9. Each of the Company, Parent and Sub agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that such information shall have become false or misleading
in any material respect, and the Company further agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and disseminated to the holders of shares of Common Stock, in each case as and
to the extent required by applicable Federal securities laws. The Company
agrees to provide Parent and Sub and their counsel in writing with any comments
the Company or its counsel may receive
-5-
<PAGE>
from the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub with mailing labels containing the names and
addresses of the record holders of Common Stock as of a recent date and of those
persons becoming record holders subsequent to such date, together with copies of
all lists of stockholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Common Stock, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Sub may reasonably request in communicating the Offer to
the Company's stockholders. Subject to the requirements of law, and except for
such steps as are necessary to disseminate the documents constituting the Offer
and any other documents necessary to consummate the Merger, Parent and Sub and
each of their affiliates and associates shall hold in confidence the information
contained in any of such labels, lists and files, will use such information only
in connection with the Offer and the Merger, and, if this Agreement is
terminated, will promptly deliver to the Company all copies of such information
then in their possession.
ARTICLE II
THE MERGER
----------
Section 2.1 The Merger. Upon the terms and subject to the conditions
----------
hereof, and in accordance with the General Corporation Law of the State of
Delaware, as amended (the "DGCL"), Sub shall be merged with and into the Company
at the Effective Time (as hereinafter defined), and Purchaser hereby agrees to
use its best efforts to effect such Merger and to take all actions necessary or
desirable to effect such Merger. Following the Merger, the separate corporate
existence of Sub shall cease and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the DGCL.
-6-
<PAGE>
Section 2.2 Effective Time. The Merger shall become effective when
--------------
the Certificate of Merger or, if applicable, the Certificate of Ownership and
Merger (each, the "Certificate of Merger"), executed in accordance with the
relevant provisions of the DGCL, are accepted for record by the Secretary of
State of the State of Delaware. When used in this Agreement, the term
"Effective Time" shall mean the later of the date and time at which the
Certificate of Merger is accepted for record or such later time established by
the Certificate of Merger. The filing of the Certificate of Merger shall be
made as soon as practicable after the satisfaction or waiver of the conditions
to the Merger set forth herein.
Section 2.3 Effects of the Merger. The Merger shall have the effects
---------------------
set forth in Section 259 of the DGCL.
Section 2.4 Certificate of Incorporation and Bylaws. The Certificate
---------------------------------------
of Incorporation and Bylaws of Sub, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and Bylaws of the
Surviving Corporation until thereafter changed or amended as provided therein or
by Certificate of Incorporation and applicable law.
Section 2.5 Directors and Officers. The directors of Sub immediately
----------------------
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their resignation or removal or
until their respective successors are duly elected and qualified.
Section 2.6 Conversion of Securities. As of the Effective Time, by
------------------------
virtue of the Merger and without any action on the part of any stockholder of
the Company:
(a) All shares of Common Stock that are held in the treasury of the
Company or by any Subsidiary (as hereinafter defined) of the Company and
any shares of Common Stock owned by Parent, Sub or any other Subsidiary of
Parent shall be cancelled and retired and
-7-
<PAGE>
no consideration shall be delivered in exchange therefor.
(b) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time (other than shares to be cancelled in
accordance with Section 2.6(a) and other than Dissenting Company Common
Shares (as defined in Section 2.8)) shall be converted into the right to
receive from the Surviving Corporation in cash, without interest, the per
share consideration paid in the Offer (the "Merger Consideration"). All
such shares of Common Stock, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and each
holder of a certificate or certificates (the "Certificates") representing
any such shares shall cease to have any rights with respect thereto, except
the right to receive the Merger Consideration.
(c) Each issued and outstanding share of the capital stock of Sub
shall be converted into and become one fully paid and nonassessable share
of common stock, par value $.01 per share, of the Surviving Corporation.
Section 2.7 Exchange of Certificates. (a) Paying Agent. Parent and
------------------------ ------------
the Company shall authorize a commercial bank (or such other person or persons
as shall be acceptable to Parent and the Company) to act as paying agent
hereunder (the "Paying Agent") for the payment of the Merger Consideration upon
surrender of Certificates. All of the fees and expenses of the Paying Agent
shall be borne by Parent.
(b) Surviving Corporation to Provide Funds. Parent shall take all
--------------------------------------
steps necessary to enable and cause the Surviving Corporation to deposit in
trust with the Paying Agent prior to the Effective Time cash in an amount
necessary to pay the Merger Consideration for all of the shares of Common Stock
pursuant to Section 2.6. Such amount shall hereinafter be referred to as the
"Exchange Fund." If the amount of cash in the Exchange Fund is insufficient to
pay all of the amounts required to be paid pursuant to Section 2.6 Parent from
time to time after the Effective Time shall take all steps necessary to enable
and cause
-8-
<PAGE>
the Surviving Corporation to deposit in trust additional cash with the Paying
Agent sufficient to make all such payments.
(c) Exchange Procedures. As soon as practicable after the Effective
-------------------
Time, the Paying Agent shall mail to each holder of record of a Certificate,
other than Parent, the Company and any Subsidiary of Parent or the Company, (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon actual
delivery of the Certificates to the Paying Agent and shall be in a form and have
such other provisions as Parent may reasonably specify) and (ii) instructions
for use in effecting the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by the
Surviving Corporation, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration and the Certificates so surrendered shall forthwith be
cancelled. No interest will be paid or will accrue on the cash payable upon the
surrender of any Certificate. If payment is to be made to a person other than
the person in whose name the Certificate so surrendered is registered, it shall
be a condition of payment that such Certificate shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of such
Certificate or establish to the satisfaction of the Surviving Corporation that
such tax has been paid or is not applicable. Until surrendered as contemplated
by this Section 2.7, each Certificate (other than Certificates representing
Dissenting Company Common Shares and Certificates representing any shares of
Common Stock owned by Parent or any Subsidiary of Parent) shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration, without interest, into which the shares of
Common Stock theretofore represented by such Certificate shall have been
converted pursuant to Section 2.6. Notwithstanding the foregoing, neither the
Paying Agent nor any party hereto shall be liable to a former stockholder of the
Company for any cash or interest delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws. Any portion of the
Exchange Fund that remains unclaimed by
-9-
<PAGE>
the stockholders of the Company for one year after the Effective Time shall be
repaid to the Surviving Corporation. Any stockholders of the Company who have
not theretofore complied with Article II hereof shall thereafter look only to
the Surviving Corporation and Parent for payment of their claim for the Merger
Consideration, without any interest thereon.
Section 2.8 Dissenting Company Common Shares. Notwithstanding any
--------------------------------
provision of this Agreement to the contrary, if required by the DGCL but only to
the extent required thereby, shares of Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are held by
holders of such shares of Common Stock who have properly exercised appraisal
rights with respect thereto in accordance with Section 262 of the DGCL (the
"Dissenting Company Common Shares") will not be exchangeable for the right to
receive the Merger Consideration, and holders of such shares of Common Stock
will be entitled to receive payment of the appraised value of such shares of
Common Stock in accordance with the provisions of such Section 262 unless and
until such holders fail to perfect or effectively withdraw or lose their rights
to appraisal and payment under the DGCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of Common Stock will thereupon be treated as if they had been converted
into and to have become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration, without any interest thereon. The Company
will give Parent prompt notice of any demands received by the Company for
appraisals of shares of Common Stock.
Section 2.9 Merger Without Meeting of Stockholders. Notwithstanding
--------------------------------------
the foregoing, in the event that Sub, or any other direct or indirect subsidiary
of Parent, shall acquire at least 90 percent of the outstanding shares of each
class of the stock of the Company, the parties hereto agree to take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer, but in no event later than six
business days thereafter, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.
Section 2.10 No Further Ownership Rights in Common Stock. All cash
-------------------------------------------
paid upon the surrender of Certificates in
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<PAGE>
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Common Stock.
Section 2.11 Closing of Company Transfer Books. At the Effective
---------------------------------
Time, the stock transfer books of the Company shall be closed and no transfer of
shares of Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged as provided in this Article II.
Section 2.12 Further Assurances. If at any time after the Effective
------------------
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (b) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations in the Merger,
all such deeds, bills of sale, assignments and assurances and do, in the name
and on behalf of such Constituent Corporations, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
----------------------------------------
Parent represents and warrants to the Company as follows:
Section 3.1 Organization, Standing and Power. Parent is a
--------------------------------
corporation duly organized, validly existing and in good standing under the laws
of The Netherlands and has the requisite
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<PAGE>
corporate power and authority to carry on its business as now being conducted.
Section 3.2 Authority; Non-Contravention. Parent has all requisite
----------------------------
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and the consummation by Parent of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Parent. This Agreement has been duly executed and delivered by Parent and
(assuming the valid authorization, execution and delivery of this Agreement by
the Company) constitutes a valid and binding obligation of Parent enforceable
against Parent in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, injunction and any other form of
equitable relief, is subject to the discretion of the court before which
proceeding therefor may be brought. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, conflict with, or result in
any violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Parent or any of its Significant Subsidiaries under, any
provision of (i) the Charter or Bylaws of Parent (true and complete copies of
which as of the date hereof have been delivered to the Company) or any provision
of the comparable charter or organizational documents of any of its Significant
Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent or any of its Significant Subsidiaries or (iii)
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or any of its Significant Subsidiaries or any of their
respective properties or assets, other than, in the case of clauses (ii) or
(iii), any such conflicts, violations, defaults, rights, liens, security
interests, charges or encumbrances that, individually or in the
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<PAGE>
aggregate, would not have a Material Adverse Effect on Parent, materially impair
the ability of Parent to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby. No filing or
registration with, or authorization, consent or approval of, any domestic
(federal and state), foreign or supranational court, commission, governmental
body, regulatory agency, authority or tribunal (a "Governmental Entity") is
required by or with respect to Parent or any of its Significant Subsidiaries in
connection with the execution and delivery of this Agreement by Parent or is
necessary for the consummation of the Offer, the Merger and the other
transactions contemplated by this Agreement, except for (i) in connection, or in
compliance, with the Exchange Act, (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (iii) such filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Offer, the Merger
or the transactions contemplated by this Agreement, (iv) such filings as may be
required in connection with the Gains Taxes described in Section 7.7, (v) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under the corporation, takeover or blue sky laws
of various states, (vi) such filings and approvals as may be required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"Improvements Act"), and (vii) such other consents, orders, authorizations,
registrations, declarations and filings which (A) may be required under the laws
of any foreign country or supra-national organization in which the Company or
any of its Subsidiaries conducts any business or owns any property or assets or
(B) the failure of which to be obtained or made would not, individually or in
the aggregate, have a Material Adverse Effect on Parent, materially impair the
ability of Parent to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby. For purposes of
this Agreement (a) "Material Adverse Change" or "Material Adverse Effect" means,
when used with respect to Parent, Sub or the Company, as the case may be, any
change or effect that is or may be materially adverse to the business, assets,
or financial condition, or results of operations of Parent and its Significant
Subsidiaries taken as a whole, Sub, or the Company and its Significant
Subsidiaries taken
-13-
<PAGE>
as a whole, as the case may be, (b) "Subsidiary" means any significant
corporation, partnership, joint venture or other legal entity of which Parent or
the Company, as the case may be (either alone or through or together with any
other Subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity and (c) "Significant Subsidiary" means any
Significant Subsidiary within the meaning of Rule 1-02 of Regulation S-X of the
SEC.
Section 3.3 Offer Documents and Proxy Statement. None of the
-----------------------------------
information to be supplied by Parent or Sub for inclusion or incorporation by
reference in the Offer Documents, the Schedule 14D-9 or the proxy statement, if
any, (together with any amendments or supplements thereto, the "Proxy
Statement") relating to the Stockholder Meeting (as defined in Section 7.1) the
information statement, if any, filed by the Company in connection with the
Merger pursuant to Rule 14C-2 promulgated under the Exchange Act (the
"Information Statement"), will (i) in the case of the Offer Documents, the
Schedule 14D-9, the Proxy Statement and the Information Statement, at the
respective time such documents are filed with the SEC or first published, sent
or given to the Company's stockholders, or (ii) in the case of the Proxy
Statement or the Information Statement, at the time of the mailing of either of
such Statements and at the time of the Stockholder Meeting or action by written
consent, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the purchase of shares
of Common Stock pursuant to the Offer there shall occur any event with respect
to Parent, its officers and directors or any of its Subsidiaries which is
required to be described in the Offer Documents, such event shall be so
described, and an amendment or supplement shall be promptly filed with the SEC
and, as required by law, disseminated to the stockholders of the Company.
Section 3.4 Financing. Parent has, or immediately prior to the
---------
expiration of the Offer will have, all of the funds necessary to consummate the
Offer and the Merger and the
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<PAGE>
transactions contemplated hereby on a timely basis and to pay any and all
related fees and expenses.
Section 3.5 Brokers. No broker, investment banker or other person,
-------
other than CS First Boston Corporation, the fees and expenses of which will be
paid by Parent, is entitled to any broker's, finder's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Sub.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows:
Section 4.1 Organization, Standing and Power. The Company and each
--------------------------------
of its Significant Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to carry on its
business as now being conducted. The Company and each of its Significant
Subsidiaries is duly qualified to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not, individually or in the aggregate, have
a Material Adverse Effect on the Company.
Section 4.2 Capital Structure. The authorized capital stock of the
-----------------
Company is 80,000,000 shares of Common Stock, consisting of 40,000,000 shares of
Class A Common Stock and 40,000,000 shares of Class B Common Stock. At the
close of business on November 24, 1995, (i) 16,638,512 shares of Class A Common
Stock were issued and outstanding, (ii) 16,397,122 shares of Class B Common
Stock were issued and outstanding, (iii) 2,000,000 shares of Common Stock were
reserved for issuance upon the exercise of outstanding Company Stock Options (as
defined in Section 7.4) and (iv) 779,690 shares of Class A Common Stock and
1,021,080 shares of Class B Common Stock were held by the Company in its
treasury. There are no outstanding stock appreciation
-15-
<PAGE>
rights ("SARs") which were not granted in tandem with a related Company Stock
Option. All outstanding shares of capital stock of the Company are validly
issued, fully paid and nonassessable and not subject to preemptive rights.
Except for the 1,217,000 Company Stock Options outstanding as of November 24,
1995, there are no options, warrants, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
Significant Subsidiaries is a party or by which any of them is bound obligating
the Company or any of its Significant Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or of any of its Significant
Subsidiaries. There are no voting trusts or other agreements or understandings
to which the Company is a party with respect to the voting of the capital stock
of the Company.
Section 4.3 Authority; Non-Contravention. The Board of Directors of
----------------------------
the Company has declared the Merger advisable and the Company has all requisite
power and authority to enter into this Agreement and, subject to approval of the
Merger by the stockholders of the Company (if required), to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to such approval of the Merger by the
stockholders of the Company (if required). This Agreement has been duly
executed and delivered by the Company and (assuming the valid authorization,
execution and delivery of this Agreement by Parent and Sub) constitutes a valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms. Except as set forth in the Company SEC Documents (as
hereinafter defined) or the letter from the Company to Parent dated the date
hereof, which letter relates to this Agreement and is designated therein as the
Company Disclosure Letter (the "Company Disclosure Letter"), the execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of
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<PAGE>
the properties or assets of the Company or any of its Significant Subsidiaries
under, any provision of (i) the Certificate of Incorporation or Bylaws of the
Company (true and complete copies of which as of the date hereof have been
delivered to Parent) or any provision of the comparable charter or organization
documents of any of its Significant Subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to the Company
or any of its Significant Subsidiaries or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Significant Subsidiaries or any of their respective properties or assets,
other than, in the case of clause (ii) or (iii), any such conflicts, violations,
defaults, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company, materially impair the ability of the Company to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby. No filing or registration with, or authorization, consent
or approval of, any Governmental Entity is required by or with respect to the
Company or any of its Significant Subsidiaries in connection with the execution
and delivery of this Agreement by the Company or the consummation by the Company
of the transactions contemplated hereby, except for (i) in connection or in
compliance with the provisions of he Exchange Act, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business, (iii) such filings and consents as may be
required under any environmental, health or safety law or regulation pertaining
to any notification, disclosure or required approval triggered by the Offer, the
Merger or the transactions contemplated by this Agreement, (iv) such filings as
may be required in connection with the Gains Taxes described in Section 7.7, (v)
such consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under the corporation, takeover or blue sky laws
of various states, (vi) such filings and approvals as may be required under the
Improvements Act, and (vii) such other consents, orders, authorizations,
registrations, declarations and filings which (A) may be required under the laws
of any foreign country or supranational organization in which the Company or any
of its Subsidiaries conducts any business or owns any property or
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<PAGE>
assets or (B) the failure of which to be obtained or made would not,
individually or in the aggregate, have a Material Adverse Effect on the Company,
materially impair the ability of Company to perform its obligations hereunder or
prevent the consummation of any of the transactions contemplated hereby.
Section 4.4 SEC Documents. The Company has filed all required
-------------
documents with the SEC since January 1, 1993 (the "Company SEC Documents"). As
of their respective dates, the Company SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and none of the Company SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the Company SEC Documents comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly present the consolidated financial
position of the Company and its consolidated Subsidiaries as at the dates
thereof and the consolidated results of their operations and changes in
financial position for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments and to any other adjustments
described therein).
Section 4.5 Offer Documents and Proxy Statement. None of the
-----------------------------------
information supplied or to be supplied by the Company for inclusion or
incorporation by reference in the Offer Documents or the Schedule 14D-9, the
Information Statement, if any, the Proxy Statement, if any, or any amendment or
supplement thereto, will (i) in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times such documents are
filed with the SEC or first published, sent or given to the Company's
stockholders, (ii) in the case of the Proxy Statement, if any, at the time of
the mailing of the Proxy Statement and at the time of the Stockholder Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to
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<PAGE>
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to the Company, its
officers and directors or any of its Subsidiaries should occur which is required
to be described in an amendment of, or a supplement to, the Proxy Statement or
the Offer Documents, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company. The Proxy Statement will
comply as to form in all material respects with the requirements of the Exchange
Act.
Section 4.6 Absence of Certain Events. Except as may be disclosed in
-------------------------
the Company Disclosure Letter or in the Company SEC Documents filed with the SEC
prior to the date hereof, the Company has, in all material respects, conducted
its business only in, and has not entered into any material transaction (other
than the transactions contemplated by this Agreement) other than in accordance
with, the ordinary course, and since September 30, 1995, there has not been any
Material Adverse Change with respect to the Company.
Section 4.7 Section 203 of the DGCL. The Board of Directors of the
-----------------------
Company has approved this Agreement and the Option Agreement for all purposes
under Section 203 of the DGCL and the Company has heretofore furnished to Parent
a true and correct copy of resolutions duly adopted by the unanimous vote of
such board on November 26, 1995 and such resolutions are in full force and
effect on the date hereof. Such action is the only action necessary so that the
restrictions on business combinations contained in Section 203 of the DGCL will
not apply with respect to or as a result of the Merger or the Option Agreement
or any of the transactions contemplated herein or therein.
Section 4.8 Taxes. Except as may be disclosed in the Company
-----
Disclosure Letter, (i) the Company and each Significant Subsidiary has filed all
Tax Returns required to have been filed on or before the date hereof; (ii) all
Taxes shown to be due on the Tax Returns referred in clause (i) have been timely
paid; (iii) neither the Company nor any Significant Subsidiary has waived any
statute of limitations in respect of Taxes of the
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<PAGE>
Company or such Subsidiary; (iv) the Tax Returns referred to in clause (i)
relating to federal and state income Taxes have been examined by the Internal
Revenue Service or the appropriate state or appropriate foreign taxing authority
or the period for assessment of the Taxes in respect of which such Tax Returns
were required to be filed has expired; (v) no issues that have been raised in
writing by the relevant taxing authority in connection with the examination of
the Tax Returns referred to in clause (i) are currently pending; (vi) to the
best of the knowledge of the Company, none of the Internal Revenue Service, the
appropriate state taxing authority or the appropriate foreign tax authority,
have proposed any adjustments to tax against the Company or any Subsidiary; and
(vii) all deficiencies asserted or assessments made as a result of any
examination of the Tax Returns referred to in clause (i) by a taxing authority
have been paid in full. For purposes of this Agreement (a) "Tax" (and, with
correlative meaning, "Taxes" and "Taxable") means, when used with respect to
Parent or the Company, as the case may be, any federal, state, local or foreign
income, gross receipts, property, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or added minimum, ad valorem,
transfer or excise tax, or any other tax, custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any governmental authority, and (b) "Tax Return"
means any return, report or similar statement required to be filed with respect
to any Tax (including any attached schedules), including, without limitation,
any information return, claim for refund, amended return or declaration of
estimated Tax.
Section 4.9 Compliance with Applicable Law. The Company and its
------------------------------
Subsidiaries hold all material permits, licenses, variances, exemptions, orders
and approvals of all United States Governmental Entities necessary for the
lawful conduct of their respective businesses (the "Company Permits"), except
for failures to hold such permits, licenses, variances, exemptions, orders and
approvals that would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. The Company and its subsidiaries are in
compliance with the terms of the Company Permits, except where the failure so to
comply would not have a Material Adverse Effect on the Company. Except as
disclosed in the Company SEC Documents, to the best knowledge of the Company,
the businesses of the Company and its subsidiaries
-20-
<PAGE>
are not being conducted in violation of any law, ordinance or regulation of any
United States Governmental Entity, except for violations that, individually or
in the aggregate, would not have a Material Adverse Effect on the Company or
prevent or materially delay the consummation of the Offer or the Merger. Except
as set forth in the Company Disclosure Letter, as of the date of this Agreement,
no investigation or review by any United States Governmental Entity with respect
to the Company or any of its subsidiaries is pending or, to the best knowledge
of the Company, threatened in writing, other than, in each case, those the
outcome of which would not be reasonably expected to have a Material Adverse
Effect on the Company or prevent or materially delay the consummation of the
Offer or the Merger.
Section 4.10 Litigation. Except as disclosed in the Company SEC
----------
Documents or in the Company Disclosure Schedule and except for suits filed in
connection with the Offer, there is no suit, claim, action, proceeding or
investigation pending before any United States Governmental Entity or, to the
best knowledge of the Company, threatened against the Company or any of its
subsidiaries that could reasonably be expected to have a Material Adverse Effect
on the Company. Except as disclosed in the Company SEC Documents or in the
Company Disclosure Letter, neither the Company nor any of its subsidiaries is
subject to any outstanding order, writ, injunction or decree that could
reasonably be expected to have a Material Adverse Effect on the Company.
Section 4.11 No Undisclosed Liabilities. Except as and to the extent
--------------------------
set forth in the Company's Annual Report to Stockholders for the year ended
December 31, 1994, or in any subsequently filed document by the Company with the
SEC prior to the date of this Agreement, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by generally accepted
accounting principles to be reflected on a consolidated balance sheet of the
Company and it subsidiaries (including the notes thereto), except for
liabilities or obligations incurred in the ordinary course of business since
December 31, 1994, that would not, individually or in the aggregate, have a
Material Adverse Effect on the Company.
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<PAGE>
Section 4.12 Benefit Plans. (a) Each "employee pension benefit plan"
-------------
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) (a Pension Plan"), "employee welfare benefit plan"
(as defined in Section 3(1) of ERISA) (a "Welfare Plan"), and each other plan,
arrangement or policy (written or oral) relating to stock options, stock
purchases, compensation, deferred compensation, bonuses, severance, fringe
benefits or other employee benefits, in each case maintained or contributed to,
or required to be maintained or contributed to, by the Company or its
subsidiaries for the benefit of any present or former employee, officer or
director (each of the foregoing, a "Benefit Plan") has been substantially
administered in accordance with its terms. The Company and its subsidiaries and
all the Benefit Plans are in compliance in all material respects with the
applicable provisions of ERISA, the Internal Revenue Code of 1986, as amended
(the "Code"), all other applicable laws and all applicable collective bargaining
agreements.
(b) None of the Company or other person or entity that, together with
the Company, is treated as a single employer under Section 414 of the Code
(each, including the Company, a "Commonly Controlled Entity") has incurred any
liability to a Pension Plan under Title IV of ERISA (other than for
contributions not yet due) or to the Pension Benefit Guaranty Corporation (other
than for payment of premiums not yet due), which liability has not been fully
paid.
(c) No Commonly Controlled Entity is required to contribute to any
"multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) or has
withdrawn from any multiemployer plan where such withdrawal has resulted or
would result in any "withdrawal liability" (within the meaning of Section 4201
of ERISA) that has not been fully paid.
Section 4.13 Trademarks, Patents and Copyrights. Except as set forth
----------------------------------
in the Disclosure Letter, (i) the Company and its subsidiaries own or possess
adequate licenses or other valid rights to use all patents, patent rights,
trademarks, trademark rights, trade names, trade dress, trade name rights,
copyrights, servicemarks, trade secrets, applications for trademarks and for
servicemarks, mask works, know-how and other proprietary rights and information
used or held for use in connection with the
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<PAGE>
business of the Company and the subsidiaries as conducted since December 31,
1993 or as currently conducted, except to the extent that the failure to so own
or possess would have a Material Adverse Effect, and (ii) the Company is unaware
of any assertion or claim challenging the validity of any of the foregoing
which, individually or in the aggregate, could have a Material Adverse Effect.
The conduct of the business of the Company and the Subsidiaries as conducted
since December 31, 1993 and as currently conducted did not and does not conflict
in any way with any applicable patent, patent right, license, trademark,
trademark right, trade dress, trade name, trade name right, service mark, mask
work or copyright of any third party that, individually or in the aggregate,
could have a Material Adverse Effect on the Company. There are no infringements
of any propriety rights owned by or licensed by or to the Company or any
subsidiary which, individually or in the aggregate, could have a Material
Adverse Effect on the Company. For purposes of this Section 4.12 only, the term
------------
"Material Adverse Effect" means Material Adverse Effect on the Company in an
amount equal to or greater than $100,000,000.
Section 4.14 Environmental Matters. (a) For purposes of this
---------------------
Agreement, the following terms shall have the following meanings: (i)
"Hazardous Substances" means (A) any asbestos-containing material, petroleum and
- ---------------------
petroleum products, including crude oil and any fractions thereof,(B) any
hazardous substance, hazardous waste, hazardous material, toxic substance, air
or water pollutant or contaminant, as those terms are defined by any federal,
state or local Environmental Law; (ii) "Environmental Law" means any federal,
state or local law relating to (A) releases or threatened releases into the
environment of Hazardous Substances; or (B) the generation, emission, discharge
or release, transport, treatment, storage or disposal of any Hazardous
Substances.
(b) Except as described in the Company Disclosure Letter: (i) neither
the Company nor any subsidiary is in material violation of any Environmental
Law; (ii) the Company and each of its subsidiaries has all material permits,
licenses and other authorizations required under any Environmental Law and each
of them is in compliance in all material respects with their requirements; (iii)
none of the Company or any of its subsidiaries has received any notice or claim
since December 31,
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<PAGE>
1993, alleging liability for or arising from the off-site disposal of Hazardous
Substance and, to the Company's knowledge, neither the Company nor any
subsidiary is liable for any off-site contamination caused by a Hazardous
Substance; and (iv) neither the Company nor any subsidiary has received any
notice of violation with or liability under any Environmental Law which,
individually or in the aggregate, would have a Material Adverse Effect on the
Company.
Section 4.15 Brokers. No broker, investment banker or other person,
-------
other than Goldman, Sachs & Co. and Dennis P. Ferrel, the fees and expenses of
which will be paid by the Company, is entitled to any broker's, finder's or
other similar fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING SUB
--------------------------------------------
Parent and Sub jointly and severally represent and warrant to the
Company as follows:
Section 5.1 Organization and Standing. Sub is a corporation duly
-------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. Sub was organized solely for the purpose of acquiring the Company and
engaging in the transactions contemplated by this Agreement and has not engaged
in any business since it was incorporated which is not in connection with the
acquisition of the Company and this Agreement.
Section 5.2 Capital Structure. The authorized capital stock of Sub
-----------------
consists of 1,000 shares of common stock, par value $.01 per share, all of which
are validly issued and outstanding, fully paid and nonassessable and are owned
by Parent free and clear of all liens, claims and encumbrances.
Section 5.3 Authority; Non-Contravention. Sub has the requisite
----------------------------
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution
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and delivery of this Agreement, the performance by Sub of its obligations
hereunder and the consummation of the transactions contemplated hereby have been
duly authorized by its Board of Directors and Parent as its sole stockholder,
and, except for the corporate filings required by state law, no other corporate
proceedings on the part of Sub are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Sub and (assuming the due authorization, execution and
delivery hereof by the Company) constitutes a valid and binding obligation of
Sub enforceable against Sub in accordance with its terms. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Sub under, any provision of (i) the
Certificate of Incorporation or Bylaws (true and complete copies of which as of
the date hereof have been delivered to the Company) of Sub, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Sub or (iii)
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Sub or any of its properties or assets, other than, in the case of
clauses (ii) or (iii), any such conflicts, violations, defaults, rights, liens,
security interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on Sub, materially impair
the ability of Sub to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
-----------------------------------------
Section 6.1 Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
Except as otherwise expressly contemplated by this Agreement or as described in
the Company Disclosure
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Letter, during the period from the date of this Agreement through the Effective
Time, the Company shall, and shall cause its Subsidiaries to, in all material
respects carry on their respective businesses in, and not enter into any
material transaction other than in accordance with, the regular and ordinary
course and, to the extent consistent therewith, use its reasonable best efforts
to preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers and others having business dealings with
them. Without limiting the generality of the foregoing, and, except as
otherwise expressly contemplated by this Agreement or as described in the
Company Disclosure Letter, the Company shall not, and shall not permit any of
its Subsidiaries to, without the prior written consent of Parent:
(a) (x) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to stockholders of the
Company in their capacity as such, other than (1) ordinary quarterly
dividends by the Company consistent with past practice in an amount not in
excess of $0.17 1/2 per share of Common Stock per quarter, the first such
dividend to be with a record date no earlier than January 16, 1996, or (2)
dividends declared prior to the date of this Agreement;
(b) issue, deliver, sell, pledge, award, dispose of or otherwise
encumber, or authorize the issuance, delivery, sale, pledge, disposition or
other encumbrance of, any shares of its capital stock, any other voting
securities or equity equivalent or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting securities
or convertible securities or equity equivalent (other than, in the case of
the Company, the issuance of Common Stock during the period from the date
of this Agreement through the Effective Time upon the exercise of Company
Stock Options outstanding on the date of this Agreement in accordance with
their current terms;
(c) amend its Certificate of Incorporation or Bylaws;
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(d) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of or equity in, or by
any other manner, any business or any corporation, partnership, association
or other business organization or division thereof;
(e) other than in the ordinary course of business consistent with
past practice, sell, lease or otherwise dispose of or agree to sell, lease
or otherwise dispose of, any of its assets;
(f) incur, assume or prepay any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others, except for borrowings or
guarantees incurred in the ordinary course of business consistent with past
practice;
(g) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any
Subsidiary of the Company; or
(h) enter into or adopt any employee benefit plans or programs (which
if currently existing would come within the definition of Benefit Plans),
or amend any existing, Benefit Plan, agreement or arrangement, make any
contribution to any Benefit Plans which is disproportionately large when
compared to prior contributions made to such Benefit Plan or enter into or
amend any employee benefit plan (including without limitation, the Long-
Term Incentive Plan) or employment or consulting agreement, grant bonuses
or compensation increases except (x) as permitted by Section 7.11 or (y)
bonuses or compensation increases associated with Benefit Plans, promotions
and regular reviews in the ordinary course of business; or
(i) except as may be required as a result of a change in law or in
generally accepting accounting principles, change any of the accounting
practices or principles used by it;
(j) make any tax election or settle or compromise any federal, state,
local or foreign tax liability;
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(k) settle or compromise any pending or threatened suit, action or
claim which is material;
(l) enter into any material contracts or modify, amend, terminate any
material contracts;
(m) take or offer or propose to take, or agree to take in writing or
otherwise any of the actions described in Sections 6.1 or any action which
would make any of the representations or warranties of the Company
contained in this Agreement untrue or incorrect as of the date when made if
such action had been taken, or would result in any of the Offer conditions
not being satisfied.
Section 6.2 No Solicitation. The Company, its affiliates and their
---------------
respective officers, directors, employees, representatives and agents shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore 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. From and after the date hereof, the Company will not,
directly or indirectly, solicit or initiate any Takeover Proposal (as
hereinafter defined) from any person, or engage in discussions or negotiations
relating thereto (including by way of furnishing information); provided,
--------
however, that (i) the Company may engage in discussions or negotiations with a
- -------
third party who seeks to initiate such discussions or negotiations or may
furnish such third party information concerning the Company and its business,
properties, assets, operating results and prospects, in each case only in
response to a request for such information or access to any person made after
the date hereof which was not encouraged, solicited or initiated by the Company
or any of its affiliates or any of its or their respective officers, directors,
employees, representatives or agents after the date hereof, pursuant to
appropriate confidentiality agreements, (ii) the Company's Board of Directors
may take and disclose to the Company's stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act and (iii) following receipt of
a Takeover Proposal or offer the Board of Directors of the Company may withdraw
or modify its recommendation referred to in Section 7.1, but in each case
referred to in the foregoing clauses (i) through (iii) only
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to the extent that the Board of Directors of the Company shall conclude in good
faith after consultation with the Company's outside counsel that such action is
appropriate in order for the Board of Directors of the Company to act in a
manner which is consistent with its fiduciary obligations under applicable law.
The Company will promptly notify Parent of its receipt of any proposal or offer.
As used in this Agreement, "Takeover Proposal" shall mean any proposal or offer,
other than a proposal or offer by Parent or any of its affiliates, for a tender
or exchange offer, a merger, consolidation or other business combination
involving the Company or any Subsidiary of the Company or any proposal to
acquire in any manner a substantial equity interest in, or a substantial portion
of the assets of, the Company or any of its Subsidiaries or any other
transaction the consummation of which could reasonably be expected to impede,
interfere with, prevent or materially delay the Offer or the Merger or which
would reasonably be expected to dilute materially the benefits to Parent of the
transactions contemplated hereby.
Section 6.3 Conduct of Business of Sub Pending the Merger. During
---------------------------------------------
the period from the date of this Agreement through the Effective Time, Sub shall
not engage in any activities of any nature except as provided in or contemplated
by this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
Section 7.1 Company Stockholder Approval; Proxy Statement. (a) If
---------------------------------------------
approval of the Merger by the holders of Class A Common Stock ("Class A
Holders") is required by applicable law, the Company shall either (i) call a
meeting of its Class A Holders (the "Stockholder Meeting") for the purpose of
voting upon the Merger and shall use its reasonable best efforts to obtain Class
A Holder approval of the Merger or (ii) if the holders of a majority of the
outstanding shares of Class A Common Stock intend to act by written consent,
comply with the requirements of Rule 14c-2 promulgated under the Exchange Act.
The Stockholder Meeting, if necessary, shall be held as soon as practicable
following the purchase of shares of Common Stock pursuant to the Offer and the
Company will, through its Board of
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Directors but subject to the fiduciary duties of its Board of Directors under
applicable law as determined by the Board of Directors in good faith after
consultation with the Company's outside counsel, recommend to its Class A
Holders the approval of the Merger and not rescind its declaration that the
Merger is advisable. The record date for the Stockholder Meeting shall be a
date subsequent to the date Parent or Sub becomes a record holder of Common
Stock purchased pursuant to the Offer.
(b) If required by applicable law, the Company will, as soon as
practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement or Information Statement, as the case may be, with
the SEC and will use its reasonable best efforts to respond to any comments of
the SEC or its staff and to cause the Proxy Statement to be mailed to the Class
A Holders. The Company will notify Parent of the receipt of any comments from
the SEC or its staff and of any request by the SEC or its staff for amendments
or supplements to the Proxy Statement or for additional information and will
supply Parent with copies of all correspondence between the Company or any of
its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or the Merger. If at any time prior
to the approval of this Agreement by the Class A Holders at the Stockholder
Meeting, if necessary, there shall occur any event that should be set forth in
an amendment or supplement to the Proxy Statement, the Company will prepare and
mail to its stockholders such an amendment or supplement.
(c) Parent agrees to cause all shares of Class A Common Stock
purchased pursuant to the Offer and all other shares of Class A Common Stock
owned by Sub or any other Subsidiary of Parent to be voted in favor of the
approval of the Merger.
Section 7.2 Access to Information. The Company shall, and shall
---------------------
cause each of its Subsidiaries to, afford to Parent, and to Parent's
accountants, counsel, financial advisors and other representatives, reasonable
access and permit them to make such inspections as they may reasonably require
during normal business hours during the period from the date of this Agreement
through the Effective Time to all their respective properties, books, contracts,
commitments and records (including the availability of an office at the
Company's corporate headquarters
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where Parent's representatives may work on a day-to-day basis) and, during such
period, the Company shall, and shall cause each of its Subsidiaries to, furnish
promptly to Parent (i) a copy of each report, schedule, registration statement
and other document filed by it during such period pursuant to the requirements
of federal or state laws and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request; provided that no
investigation pursuant to this Section 7.2 or otherwise will affect or be deemed
to modify any of the representations and warranties made by the Company in this
Agreement. In no event shall the Company be requested to supply to Parent, or
to Parent's accountants, counsel, financial advisors or other representatives,
any information relating to indications of interest from, or discussions with,
any other potential acquirors of the Company which were received or conducted
prior to the date hereof, except to the extent necessary for use in the Offer
Documents, the Schedule 14D-9 and the Proxy Statement and/or the Information
Statement. Except as required by law, Parent will hold, and will cause its
affiliates, associates and representatives to hold, any nonpublic information in
confidence until such time as such information otherwise becomes publicly
available and shall use its reasonable best efforts to ensure that such
affiliates, associates and representatives do not disclose such information to
others without the prior written consent of the Company. In the event of
termination of this Agreement for any reason, Parent shall promptly return or
destroy all nonpublic documents so obtained from the Company or any of its
Subsidiaries and any copies made of such documents for Parent.
Section 7.3 Fees and Expenses. Whether or not the Merger is
-----------------
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses.
Section 7.4 Company Stock Options; Tax Gross-Up. Immediately upon
-----------------------------------
the consummation of the Offer, all outstanding employee stock options, whether
or not then fully exercisable or vested, to purchase shares of Common Stock (a
"Company Stock Option") heretofore granted under the Long-Term Incentive Plan
shall become fully exercisable and vested, and, pursuant to the terms of the
Long Term Incentive Plan, the Company Stock Options,
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<PAGE>
shall, upon their surrender to the Company by the holders thereof, be cancelled
by the Company, and the holders thereof shall receive a cash payment from the
Company in an amount equal to the number of shares of Common Stock subject to
each surrendered option multiplied by the difference between the exercise price
per share of Common Stock covered by the option and the Merger Consideration.
No additional awards shall be granted under the Long Term Incentive Plan.
Parent acknowledges that the Company has resolved to "gross-up" certain
executives for excise taxes due on any "excess parachute payment" as a result of
the acceleration of the vesting of the Company Stock Options (subject to a
maximum "gross-up" amount of $6,000,000 and undertakes to make such payments to
the extent due after the Effective Time.
Section 7.5 Reasonable Best Efforts. Upon the terms and subject to
-----------------------
the conditions set forth in this Agreement, each of the parties agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger, and the other
transactions contemplated by this Agreement, including (a) the obtaining of all
necessary actions or non-actions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities) and the taking of all reasonable
steps as may be necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by any Governmental Entity, (b) the obtaining of all
necessary consents, approvals or waivers from third parties, (c) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (d)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement; provided, however, that the
-------- -------
Company shall be under no obligation to take any action to the extent that the
Board of Directors shall conclude in good faith, after consultation with the
Company's outside counsel, that such action could be
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inconsistent with the Board of Directors' fiduciary obligations under applicable
law.
Section 7.6 Public Announcements. Parent and Sub, on the one hand,
--------------------
and the Company, on the other hand, will consult with each other before issuing
any press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange.
Section 7.7 Real Estate Transfer and Gains Taxes. Parent and the
------------------------------------
Company agree that either the Company or the Surviving Corporation will pay any
stamp tax, recording tax, sales tax, use tax, real property transfer or gains
tax, stock transfer tax or similar tax, or any other state or local tax which is
attributable to the transfer of the beneficial ownership of the Company's or its
Subsidiaries real property, if any (collectively, the "Gains Taxes"), and any
penalties or interest with respect to the Gains Taxes, payable in connection
with the consummation of the Offer or the Merger. The Company agrees to
cooperate with Sub in the filing of any returns with respect to the Gains Taxes,
including supplying in a timely manner a complete list of all real property
interests held by the Company or its Subsidiaries and any information with
respect to such property that is reasonably necessary to complete such returns.
The portion of the consideration allocable to the real property of the Company
and its Subsidiaries shall be determined by Sub or Parent in its reasonable
discretion. The stockholders of the Company shall be deemed to have agreed to
be bound by the allocation established pursuant to this Section 7.7 in the
preparation of any return with respect to the Gains Taxes.
Section 7.8 State Takeover Laws. If any "fair price" or "control
-------------------
share acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, the Company and the members
of the Board of Directors of the Company shall use their reasonable best efforts
to grant such approvals and take such actions as are necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and
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otherwise act to minimize the effects of such statute or regulation on the
transactions contemplated hereby.
Section 7.9 Indemnification; Directors and Officers Insurance. From
-------------------------------------------------
and after the Effective Time, Parent agrees to, and to cause the Surviving
Corporation to, indemnify and hold harmless all past and present officers,
directors, employees and agents of the Company and of its Subsidiaries to the
full extent such persons may be indemnified by the Company pursuant to the
Company's Certificate of Incorporation and Bylaws as in effect as of the date
hereof for acts and omissions occurring at or prior to the Effective Time and
shall advance reasonable litigation expenses incurred by such persons in
connection with defending any action arising out of such acts or omissions in
accordance with the terms and provisions of the Certificate of Incorporation and
Bylaws. In addition, Parent shall maintain in effect for a period of six years
the Company's current directors' and officers' liability insurance covering
those persons who are currently covered by such policy (a true and correct copy
of which has been made available to Parent); provided, however, that in no event
-------- -------
shall Parent be required to expend in any one year an amount in excess of 150%
of the annual premiums currently paid by the Company for such insurance which
the Company represents is $167,000 for the primary policy; and provided,
--------
further, that if the annual premiums of such insurance coverage exceed such
- -------
amount, Parent shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount.
Section 7.10 Employee Benefits. (a) Until at least December 31,
-----------------
1996, Parent shall maintain or cause to be maintained employee benefits and
programs for retirees, directors, officers and employees of the Company and its
Subsidiaries that are no less favorable in the aggregate than those being
provided to such retirees, directors, officers and employees on the date hereof
taking into account that the Company will be a private company without stock
options and the like. On or after January 1, 1997, the retirees, directors,
officers and employees of the Company and its Subsidiaries shall be eligible for
employee benefits, plans and programs (including but not limited to incentive
compensation, deferred compensation, pension, life insurance, medical, profit
sharing (including 401(k)), severance, salary continuation and fringe benefits)
which are no less favorable in the aggregate than those generally
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available to similarly situated retirees, directors, officers and employees of
Parent and its Significant Subsidiaries in the relevant geographic regions. For
purposes of eligibility to participate in and vesting in all benefits provided
to retirees, directors, officers and employees, retirees, directors, officers
and employees of the Company and its Subsidiaries will be credited with their
years of service with the Company and its Subsidiaries and years of service with
prior employers to the extent service with prior employers is taken into account
under plans of the Company. Upon termination of any medical plan of the
Company, individuals who were directors, officers or employees of the Company or
its Subsidiaries at the Effective Time shall become eligible to participate in
the medical plan of Parent, provided that no condition that was eligible for
--------
coverage under any medical plan of the Company at the time of such termination
shall be excluded from coverage under the medical plan of Parent as a pre-
existing condition. Amounts paid before the Effective Time by retirees,
directors, officers and employees of the Company under any medical plans of the
Company shall after the Effective Time be taken into account in applying
deductibles and maximum out-of-pocket limits applicable under the medical plan
of Parent provided as of the Effective Time to the same extent as if such
amounts had been paid under such medical plan of Parent.
(b) Parent agrees that the following principles shall apply for
purposes of determining bonuses for 1995 under the Company's Short Term
Incentive Plan for 1995: (1) the Compensation Committee's determination to pay
certain persons who are employees of the Company or any of its Subsidiaries and
who are covered by such plan (other than employees whose employment is
terminated for any reason for cause on or prior to December 31, 1995) the
maximum amount of such bonuses is hereby ratified by Parent; (2) whether any
bonuses are payable under such plan to other employees and, if so, the amounts
thereof shall be determined as if the transactions contemplated hereby had not
occurred and the Company had remained an independent, publicly-owned company
through December 31, 1995, taking into account to the extent reasonably
applicable the limitations imposed by Section 6.1(a); and (3) any bonuses
payable pursuant to clause (2) above shall be paid by February 28, 1996. The
Company reasonably estimates that the total amount of such bonuses will not
exceed $3,000,000.
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(c) Notwithstanding anything herein to the contrary, Parent agrees to
fulfill any obligations that may arise under any Welfare Plan to provide health
benefits to retirees or other arrangements to provide health benefits to
retirees, in either case, entered into prior to the date hereof.
Section 7.11 Merit Bonuses; Severance Policy. (a) From the date
-------------------------------
hereof up to the Effective Time, the Company shall be permitted to offer and pay
bonuses, in addition to any bonuses or payments pursuant to any existing bonus
or incentive plans of the Company, payable to officers and employees whose
performance and dedication to the Company or its Subsidiaries merits, in the
discretion of the Chief Executive Officer, special compensation ("Merit
Bonuses"); provided, however, that the aggregate amount paid by the Company
-------- -------
pursuant to such Merit Bonuses shall be no greater than $1,000,000.
(b) With respect to officers and employees who are or will be
terminated, Parent shall maintain the Company's severance policy as in effect on
the date hereof, or shall replace such policy with a policy providing equal or
more favorable compensation, for a period of at least one year from the
Effective Time.
(c) Parent shall honor or cause to be honored all existing severance
with the Company's officers and employees.
(d) Parent and its Subsidiaries shall provide reasonable and
customary outplacement services ("Outplacement Services") to officers of the
Company and its Subsidiaries who are terminated as a result of, or within
eighteen months following, the Merger, which Outplacement Services provided to
such officer and employees shall include one-on-one counseling and assistance.
Section 7.12 Management Contracts. The Company agrees to use its
--------------------
reasonably best efforts to cause the key members of its senior management to
enter into employment arrangements with the Surviving Corporation on terms and
conditions satisfactory to Parent and pursuant to which they shall remain as
employees of the Surviving Corporation following the Effective Time.
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ARTICLE VIII
CONDITIONS PRECEDENT
--------------------
Section 8.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall be
- ------
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. If approval of the Merger by the Class A
--------------------
Holders is required by applicable law, the Merger shall have been approved
by the requisite vote of such holders.
(b) Purchase of Shares of Common Stock. Sub shall have accepted for
----------------------------------
payment and paid for the shares of Common Stock properly tendered pursuant
to the Offer; provided, however, that this condition will be deemed
-------- -------
satisfied with respect to the obligations of Parent and Sub if Sub fails to
accept for payment and pay for any shares of Common Stock pursuant to the
Offer in violation of the terms of this Agreement or the Offer.
(c) No Order. No Governmental Entity or court of competent
--------
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any law, rule, regulation, executive order, decree or injunction prohibits
the consummation of the Merger; provided, however, that the Company, Parent
-------- -------
and Sub shall use their reasonable best efforts to have any such order,
decree or injunction vacated.
(d) Improvements Act Waiting Period. The applicable waiting period
-------------------------------
under the Improvements Act shall have expired or been terminated.
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ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 9.1 Termination. This Agreement may be terminated at any
-----------
time prior to the Effective Time, whether before or after any approval by the
stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by the Company if:
(i) the Offer has not been timely commenced in accordance with
Section 1.1(a); or
(ii) the Offer shall expire or is terminated without any shares of
Common Stock being purchased thereunder due to the conditions set forth in
Exhibit A (other than the Minimum Condition) failing to be met; or
(iii) there is an offer to acquire all of the outstanding shares of
Common Stock or substantially all of the assets of the Company for
consideration that provides stockholders of the Company a value per share
of Common Stock which, in the good faith judgment of the Board of Directors
of the Company, provides a higher value per share than the consideration
per share pursuant to the Offer or the Merger and as a result of which, the
Board of Directors of the Company is obligated in accordance with its
fiduciary duty under applicable law, as advised by its counsel, to
terminate this Agreement; or
(iv) there has been (y) a material breach by Parent or Sub of any
representation or warranty that is not qualified as to materiality or (z) a
breach by Parent or Sub of any representation or warranty that is qualified
as to materiality, in each case which breach has not been cured within five
business days following receipt by Parent or Sub of notice of the breach;
or
(v) Parent or Sub fails to comply in any material respect with any of
its material obligations or covenants
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contained herein which failure to perform is incapable of being cured or
has not been cured within five (5) business days following receipt by
Parent or Sub of written notice of the failure to perform.
(c) by either Parent or the Company if:
(i) the Merger has not been effected on or prior to the close of
business on May 31, 1996; provided, however, that the right to terminate
-------- -------
this Agreement pursuant to this clause shall not be available (y) to Parent
if Sub or any affiliate of Sub acquires shares of Common Stock pursuant to
the Offer, or (z) to any party whose failure to fulfill any obligation of
this Agreement has been the cause of, or resulted in, the failure of the
Merger to have occurred on or prior to the aforesaid date; or
(ii) any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become
final and nonappealable; or
(iii) if the stockholders of the Company fail to give any approval
required by applicable law; or
(iv) if as the result of the failure of any of the conditions set
forth in Exhibit A hereto (except for the Minimum Condition), the Offer
shall have terminated or expired in accordance with its terms without Sub
having purchased any shares of Common Stock pursuant to the Offer or
pursuant to the Option Agreement in accordance with its terms; provided,
--------
however, that the right to terminate this Agreement pursuant to this
-------
Section 9.1(c)(v) shall not be available to any party whose failure to
fulfill any of its obligations under this Agreement results in the failure
of any such condition.
(d) By Parent if the Board of Directors of the Company shall have
failed to recommend, or withdrawn, modified or amended in any material
respect its approval or
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<PAGE>
recommendations of the Offer or the Merger or shall have resolved to do any
of the foregoing.
Section 9.2 Effect of Termination. In the event of termination of
---------------------
this Agreement by either Parent or the Company, as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent or Sub or their respective officers or
directors (except as set forth in the last two sentences of Section 7.2 and
except for Section 7.3, which shall survive the termination); provided, however,
-------- -------
that nothing contained in this Section 9.2 shall relieve any party hereto from
any liability for any breach of this Agreement.
Section 9.3 Amendment. This Agreement may be amended by the parties
---------
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after any approval of the Merger by the Class A Holders of
the Company but, after the purchase of any shares of Common Stock pursuant to
the Offer, no amendment shall be made which decreases the Merger Consideration
or which in any way materially adversely affects the rights of stockholders of
the Company, without the further approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
Section 9.4 Waiver. At any time prior to the Effective Time, the
------
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
-40-
<PAGE>
ARTICLE X
GENERAL PROVISIONS
------------------
Section 10.1 Non-Survival of Representations and Warranties. None of
----------------------------------- ----------
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time.
Section 10.2 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally, sent by
overnight courier or telecopied (with a confirmatory copy sent by overnight
courier) to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Parent or Sub, to:
Hans E.M. van Dinter
Wolters Kluwer
Stadhouderskade 1
1000 AV Amsterdam
The Netherlands
Telefax: 31 20 607 04 16
with a copy to:
Arnold J. Schaab, Esq.
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, NY 10022
(b) if to the Company, to:
Oakleigh Thorne
CCH Incorporated
2700 Lake Cook Road
Riverwoods, Illinois 60015
with a copy to:
Mary Ann Hynes
CCH Incorporated
2700 Lake Cook Road
Riverwoods, Illinois 60015
and
-41-
<PAGE>
Deirdre von Moltke
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
and a copy to:
Douglas A. Doetsch
Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, IL 60603
Section 10.3 Interpretation. When a reference is made in this
--------------
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
Section 10.4 Counterparts. This Agreement may be executed in
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
Section 10.5 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement, including the documents and instruments referred to herein, (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (b) except for the provisions of Sections 7.9, 7.10(b)
and 7.11(a), (b)(only with respect to officers) and (d), is not intended to
confer upon any person other than the parties any rights or remedies hereunder.
Section 10.6 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
-42-
<PAGE>
Section 10.7 Assignment. Neither this Agreement nor any of the
----------
rights, interests or obligations hereunder shall be assigned by any of the
parties without the prior written consent of the other parties, except that Sub
may assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Sub of any of
its obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
Section 10.8 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions be consummated as originally contemplated to the
fullest extent possible.
Section 10.9 Enforcement of this Agreement. The parties agree that
-----------------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
-43-
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
all as of the date first written above.
WOLTERS KLUWER N.V.
By: /s/ Peter W. van Wel
---------------------
Name:
Title:
Attest: /s/ C.H. van Kempen
--------------------
Name:
Title:
WK ACQUISITION SUB, INC.
By: /s/ Bruce C. Lenz
------------------------
Name:
Title:
Attest: /s/ C.H. van Kempen
--------------------
Name:
Title:
CCH INCORPORATED
By: /s/ Oakleigh Thorne
--------------------------
Name: Oakleigh Thorne
Title: President and Chief
Executive Officer
Attest: /s/ Ralph C. Whitley
----------------------
Name: Ralph C. Whitley
Title: Executive Vice
President
-44-
<PAGE>
EXHIBIT A
Notwithstanding any other provisions of the Offer, and provided that
Sub shall not be obligated to accept for payment any shares of Common Stock
until expiration of all applicable waiting periods under the Improvements Act,
Sub shall not be required to accept for payment, purchase or pay for any shares
of Common Stock tendered, and may terminate or, subject to the terms of the
Agreement, amend the Offer and may delay the acceptance for payment of and
payment for shares of Common Stock, if (i) there shall not have been validly
tendered and not withdrawn immediately prior to the expiration of the Offer such
number of shares of Common Stock which would constitute a majority of the voting
power of the outstanding shares (determined on a fully diluted basis) of the
Class A Common Stock (the "Minimum Condition") and (ii) if at any time on or
after the date hereof and before the time of payment for any such shares of
Common Stock (whether or not any shares of Common Stock have theretofore been
accepted for payment or paid for pursuant to the Offer) any of the following
conditions exist or shall occur and remain in effect:
(a) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued, by any United States Governmental Entity which (i) prohibits or
limits or seeks to prohibit or materially limit Parent's or Sub's (x) ownership,
or seeks to impose material limitations on the ability of Parent or Sub to
acquire or hold, or exercise full rights of ownership of, any shares of Common
Stock accepted for payment pursuant to the Offer, including, without limitation,
the right to vote such shares of Common Stock or (y) operation of all or a
material portion of the Company's business or assets, or compels Parent to
dispose of or hold separate all or a material portion of the Company's business
or assets as a result of the Offer or the Merger, or (ii) prohibits, or limits
or seeks to prohibit or materially limit, or makes illegal, the acceptance for
payment, purchase or payment for shares of Common Stock or the consummation of
the Offer or the Merger and such statute, rule, regulation, judgment, order or
injunction shall remain in effect for a period of fifteen business days after
the issuance thereof; provided, however, that in order to invoke this condition
-------- -------
with
<PAGE>
respect to any such statute, rule, regulation, judgment, order or injunction
Parent shall have used its reasonable best efforts to prevent such statute,
rule, regulation, judgment, order or injunction or ameliorate the effects
thereof; provided, further, that if any such order or injunction is a temporary
-------- -------
restraining order or preliminary injunction, Parent may not, for a period of 30
days, by virtue of this condition alone amend or terminate the Offer, but may
only extend the Offer and thereby postpone acceptance for payment or purchase of
shares of Common Stock;
(b) the Agreement shall have been terminated in accordance with its
terms;
(c) the Company shall have breached any of its representations and
warranties set forth in Article IV of the Merger Agreement (other than any
matters that, in the aggregate, would not have a Material Adverse Effect on
the Company);
(d) the Company shall have failed in any material respect to perform
any obligation or covenant required by the Agreement to be performed or
complied with by it;
(e) the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to Parent or Sub its approval or
recommendation of the Offer, the Merger or this Agreement, or approved or
recommended any Takeover Proposal; or
(f) there shall have occurred and continued to exist for at least
three business days (i) any general suspension of trading in, or limitation
on prices for, securities on a national securities exchange in the United
States or (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or The Netherlands;
which, in the reasonable judgment of Sub, makes it inadvisable to proceed with
the Offer or with such acceptance for payment or payment.
The foregoing conditions may be waived by Sub, in whole or part, at
any time and from time to time, in the sole discretion of Sub. The failure by
Sub at any time to exercise any of the foregoing rights will not be deemed a
waiver of any
<PAGE>
right and each right will be deemed an ongoing right which may be asserted at
any time and from time to time.
<PAGE>
EXHIBIT 2
STOCK OPTION AND TENDER AGREEMENT
Stock Option and Tender Agreement (this "Agreement"), dated as of November
---------
27, 1995, is by and among Wolters Kluwer N.V., a corporation organized under the
laws of The Netherlands ("Purchaser"), WK Acquisition Sub, Inc., a Delaware
---------
corporation and a wholly-owned subsidiary of Purchaser ("Sub"), and the
---
Stockholders set forth in Annex I hereto (each, a "Stockholder" and
------- -----------
collectively, the "Stockholders") of CCH INCORPORATED, a Delaware corporation
------------
(the "Company").
-------
W I T N E S S E T H:
-------------------
WHEREAS, Purchaser, Sub, and the Company are entering into an Agreement and
Plan of Merger (the "Merger Agreement") pursuant to which Sub has agreed to make
----------------
a tender offer (the "Offer") for all outstanding shares of Class A Common Stock,
-----
par value $1.00 per share, and Class B Common Stock, par value $1.00 per share
(collectively, the "Common Stock"), of the Company at $55.50 per share (the
------------
"Offer Price"), net to the seller in cash, to be followed by a merger (the
- ------------
"Merger") of Sub with and into the Company.
- -------
WHEREAS, as a condition to the willingness of Purchaser to enter into the
Merger Agreement, Purchaser has required that each Stockholder agree, and in
order to induce Purchaser to enter into the Merger Agreement, each Stockholder
has agreed, among other things, (i) to tender in the Offer all of the shares of
Common Stock now owned or which may hereafter be acquired by such Stockholder
(the "Shares"), (ii) to grant Purchaser the option to purchase the Shares in
------
certain circumstances, (iii) to appoint Purchaser as each Stockholder's proxy to
vote the Shares in connection with the Merger Agreement, and (iv) with respect
to certain questions put to stockholders of the Company for a vote, to vote the
Shares, in each case, in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the adequacy of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Tender of Shares. Each Stockholder severally (and not jointly) agrees
----------------
to tender and sell to Purchaser and/or Sub pursuant to the Offer all of the
Shares legally and/or beneficially owned by such Stockholder (as set forth on
Schedules A and B hereto) (or, with respect to pledged Shares described on
- ----------- -
Schedule A or B, to use reasonable best efforts to cause the pledgees to so
- -------- - -
tender and sell, and to otherwise comply with the terms of this Agreement).
Each Stockholder severally (and not jointly) agrees that such Stockholder shall
deliver to the depositary for the Offer, no later than the tenth business day
following the commencement of the Offer, either a letter of
<PAGE>
transmittal together with the certificates for the Shares, if available, or a
"Notice of Guaranteed Delivery", if the Shares are not available; provided that
--------
each Stockholder shall use all reasonable efforts to complete the foregoing
within 5 business days following the commencement of the Offer; provided,
--------
further, any tender made after 5 business days following the commencement of the
- -------
Offer may not be made pursuant to a "Notice Guaranteed Delivery". Each
Stockholder severally (and not jointly) agrees not to withdraw any Shares
tendered into the Offer.
2. Stock Option.
------------
2.1 Grant of Stock Option. Each Stockholder hereby grants to Purchaser an
---------------------
irrevocable option (the "Stock Option") to purchase all of the Shares legally
------------
and/or beneficially owned by such Stockholder (as set forth on Schedules A and B
----------- -
hereto), at such time as Purchaser may exercise the Stock Option during the
Exercise Period (as defined below), at a purchase price equal to the Offer
Price; provided that such Shares subject to the Stock Option shall include all
--------
Class B shares so owned by such Stockholder and such number of Class A shares as
shall be equal to the lesser of (x) all Class A shares so owned by such
Stockholder and (y) such number of Class B shares.
2.2 Exercise of Stock Option. (a) Subject to Section 2.3 hereof, the
------------------------
Stock Option may be exercised by Purchaser, in whole and for all Stockholders
but not in part or for less than all Stockholders, upon termination or
expiration of the Offer, and during the period (the "Exercise Period")
---------------
commencing on the later of January 2, 1996 and the termination or expiration of
the Offer and ending on the date 10 business days after the date such period
commenced; provided that if the Merger Agreement shall terminate solely by
--------
reason of the Company's exercise of its termination rights pursuant to Section
9.1(b)(iii) of the Merger Agreement, the Exercise Period shall commence on such
date and end on the date 10 business days thereafter.
(b) In the event Purchaser wishes to exercise the Stock Option, Purchaser
shall send a written notice (an "Exercise Notice") during the Exercise Period to
---------------
each Stockholder specifying that Purchaser shall purchase the total number of
Shares held by such Stockholder and a date, which shall be a business day, and a
place, which shall be in The City of New York, for the closing of such purchase
(the "Stock Option Closing").
------------ -------
(c) Upon receipt of the Exercise Notice, each Stockholder shall be
obligated to deliver to Purchaser a certificate or certificates representing the
number of Shares held by such Stockholder (or to direct the depository for the
Offer to so deliver such certificate or certificates), in
-2-
<PAGE>
accordance with the terms of this Agreement, on the later of the date specified
in such Exercise Notice and the first business day on which the conditions
specified in Section 2.3 shall be satisfied. The date specified in such
Exercise Notice may be as early as one business day after the date of such
Exercise Notice.
2.3 Conditions to Delivery of the Shares. The obligation of the
------------------------------------
Stockholders to deliver the Shares upon exercise of the Stock Option is subject
to the following conditions:
(a) All waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, applicable to the exercise of the Stock Option and the
delivery of the Shares shall have expired or been terminated;
(b) There shall be no preliminary or 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 Shares in respect of such
exercise; and
(c) The Offer shall have expired or terminated without any shares of
Common Stock being purchased thereunder and without any violation of the Offer
by the Purchaser or Sub.
2.4 Stock Option Closings. At the Stock Option Closing, each Stockholder
---------------------
will deliver to Purchaser a certificate or certificates evidencing the number of
Shares owned by such Stockholder, each such certificate being duly endorsed in
blank and accompanied by such stock powers and such other documents as may be
necessary in Purchaser's judgment to transfer record ownership of the Shares
into Purchaser's name on the stock transfer books of the Company, and Purchaser
will purchase the delivered Shares at the Offer Price. All payments made by
Purchaser to the Stockholders pursuant to this Section 2.4 shall be made by wire
transfer of immediately available funds or by certified bank check payable to
the Stockholders, in an amount for each Stockholder equal to the product of (a)
the Offer Price and (b) the number of Shares delivered by such Stockholder in
respect of the Stock Option Closing.
2.5 Adjustments Upon Changes in Capitalization. In the event of any
------------------------------------------
change in the number of issued and outstanding shares of Common Stock by reason
of any stock dividend, subdivision, merger, recapitalization, combination,
conversion or exchange of shares, or any other change in the corporate or
capital structure of the Company (including, without limitation, the declaration
or payment of an extraordinary dividend of cash or securities) which would have
the effect of diluting or otherwise adversely affecting Purchaser's rights and
privileges under this Agreement, the number and kind of the
-3-
<PAGE>
Shares and the consideration payable in respect of the Shares shall be
appropriately and equitably adjusted to restore to Purchaser its rights and
privileges under this Agreement. Without limiting the scope of the foregoing,
in any such event, at the option of Purchaser, the Stock Option shall represent
the right to purchase, in addition to the number and kind of Shares which
Purchaser would be entitled to purchase pursuant to the immediately preceding
sentence, whatever securities, cash or other property the Shares subject to the
Stock Option shall have been converted into or otherwise exchanged for, together
with any securities, cash or other property which shall have been distributed
with respect to such Shares.
3. Representations and Warranties of Stockholders.
----------------------------------------------
Each Stockholder severally (and not jointly), represents and warrants to
Purchaser and Sub that:
3.1 Power and Authority. Except as disclosed in writing to Purchaser
-------------------
(including in Schedules A and B), such Stockholder has all necessary power and
--------- - -
authority to enter into this Agreement and to sell, assign, transfer and deliver
to Sub, pursuant to the terms and conditions of this Agreement and the Merger
Agreement, the Shares legally and/or beneficially owned by such Stockholder (as
set forth on Schedules A and B hereto);
----------- -
3.2 No Other Rights. Except for this Agreement and as shown on Schedule A
--------------- -------- -
or B, there are no outstanding options, warrants or rights to purchase or
-
acquire such Shares of such Stockholder;
3.3 Only Shares. Except as disclosed on Schedule A or B, such Shares of
----------- -------- - -
such Stockholder subject to this Agreement are the only shares of Common Stock
owned of record, or owned beneficially with the power to sell, by such
Shareholder;
3.4 Title. Except as disclosed on Schedule A or B, such Stockholder has,
----- -------- - -
and upon the closing of the Offer Sub shall receive (without regard to the
disclosure on Schedule A or B other than the disclosure as to loans extended to
---------- -
Daniel K. Thorne by Metropolitan Life), good and marketable title to such Shares
of such Stockholder, free and clear of all liens, claims, encumbrances and
security interests of any nature whatsoever; and
3.5 Validity. This Agreement is the legal, valid and binding agreement of
--------
such Stockholder enforceable against such Stockholder in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
-4-
<PAGE>
3.6 Non-Contravention. Except for certain pledge agreements as disclosed
-----------------
on Schedule A or B, the execution and delivery of this Agreement do not, and the
-------- - -
consummation of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation under,
or result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of such Stockholder under, any provision of
(i) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license applicable
to such Stockholder or (ii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to such Stockholder or any of its
properties or assets, other than any such conflicts, violations, defaults,
rights, liens, security interests, charges or encumbrances that, individually or
in the aggregate, would not have a material adverse effect on the ability of
such Stockholder to perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated hereby.
4. Representations and Warranties of Purchaser and Sub. Purchaser and Sub
---------------------------------------------------
hereby represent and warrant to each Stockholder as follows:
4.1 Power and Authority. Each of Purchaser and Sub has all necessary
-------------------
power and authority to enter into the Agreement, and to purchase the Shares
pursuant to the terms and conditions of this Agreement and the Merger Agreement;
4.2 Sufficient Funds. Purchaser has, or prior to the date of the Stock
----------------
Option Closing will have, all of the funds necessary to consummate the
transactions contemplated hereby on a timely basis and to pay any and all
related fees and expenses;
4.3 Validity. This Agreement is the legal, valid and binding agreement of
--------
Purchaser and Sub enforceable against them in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditor's rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought;
4.4 Non-Contravention. The execution and delivery of this Agreement do
-----------------
not, and the consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
under, or result in the creation
-5-
<PAGE>
of any lien, security interest, charge or encumbrance upon any of the properties
or assets of Purchaser or any of its Significant Subsidiaries (as defined in the
Merger Agreement) under, any provision of (i) the Charter or Bylaws of Purchaser
(or any comparable organizational documents) or any provision of the comparable
charter or organizational documents of any of its Significant Subsidiaries, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
Parent or any of its Significant Subsidiaries or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Purchaser or
any of its Significant Subsidiaries or any of their respective properties or
assets, other than, in the case of clauses (ii) or (iii), any such conflicts,
violations, defaults, rights, liens, security interests, charges or encumbrances
that, individually or in the aggregate, would not have a Material Adverse Effect
(as defined in the Merger Agreement) on Purchaser, materially impair the ability
of Purchaser to perform its obligations hereunder or prevent the consummation of
any of the transactions contemplated hereby.
5. Covenants of Stockholders.
-------------------------
5.1 No Disposition or Encumbrance of Shares; No Acquisition of Shares.
-----------------------------------------------------------------
(a) Each Stockholder severally (and not jointly) covenants and agrees that,
except as contemplated by this Agreement, no Stockholder shall, and no
Stockholder shall 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, agreement, limitation on such Stockholder's
voting rights, charge or other encumbrance of any nature whatsoever with respect
to the Shares now legally and/or beneficially owned by, or that may hereafter be
acquired by, such Stockholder.
(b) Each Stockholder hereby severally (and not jointly) covenants and
agrees that it shall not, and shall not offer to agree to, acquire any
additional shares of Common Stock, or options, warrants or other rights to
acquire shares of Common Stock, without the prior written consent of Purchaser.
5.2 No Solicitation of Transactions. Each Stockholder shall immediately
-------------------------------
cease any existing discussions or negotiations, if any, with any parties
conducted heretofore 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. From and after the date hereof, no Stockholder shall, directly or
indirectly, solicit or initiate any takeover proposal or offer from any person,
or engage in discussions or negotiations relating thereto (including by way of
furnishing information). Each Stockholder shall
-6-
<PAGE>
promptly advise Purchaser of the receipt of any Takeover Proposal. As used in
this Agreement, "Takeover Proposal" shall mean any proposal or offer, other than
a proposal or offer by Purchaser or any of its affiliates, for a tender or
exchange offer, a merger, consolidation or other business combination involving
the Company or any subsidiary of the Company or any proposal to acquire in any
manner a substantial equity interest in, or a substantial portion of the assets
of, the Company or any of its subsidiaries or any other transaction the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the Offer or the Merger or which would reasonably be
expected to dilute materially the benefits to Parent of the transactions
contemplated hereby or by the Merger Agreement.
5.3 Stockholders' Representative. Each Stockholder hereby appoints
----------------------------
Oakleigh Thorne as Stockholders' Representative to act as Stockholders'
Representative for purposes of giving and receiving notices under this
Agreement.
6. Covenants of Purchaser and Sub.
-------------------------------
6.1 No Sale. Neither Purchaser nor Sub will sell, offer to sell or
-------
otherwise dispose of the Shares in violation of the Securities Act of 1993, as
amended.
6.2 Performance. Purchaser and Sub shall perform in all material respects
-----------
all of their respective obligations under the Merger Agreement. If Purchaser
and Sub exercise the Stock Option or any of their other rights hereunder at a
time when the Merger Agreement shall have terminated, Purchaser and Sub
nevertheless agree to effect a merger pursuant to which each outstanding share
of common stock of the Company (other than held by Purchaser, Sub, the Company
or any subsidiary of the Company) shall be converted into the right to receive
not less than $55.50 per share, net to the seller, in cash at the earliest
practicable date after the Stock Option Closing.
7. Voting Agreement; Proxy of Stockholder.
--------------------------------------
7.1 Voting Agreement. (a) Each Stockholder hereby severally (and not
----------------
jointly) agrees that, during the time this Agreement is in effect, at any
meeting of the stockholders of the Company, however called, and in any action by
written consent of the stockholders of the Company, such Stockholder shall (i)
vote all of the Shares legally and/or beneficially owned by such Stockholder in
favor of the Merger, the Merger Agreement (as amended from time to time) and any
of the transactions contemplated by the Merger Agreement; (ii) vote such Shares
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) vote the Shares against any
action or
-7-
<PAGE>
agreement that would materially impede, interfere with or attempt to discourage
the Offer or the Merger.
(b) Each Stockholder hereby severally (and not jointly) further agrees
that, if the Merger Agreement shall terminate solely by reason of the Company's
exercise of its termination rights pursuant to Section 9.1(b)(iii) of the Merger
Agreement, and for as long as the Exercise Period has not ended, such
Stockholder (i) shall attend or otherwise participate in all duly called
stockholder meetings and in all actions by written consent of stockholders, (ii)
shall vote the Shares legally and/or beneficially owned by such Stockholder to
enlarge the Board of Directors of the Company to provide the Purchaser with a
majority of members of the Board elected by the Purchaser, (iii) shall not,
without the prior written consent of Purchaser, vote any of such Shares in favor
of any of the actions described in Section 6.1(a), (b), (e) or (f) of the Merger
Agreement and (iv) shall otherwise vote such Shares, and use its reasonable
efforts in its capacity as stockholder of the Company, to prevent the actions
described in Section 6.1(a), (b), (e) or (f) of the Merger Agreement.
(c) Each Purchaser and Sub agree that the covenants of each Stockholder
under this Section 7.1 relate only to each Stockholder in its capacity as
stockholder and not to any other capacity in which such person may be acting.
7.2 Irrevocable Proxy. In the event that any Stockholder shall breach its
-----------------
covenant set forth in Section 7.1, such Stockholder (without any further action
on such Stockholder's part) shall be deemed to have hereby irrevocably appointed
Purchaser as the attorney and proxy of such Stockholder pursuant to the
provisions of section 212 of the DGCL, with full power of substitution, to vote,
and otherwise act (by written consent or otherwise) with respect to all shares
of Common Stock, including the Shares, that such Stockholder is entitled to vote
at any meeting of stockholders of the Company (whether annual or special and
whether or not an adjourned or postponed meeting) or consent in lieu of any such
meeting or otherwise, to vote such shares as set forth in Section 7.1 above;
provided that in any such vote or other action pursuant to such proxy, Purchaser
- --------
shall not have the right (and such proxy shall not confer the right) to vote to
reduce the Offer Price or the Merger Consideration (as defined in the Merger
Agreement) or to otherwise modify or amend the Merger Agreement to reduce the
rights or benefits of the Company or any stockholders of the Company (including
the Stockholders) under the Offer or the Merger Agreement or to reduce the
obligations of Purchaser and/or Sub thereunder; and provided further, that this
-------- -------
proxy shall irrevocably cease to be in effect at any time that (x) the Offer
shall have expired or terminated without any share of Common Stock being
purchased thereunder in violation of the terms of the Offer or (y) Purchaser or
Sub shall be in violation of the terms of this
-8-
<PAGE>
Agreement. THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN
INTEREST. Each Stockholder hereby revokes, effective upon the execution and
delivery of the Merger Agreement by the parties thereto, all other proxies and
powers of attorney with respect to the Shares that Stockholder may have
heretofore appointed or granted, and no subsequent proxy or power of attorney
(except in furtherance of Stockholder's obligations under 7.1 hereof) shall be
given or written consent executed (and if given or executed, shall not be
effective) by Stockholder with respect thereto so long as this Agreement remains
in effect. Each Stockholder shall forward to Purchaser any proxy cards that
such Stockholder receives with respect to the Offer or the Merger Agreement.
8. Effectiveness; Termination; No Survival. This Agreement shall become
---------------------------------------
effective upon its execution by each of the parties hereto and upon the
execution of the Merger Agreement. This Agreement may be terminated at any time
by mutual written consent of the parties hereto. Other than the Stock Option,
which shall be governed by Section 2.2(a), this Agreement shall terminate,
without any action by the parties hereto, on the date on which the Merger
Agreement terminates in accordance with its terms. No such termination shall
relieve any party from liability for any breach of this Agreement. The
representations and warranties of the parties set forth in Sections 3 and 4
hereof (other than Sections 3.1, 3.2, 3.4 and 3.5 which shall survive regardless
---
of any investigation made by the Purchaser) shall not survive the termination of
this Agreement (or, in the event the Stock Option is exercised, the purchase of
the Shares pursuant thereto).
9. Miscellaneous.
-------------
9.1 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail, postage prepaid, with return receipt
requested, as follows:
If to Purchaser or Sub, to:
Wolters Kluwer N.V.
Stadhouderskade 1
P.O. Box 818
1000 AV Amsterdam
The Netherlands
Attention: Hans E.M. van Dinter
-9-
<PAGE>
with a copy to:
Pryor, Cashman, Sherman & Flynn
410 Park Avenue
New York, New York 10022
Attention: Arnold J. Schaab, Esq.
If to the Stockholders, to the Stockholders'
Representative at:
Oakleigh Thorne
CCH Incorporated
2700 Lake Cook Road
Riverwoods, Illinois
60015-3888
with a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Douglas A. Doetsch
and a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Deirdre M. von Moltke
and a copy to:
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004-2594
Attention: Theodore S. Lynn
9.2 Waiver and Amendment. Any provision of this Agreement may be waived
--------------------
at any time by the party which is entitled to the benefits thereof and this
Agreement may be amended or supplemented at any time. No such waiver, amendment
or supplement shall be effective unless in writing and signed by the party
sought to be bound thereby.
9.3 No Prior Agreements. This Agreement and the Merger Agreement contain
-------------------
the entire agreement, and supersede all other prior agreements and
understandings, both written and oral, among the parties hereto with respect to
the subject matter hereof. This Agreement is not intended to confer upon any
other person any rights or remedies hereunder.
9.4 Successors and Assigns. This Agreement shall not be assignable,
----------------------
except that Parent or Sub may assign its rights
-10-
<PAGE>
under this Agreement to another direct or indirect wholly-owned subsidiary of
Parent, but such assignment shall not relieve Parent or Sub of their respective
obligations hereunder. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by and against the parties hereto and their
successors (including administrators and executors of individuals) and permitted
assigns.
9.5 Remedies. Parent and Sub, on the one hand, and the Stockholders, on
--------
the other hand, each acknowledge and agree that the other would be irreparably
damaged in the event any of the provisions of this Agreement were not performed
by the other in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that each party shall be entitled to an injunction or
injunctions to redress the breaches of this Agreement and to specifically
enforce the terms and provisions hereof in any action instituted in any court of
the United States or any state thereof having jurisdiction, in addition to any
other remedy to which such party may be entitled at law or in equity.
9.6 Expenses. Each of the parties shall pay its own expenses in
--------
connection with the negotiation, execution and performance of the Agreement.
9.7 Counterparts. This Agreement and any amendments hereto may be
------------
executed in two or more counterparts, each of which shall be considered to be an
original, but of which together shall constitute the same instrument.
9.8 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the state of Delaware, without regard to the
principles of conflicts of laws.
9.9 Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
-11-
<PAGE>
10. Effect of Headings. The section headings herein are for convenience
------------------
only and shall not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement to take effect
as of the date set forth above.
WOLTERS KLUWER N.V.
By: /s/ Peter W. van Wel
---------------------
Name:
Title:
WK ACQUISITION SUB, INC.
By: /s/ Bruce C. Lenz
---------------------
Name:
Title:
-12-
<PAGE>
Annex I
Signatures of Stockholders
-13-
<PAGE>
/s/ Oakleigh B. Thorne /s/ Oakleigh B. Thorne
- ---------------------- ----------------------
OAKLEIGH B. THORNE, OAKLEIGH B. THORNE,
individually as beneficiary of CCH Employees'
Profit Sharing Plan
<PAGE>
/s/ Daniel K. Thorne
- --------------------
DANIEL K. THORNE,
individually
/s/ Daniel K. Thorne /s/ Theodore S. Lynn
- --------------------- --------------------
DANIEL K. THORNE THEORDORE S. LYNN,
as Trustee of as Trustee of
Daniel K. Thorne 1995 Daniel K. Thorne 1995
Charitable Remiander Trust Charitable Remainder Trust
U/A dated 10/31/95 U/A dated 10/31/95
<PAGE>
/s/ Oakleigh B. Thorne /s/ Potter Palmer
- ---------------------------- ---------------------------
OAKLEIGH B. THORNE, POTTER PALMER,
as Trustee of Trust as Trustee of Trust
f/b/o Oakleigh B. Thorne f/b/o Oakleigh B. Thorne
U/A dated 12/23/70 U/A dated 12/23/70
/s/ Oakleigh B. Thorne /s/ Potter Palmer
- ---------------------------- ---------------------------
OAKLEIGH B. THORNE, POTTER PALMER,
as Trustee of Trust as Trustee of Trust
f/b/o Honore T. Wamsler f/b/o Honore T. Wamsler
U/A dated 12/23/70 U/A dated 12/23/70
/s/ Oakleigh B. Thorne /s/ Potter Palmer
- ---------------------------- ---------------------------
OAKLEIGH B. THORNE, POTTER PALMER,
as Trustee of Trust as Trustee of Trust
f/b/o Charlotte T. Bordeaux f/b/o Charlotte T. Bordeaux
U/A dated 12/23/70 U/A dated 12/23/70
<PAGE>
/s/ Oakleigh B. Thorne /s/ John Akin
- ---------------------- --------------
OAKLEIGH B. THORNE, JOHN AKIN,
as Trustee of Trust as Trustee of Trust
U/W Oakleigh L. Thorne U/W Oakleigh L. Thorne
f/b/o Dorothy Forbes Thorne f/b/o Dorothy Forbes Thorne
<PAGE>
/s/ Oakleigh B. Thorne /s/ George Whalen, Jr.
- -------------------------------- ---------------------------------
OAKLEIGH B. THORNE GEORGE WHALEN, JR.
President and Member, Investment Member, Investment Committee
Committee Millbrook Tribute Gardens, Inc.
Millbrook Tribute Gardens, Inc.
/s/ Oakleigh B. Thorne /s/ George Whalen, Jr.,
- -------------------------------- ---------------------------------
OAKLEIGH B. THORNE GEORGE WHALEN, JR.,
as Trustee of Trust as Trustee of Trust
U/W Margaret Parshall U/W Margaret Parshall
f/b/o Helen C. King f/b/o Helen C. King
<PAGE>
/s/ Oakleigh B. Thorne /s/ Mark M. Collins
- -------------------------------- ------------------------------
OAKLEIGH B. THORNE MARK M. COLLINS
as Trustee of Trust as Trustee of Trust
U/A dated 12/15/76 U/A dated 12/15/76
<PAGE>
/s/ Oakleigh Thorne
- -------------------
OAKLEIGH THORNE,
individually
<PAGE>
/s/ Oakleigh Thorne /s/ Oakleigh Thorne
- ----------------------------- ------------------------------
OAKLEIGH THORNE, OAKLEIGH THORNE,
as Trustee of as Trustee of
Thorne GST Trust Oakleigh Hewson Thorne 1995 Trust
U/A dated 9/5/95 U/A dated 9/5/95
<PAGE>
/s/ Oakleigh B. Thorne /s/ Oakleigh B. Thorne
- ------------------------------- -------------------------------
OAKLEIGH B. THORNE, OAKLEIGH B. THORNE,
as Trustee of Trust as Trustee of Trust
U/W Oakleigh L. Thorne U/W Oakleigh L. Thorne
f/b/o Oakleigh B. Thorne f/b/o Honore T. Wamsler
/s/ OAKLEIGH B. THORNE
- ------------------------------
OAKLEIGH B. THORNE
as Trustee of Trust
U/W Oakleigh L. Thorne
f/b/o Charlotte T. Bordeaux
<PAGE>
/s/ Henry F. Thorne 11/26/95 /s/ Henry F. Thorne 11/26/95
- ---------------------------------- ----------------------------------
HENRY FLEMING THORNE, HENRY FLEMING THORNE,
as Trustee of as Trustee of
Maxwell Edward Thorne 1995 Trust Alexander Lewis Thorne 1995 Trust
U/A dated 9/5/95 U/A dated 9/5/95
<PAGE>
/s/ Honore T. Wamsler
- ---------------------
HONORE T. WAMSLER
individually
<PAGE>
/s/ Oakleigh B. Thorne /s/ Henry S. Gooss
- ---------------------------- ---------------------------
OAKLEIGH B. THORNE, CHEMICAL BANK,
as Trustee of Trust as Trustee of Trust
f/b/o Oakleigh B. Thorne f/b/o Oakleigh B. Thorne
U/A dated 1/27/74 U/A dated 1/27/74
/s/ Oakleigh B. Thorne /s/ Henry S. Gooss
- ---------------------------- ---------------------------
OAKLEIGH B. THORNE, CHEMICAL BANK,
as Trustee of Trust as Trustee of Trust
f/b/o Honore T. Wamsler f/b/o Honore T. Wamsler
U/A dated 1/27/74 U/A dated 1/27/74
/s/ Oakleigh B. Thorne /s/ Henry S. Gooss
- ---------------------------- ---------------------------
OAKLEIGH B. THORNE, CHEMICAL BANK,
as Trustee of Trust as Trustee of Trust
f/b/o Charlotte T. Bordeaux f/b/o Charlotte T. Bordeaux
U/A dated 1/27/74 U/A dated 1/27/74
<PAGE>
SCHEDULE A
FIDUCIARY SHAREHOLDERS
----------------------
Shares
Trust Trustee (and Class)
----- ------- -----------
Trust f/b/o Oakleigh B. 102,000 (A)
Oakleigh B. Thorne Thorne 102,000 (B)
dated 12/23/70 Potter Palmer
Trust f/b/o Oakleigh B. 106,000 (A)
Honore T. Wamsler Thorne 106,000 (B)
U/A dated 12/23/70 Potter Palmer
Trust f/b/o Oakleigh B. 100,000 (A)
Charlotte T. Bordeaux Thorne 100,000 (A)
U/A dated 12/23/70 Potter Palmer
Trust f/b/o Oakleigh B. 637,616 (A)
Oakleigh B. Thorne Thorne 637,616 (B)
U/A dated 1/27/74 Chemical Bank
Trust f/b/o Oakleigh B. 637,618 (A)
Honore T. Wamsler Thorne 637,618 (B)
U/A dated 1/27/74 Chemical Bank
Trust f/b/o Oakleigh B. 637,618 (A)
Charlotte T. Bordeaux Thorne 637,618 (B)
U/A dated 1/27/74 Chemical Bank
Trust U/W Oakleigh B. 1,140,242 (A)
Oakleigh L. Thorne Thorne 1,140,242 (B)
f/b/o Oakleigh B. Chemical Bank
Thorne
Trust U/W Oakleigh B. 1,057,000 (A)
Oakleigh L. Thorne Thorne 1,057,000 (B)
f/b/o Honore T. Wamsler Chemical Bank
Trust U/W Oakleigh B. 1,127,742 (A)
Oakleigh L. Thorne Thorne 1,127,742 (B)
f/b/o Charlotte T. Chemical Bank
Bordeaux
Trust U/W Oakleigh B. 1,268,816 (A)
Oakleigh L. Thorne Thorne 1,268,816 (B)
f/b/o Dorothy Forbes John Akin
Thorne
<PAGE>
Shares
Trust Trustee (and Class)
----- ------- -----------
Trust U/A Oakleigh B. 489,598 (A)
dated 12/15/76 Thorne 489,598 (B)
Mark M. Collins
Thorne GST Trust Oakleigh Thorne 93,567 (B)
U/A dated 9/5/95
Oakleigh Hewson Thorne Oakleigh Thorne 935 (B)
1995 Trust
U/A date 9/5/95
Maxwell Edward Thorne Henry F. Thorne 935 (B)
1995 Trust
U/A dated 9/5/95
Alexander Lewis Thorne Henry F. Thorne 935 (B)
1995 Trust
U/A dated 9/5/95
Trust U/W Oakleigh B. 94,944 (A)
Margaret Parshall Thorne 94,944 (B)
f/b/o Helen C. King George Whalen, Jr.
Daniel K. Thorne 1995 Daniel K. Thorne 177,853 (B)
Charitable Remainder Theodore S. Lynn ------------
Trust
U/A dated 10/31/95
Total (A) 7,399,194
Total (B) 7,673,419
----------
Grand Total 15,072,613
==========
<PAGE>
SCHEDULE B
INDIVIDUAL SHAREHOLDINGS
------------------------
Shares
Person (and Class)
------ -----------
Oakleigh B. Thorne/1/ 341,469.6 (A)
255,073.7 (B)
Honore T. Wamsler 81,242 (A)
Daniel K. Thorne/2/ 1,546,852 (A)
1,368,999 (B)
Millbrook Tribute Gardens, Inc. 200,009 (A)
200,009 (B)
Oakleigh Thorne 200 (A)
200 (B)
-------
Total (A) 2,169,772.6
Total (B) 1,824,281.7
-----------
Grand Total 3,994,054.3
===========
The representations and warranties made in the foregoing Agreement are subject
to the footnotes below.
- ---------------
/1/ Oakleigh B. Thorne's holdings include 24,157.63 shares of Class A and
34,133.73 shares of Class B in the CCH Employees' Savings Plan. Mr. Thorne
does not have legal title to said shares. 214,922 of his Class A shares are
pledged.
/2/ All of Daniel K. Thorne's Class B shares and no more than 57,000 of his
Class A shares are pledged against loans made by Metropolitan Life (pledged
shares being 41,426 Class A shares and 110,000 Class B shares) and Bankers
Trust (pledged shares being all such remaining Class A shares and Class B
shares), and the pledgees are being requested to cooperate as contained in
a letter of this date denominated an "Irrevocable Instruction".
<PAGE>
November 27, 1995
Wolters Kluwer N.V.
P.O. Box 818
1000 AV Amsterdam
Re: CCH Incorporated (the "Company")
--------------------------------
Gentlemen:
Reference is hereby made to that certain Agreement and Plan of Merger,
dated as of the date hereof, among Wolters Kluwer N.V., WK Acquisition Sub, Inc.
and the Company (the "Merger Agreement"). Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Merger Agreement.
The undersigned hereby agrees that, prior to the expiration of the
Offer, he shall deliver to the designated depositary for the Offer a letter
indicating his intention to withdraw from the Offer that number of shares of
Class A Common Stock of the Company that are necessary to cause the total number
of shares of Class B Common Stock of the Company tendered by all stockholders in
the Offer and accepted by Sub to equal the total number of shares of Class A
Common Stock of the Company tendered by all stockholders in the Offer and
accepted by Sub. As soon as practicable following the expiration of the Offer,
you shall notify the undersigned in writing as to the exact number of shares of
Class A Common Stock of the Company, if any, that he will need to withdraw from
the Offer in accordance with the immediately preceding sentence and the
undersigned shall promptly thereafter withdraw such shares of Class A Common
Stock of the Company from the Offer.
<PAGE>
Please confirm your agreement to the foregoing by signing the attached
copy of this letter as indicated below.
Very truly yours,
/s/ Oakleigh Thorne
-------------------------
Oakleigh Thorne
Agreed to an Accepted:
WOLTERS KLUWER N.V.
/s/ Peter W. van Wel
By: ____________________
Name:
Title:
<PAGE>
EXHIBIT 3
CCH INCORPORATED
2700 Lake Cook Road
Riverwoods, Illinois 60015
----------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about December 1, 1995 as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") to holders of the Shares of the Company. Capitalized terms
used and not otherwise defined herein shall have the meaning set forth in the
Schedule 14D-9. You are receiving this Information Statement in connection
with the possible election of persons designated by Offeror to a majority of
the seats on the Board of Directors of the Company (the "Board").
Pursuant to the Merger Agreement, on December 1, 1995, the Offeror commenced
the Offer. The Offer is scheduled to expire at 5:00 P.M., New York City time,
on January 4, 1996, unless extended.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934 and Rule 14f-1 thereunder. You are urged to read this
Information Statement carefully. You are not, however, required to take any
action.
The information contained in this Information Statement (including
information incorporated by reference) concerning Parent and the Offeror and
the Designees (as defined herein) has been furnished to the Company by Parent
and the Offeror and the Company assumes no responsibility for the accuracy or
completeness of such information.
GENERAL INFORMATION REGARDING THE COMPANY
GENERAL
The Class A Common Stock is the only class of voting securities of the
Company outstanding. Each share of Class A Common Stock has one vote. As of
November 27, 1995, (i) there were 16,638,512 shares of Class A Common Stock
outstanding, (ii) 16,397,122 shares of Class B Common Stock outstanding and
(iii) outstanding employee stock options granted under the Company's 1993
Long-Term Incentive Plan to purchase an aggregate of 1,217,000 shares of Class
B Common Stock. The Board currently consists of eight members and there are
currently no vacancies on the Board. Each director serves a term of one year
or until his successor is duly elected and qualified or until his earlier
death, resignation or removal.
DESIGNEES
Pursuant to the Option Agreement the Stockholders severally agreed that, if
the Merger Agreement shall terminate solely by reason of the Company's
Fiduciary Duty Termination, and for as long as the Exercise Period (as defined
in the Merger Agreement) has not ended, the Stockholders shall vote the Shares
owned by such Stockholders to enlarge the Board to provide the Offeror with a
majority of members of the Board elected by the Offeror (the "Designees").
Offeror has informed the Company that it will choose the Designees from the
directors and executive officers listed in the section herein entitled
"Information With Respect to Designees." Offeror has informed the Company that
each of the directors and executive officers listed in such section has
consented to act as a director, if so designated. The business address of
Parent and Offeror is Stadhouderskade 1, 1054 ES Amsterdam, The Netherlands.
I-1
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
DIRECTORS OF THE COMPANY
The names of the current directors, their ages as of March 2, 1995 and
certain other information about them are set forth below.
<TABLE>
<CAPTION>
YEAR FIRST POSITION WITH THE COMPANY OR
ELECTED A PRINCIPAL OCCUPATION DURING THE PAST FIVE
NAME OF DIRECTOR AGE DIRECTOR YEARS
- ---------------- --- ---------- -------------------------------------------
<S> <C> <C> <C>
John C. Burton...... 62 1979 John C. Burton has been a Director of the
Company since 1979. Mr. Burton has been
Ernst & Young Professor of Accounting and
Finance at Columbia University, New York,
New York, since 1962 except from 1976 to
1977, when he served as Deputy Mayor for
Finance for the City of New York, and from
1972 to 1976, when he served as Chief Ac-
countant of the Securities and Exchange
Commission. Mr. Burton is also a director
of Scholastic, Inc., Manville Corporation,
CPAC, Inc., and Salomon Swapco, a wholly-
owned subsidiary of Salomon Brothers Inc,
and was a Governor at Large for the Na-
tional Association of Securities Dealers
from 1991 to 1994.
William C. Egan 49 1993 Mr. Egan has served as the Executive Vice
III................ President of Consumer Products Worldwide of
Johnson & Johnson Inc. since January 1995.
He also served as the President of the Arm
& Hammer Division of Church & Dwight, Inc.,
and Chairman of Church & Dwight, Ltd. (Can-
ada) from 1990 to 1991.
Robert H. Mundheim.. 62 1981 Mr. Mundheim has served as Executive Vice
President and General Counsel for Salomon,
Inc. and a Managing Director and member of
the Executive Committee of Salomon Brothers
Inc since 1992. He served as Co-Chairman of
the law firm of Fried, Frank, Harris,
Shriver and Jacobson from 1989 to 1992 and
University Professor of Law and Finance
Emeritus, University of Pennsylvania Law
School. Mr. Mundheim has been a member of
the faculty of the University of Pennsylva-
nia since 1965, except for the period from
1977 to 1980, when he served as General
Counsel of the Treasury Department. He also
served the National Association of Securi-
ties Dealers as Governor at Large from 1988
to 1991 and Vice Chairman-Finance, 1990-
1991.
Daniel K. Thorne.... 43 1977 Mr. Thorne is a private investor and a Di-
rector of Imperial Holly Corporation.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST POSITION WITH THE COMPANY OR
ELECTED A PRINCIPAL OCCUPATION DURING THE PAST FIVE
NAME OF DIRECTOR AGE DIRECTOR YEARS
- ---------------- --- ---------- -------------------------------------------
<S> <C> <C> <C>
Edward L. Massie.... 65 1981 Edward L. Massie served as President, Chief
Executive Officer and a member of the Exec-
utive Committee of the Company from 1991 to
April, 1995. Mr. Massie also served as Ex-
ecutive Vice President of the Company from
1980 to 1991.
Oakleigh B. Thorne.. 62 1959 Oakleigh B. Thorne has served as Chairman
of the Company since 1973. Mr. Thorne is
also a Director of the Bank of Millbrook
and Fiduciary Trust Company International.
Oakleigh Thorne..... 37 1988 Oakleigh Thorne has served as President and
Chief Executive Officer since April, 1995,
as a member of the Company's Executive Com-
mittee since 1992 and as Executive Vice
President of the Company from 1991 to 1992.
Mr. Thorne also served as the President of
CCH Legal Information Services, Inc. from
1988 to 1992.
Ralph C. Whitley.... 52 1993 Ralph C. Whitley has been a member of the
Company's Executive Committee since 1992.
Mr. Whitley also served as the President of
CCH Computax, Inc. ("Computax") from 1992
to 1994 and Executive Vice President of
Computax from 1978 to 1992.
</TABLE>
Each of the directors has been engaged in the principal occupation(s)
described above during the past five (5) years. Oakleigh B. Thorne and Daniel
K. Thorne are brothers and Oakleigh Thorne is a son of Oakleigh B. Thorne.
William C. Egan III is a cousin (by marriage) of Oakleigh B. Thorne.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During 1994 there were 11 meetings of the Board. The Board has an Audit
Committee and a Compensation Committee. The Board does not have a standing
nominating committee or any committee serving similar functions, nor is there
an executive committee of the Board. The Executive Committee of the Company
mentioned above is an executive management committee responsible for day-to-
day operations, but it cannot act in lieu of the Board.
The Audit Committee of the Board consists of John C. Burton (Chairman),
Robert H. Mundheim and Daniel K. Thorne and met two times during 1994. The
principal functions of the Audit Committee of the Board are to recommend
independent auditors to be engaged by the Board, to review with the auditors
the scope and results of the audit engagement, to review the Company's
financial statements, financial accounting policies, and decisions embodied in
the annual financial statements, and to exercise general oversight with
respect to the Company's internal accounting control systems.
The Compensation Committee consists of Robert H. Mundheim (Chairman), John
C. Burton and William C. Egan, III, and met five times during 1994. The
principal function of the Compensation Committee is to determine the
compensation of all executive officers of the Company, to recommend to the
Board the terms of principal compensation plans requiring stockholder approval
or benefiting executive officers, and to administer the plans.
I-3
<PAGE>
Each non-employee director is entitled to receive $30,000 annually for
serving as a director of the Company. Employee directors receive $250 for each
meeting of the Board they attend. The directors who chair the Audit Committee
and the Compensation Committee each receive an additional $5,000 annually for
such services, and directors serving on those committees receive $500 for each
Audit or Compensation Committee meeting they attend. Each non-employee
director made a one-time irrevocable election in 1993 (or, if later, when such
non-employee director began serving on the Board) to substitute phantom units
of Class B Common Stock for all or a portion of such director's next ten years
of cash compensation for services as a director. Such phantom units will be
settled ten years after the deferral election was made or the director's
retirement from the Board, whichever is earlier, in an amount equal to the
then fair market value of the corresponding Class B Common Stock.
The number of phantom stock units credited to a director's account is
determined by dividing the amount of the director's deferred compensation by
an amount equal to 75% of the price of the Class B Common Stock on February
11, 1993, in the case of a director elected on March 15, 1993, or, in the case
of a director joining the Board thereafter, by an amount equal to 75% of the
price of the Class B Common Stock on the date the director becomes eligible to
participate in the plan. In addition, each director's phantom stock account is
credited with phantom dividends in the form of additional phantom stock. The
amount of phantom stock so credited is calculated by dividing the amount of
dividends that would have been paid on the phantom shares already credited to
the director's account had those phantom shares been actual Class B Common
Stock by a amount equal to 75% of the price of Class B Common Stock on
February 11, 1993, in the case of a director elected on March 15, 1993, or, in
the case of a director joining the Board thereafter, by an amount equal to 75%
of the price of the Class B Common Stock on the date the director becomes
eligible to participate in the plan.
In addition, non-employee directors who do not have benefits under any other
employee retirement plan of the Company are entitled to a retirement annuity
ranging from 50% (for 10 years of service) to 100% (for 20 years of service)
of the amount payable to such directors for services during the final year of
service. Benefits under this plan will normally begin at the later of the
attainment of age 70 or retirement from the Board. The retired director will
receive full benefits for life or for the number of years of service on the
Board, whichever is less.
EXECUTIVE OFFICERS OF THE COMPANY
The following individuals currently serve as executive officers of the
Company:
<TABLE>
<CAPTION>
NAME POSITION(S) HELD
- ---- ----------------
<S> <C>
Edward L. Massie*......................... President and Chief Executive Officer
Jonathan Copulsky......................... Senior Officer, Product/Customer Mgt.
Richard G. Honor.......................... Senior Officer, International
Oakleigh B. Thorne........................ Chairman of the Board
Oakleigh Thorne*.......................... Member of Executive Committee
Ralph C. Whitley.......................... Member of Executive Committee
Hugh J. Yarrington........................ Senior Officer, Knowledge
</TABLE>
- --------
*In April, 1995 Oakleigh Thorne was elected President and Chief Executive
Officer.
I-4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to, earned by or
paid to the Company's President and Chief Executive Officer and each of the
Company's six most highly compensated Executive Officers (other than the
President and Chief Executive Officer) whose total annual salary and bonus
exceeded $100,000 for all services rendered in all capacities to the Company
and its subsidiaries for the Company's fiscal year ended December 31, 1994.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS PAYMENTS
--------------------------------------- --------------------- --------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION(1)
POSITION YEAR SALARY($) BONUS($) ($) ($) SARS(#) ($) $
------------------ ---- --------- -------- ------------ ---------- ---------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EDWARD L. MASSIE*
President and Chief
Executive Officer...... 1994 405,962 196,800 -- -- 35,000 -- 6,400
President and Chief
Executive Officer...... 1993 391,546 153,734 -- -- 120,000 -- 7,613
President and Chief
Executive Officer...... 1992 380,000 110,000 -- -- -- -- 13,459
JONATHAN COPULSKY
Sr. Officer,
Product/Customer Mgt... 1994 202,308 87,571 -- -- 20,000 -- 2,824
Sr. Officer,
Product/Customer Mgt... 1993 191,538 63,677 9,742(2) -- 60,000 -- 2,585
Sr. Officer,
Product/Customer Mgt... 1992 180,000 25,000 34,882(3) -- -- -- --
RICHARD G. HONOR
Sr. Officer, Interna-
tional................. 1994 210,923 81,408 36,000(4) -- 3,750 -- 3,475
Sr. Officer, Interna-
tional................. 1993 206,154 29,515 36,571(5) -- 30,000 -- 4,157
Sr. Officer, Interna-
tional................. 1992 180,870 6,250 11,778(6) -- -- -- 1,491
OAKLEIGH B. THORNE
Chairman of the Board... 1994 290,000 0 -- -- 0 -- 4,661
Chairman of the Board... 1993 200,000 90,000 -- -- 0 -- 4,315
Chairman of the Board... 1992 200,000 90,000 -- -- -- -- 7,084
OAKLEIGH THORNE*
Member of Executive Com-
mittee................. 1994 224,077 110,400 -- -- 35,000 -- 791
Member of Executive Com-
mittee................. 1993 206,154 80,954 -- -- 100,000 -- 4,099
Member of Executive Com-
mittee................. 1992 200,000 65,000 -- -- -- -- 7,084
RALPH C. WHITLEY
Member of Executive Com-
mittee................. 1994 235,962 115,200 12,500(2) -- 35,000 -- 3,850
Member of Executive Com-
mittee................. 1993 229,717 129,909(7) 41,367(3) -- 100,000 -- 4,264
Member of Executive Com-
mittee................. 1992 216,000 69,000 -- -- -- -- 7,604
HUGH J. YARRINGTON(8)
Sr. Officer, Knowledge.. 1994 207,308 87,539 3,013(2) -- 20,000 -- 1,280
Sr. Officer, Knowledge.. 1993 73,077 26,520 28,932(3) -- 60,000 -- 262
</TABLE>
- --------
(1) The totals in this column reflect the value of the CCH contributions to
the CCH Employees' Profit-Sharing Plan. The 1994 amounts include
additional 1994 Plan contributions that have been estimated because the
contribution is not calculable at this time. The estimate is expected to
be accurate to within ^ 5%. The 1993 contributions shown here are actual,
whereas in last year's proxy statement they were estimated.
(2) Represents reimbursements for taxes incurred as a result of relocation in
the previous year.
(3) Represents reimbursements for relocation expenses.
(4) Represents automobile and housing allowances.
(5) Of this amount, $36,000 was for automobile and housing allowances, $207
was for relocation expenses, and $364 represents reimbursement for taxes
incurred as a result of relocation expense reimbursement in the previous
year.
(6) Of this amount, $9,692 was for automobile and housing allowances and
$11,778 was for relocation.
(7) Of this amount, $42,339 was for payment of accrued vacation upon transfer
from Computax to CCH.
(8) Hired August 16, 1993.
* In April, 1995 Oakleigh Thorne was elected President and Chief Executive
Officer.
I-5
<PAGE>
OPTIONS/SAR GRANTS
The following tables set forth information pertaining to grants of stock
options to the Executive Officers during 1994 as well as to stock options held
by the Executive Officers at the end of 1994. All such options were granted
under the 1993 Long-Term Incentive Plan and relate to Class B Common Stock. No
stock appreciation rights were granted during 1994. None of the Executive
Officers exercised any stock options during 1994.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/ EMPLOYEES OR BASE GRANT DATE
SARS IN FISCAL PRICE EXPIRATION PRESENT
NAME GRANTED YEAR ($/SH) DATE(1) VALUE ($)(2)
---- ---------- ---------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Edward L. Massie........ 35,000 13.1% 17.000 2/10/04 173,950
Jonathan Copulsky....... 20,000 7.5% 17.000 2/10/04 99,400
Richard G. Honor........ 3,750 1.4% 17.000 2/10/04 18,638
Oakleigh B. Thorne...... 0 0 -- -- 0
Oakleigh Thorne......... 35,000 13.1% 17.000 2/10/04 173,950
Ralph C. Whitley........ 35,000 13.1% 17.000 2/10/04 173,950
Hugh J. Yarrington...... 20,000 7.5% 17.000 2/10/04 99,400
</TABLE>
- --------
(1) In general, the options granted in 1994 to all executive officers (other
than the Chief Executive Officer and Richard G. Honor) become exercisable
at the rate of one half on the second anniversary of the grant date and
one quarter on the third and fourth anniversaries of the grant date. For
Mr. Massie and Mr. Honor, all of their 1994 options become exercisable on
the second anniversary of the date of grant. Under the terms of the 1993
Long-Term Incentive Plan, in the event of a change of control, as defined
in the Plan, all options become immediately vested and exercisable.
(2) The Black-Scholes option pricing model has been used to calculate present
value as of the date of grant, February 10, 1994. The present value as of
the date of grant, calculated using the Black-Scholes model, is based on
assumptions about future interest rates, stock price volatility, and
dividend yield. The Black-Scholes model is a complicated mathematical
formula widely used to value exchange-traded options. However, stock
options granted by CCH to its executive officers differ from exchange-
traded options in three key respects: CCH's options are long-term, non-
transferable, and subject to vesting restrictions, while exchange-traded
options are short-term and can be exercised or sold immediately in a
liquid market. There is no assurance that the assumptions used, as
described below will prove to be true in the future. Consequently, the
grant date present values set forth in the table are only theoretical
values and may not accurately determine present value. The actual value,
if any, that may be realized by each individual will depend on the market
price of Class B Shares on the date of exercise. The following key
assumptions were used in the calculation: a risk-free rate of return equal
to the interest rate on a U.S. Treasury security with a maturity date
corresponding to that of the option term (5.923%); a 9-month volatility of
25% as reported in Bloomberg Financial Services as of February 28, 1994; a
dividend yield of 3.20%; and time of exercise of 10 years (exercisable
only at maturity).
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)
-------------------- -------------------
SHARES ACQUIRED VALUED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------ -------------------- -------------------
<S> <C> <C> <C> <C>
Edward L. Massie........ -- -- 0/155,000 0/0
Jonathan Copulsky....... -- -- 0/80,000 0/0
Richard G. Honor........ -- -- 0/33,750 0/0
Oakleigh B. Thorne...... -- -- 0/0 0/0
Oakleigh Thorne......... -- -- 0/135,000 0/0
Ralph C. Whitley........ -- -- 0/135,000 0/0
Hugh J. Yarrington...... -- -- 0/80,000 0/0
</TABLE>
I-6
<PAGE>
PENSION PLAN
CCH maintains an integrated pension plan (the "Pension Plan") that provides
for defined benefits to eligible officers and employees of CCH and its
participating subsidiaries upon retirement at a specified age. These benefits
are based on the participant's number of years of service, final average pay
(the individual's highest average pay in any 60 consecutive months in his or
her last 120 months of service), and the individual's "excess final average
pay" (the portion, if any, of final average pay that exceeds the average
amount of pay subject to Social Security tax). Under the Pension Plan, a
participant's pay includes base salary, overtime, commissions, and bonuses
(subject to certain limitations under the Code). CCH also maintains an
unfunded supplemental employee retirement plan, described more fully below
(the "SERP"). The estimated aggregate benefits payable upon retirement under
the Pension Plan and the SERP to persons in specified final average pay and
years of service classifications are listed in the table below. The normal
retirement pension at age 65 is shown in the table below in the form of a
straight life annuity (although other options, including lump sum and a joint
and survivor annuity option, are available) for different levels of earnings
and years of service.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
AVERAGE ANNUAL
EARNINGS 15 20 25 30 35 40
-------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 25,000.............. $ 4,417 $ 5,939 $ 7,462 $ 8,837 $ 10,112 $ 11,362
$ 50,000.............. 11,205 15,030 18,874 21,624 24,174 26,674
$100,000.............. 24,780 33,239 41,699 47,199 52,299 57,299
$250,000.............. 65,505 87,839 110,174 123,924 136,674 149,174
$500,000.............. 133,380 178,839 224,299 251,799 277,299 302,299
$750,000.............. 201,255 269,839 338,424 379,674 417,924 455,424
</TABLE>
As of January 1, 1995, each Named Executive Officer had the following number
of years of service under the Pension Plan and the SERP:
<TABLE>
<CAPTION>
YEARS OF
SERVICE
--------
<S> <C>
Edward L. Massie 40
Jonathan Copulsky 3
Richard G. Honor(/1/) 2
Oakleigh B. Thorne 33
Oakleigh Thorne 8
Ralph C.Whitley 26
Hugh J. Yarrington 1
</TABLE>
The Pension Plan formula provides that a participant's annual benefit will
equal the sum of (a) 1.2% of final average pay multiplied by the participant's
years of service prior to 1989 plus 1.1% of final average pay multiplied by
the participant's years of service after 1988 (up to 25 years of service), (b)
1% of final average pay multiplied by the participant's years of service over
25, and (c) .65% of "excess final average pay" multiplied by the participant's
years of service up to 25.
The Pension Plan is integrated with Social Security. However, benefit
amounts are not subject to deduction for Social Security benefits or other
offset amounts.
SUPPLEMENTAL RETIREMENT PLAN
The SERP provides benefits to certain "highly compensated" employees (as
declined in Section 414(q)(1)(B) of the Code) equal to the excess, if any, of
the benefit they would have received under the Pension Plan formula as it
existed on December 31, 1988, without regard to certain limitations contained
in the Code that generally are applicable under the Pension Plan, over the
benefit they receive under the Pension Plan. The Pension Plan formula as of
December 31, 1988 provided that a participant's annual benefit would equal the
sum of (a) 2% of final average pay multiplied by the participant's years of
service up to 25 and (b) 1% of final average pay multiplied by the
participant's years of service over 25, reduced by (c) 2% of the participant's
estimated primary Social Security benefit multiplied by the participant's
years of service up to 25.
Under the SERP, a participant's pay generally is the same as his or her pay
under the Pension Plan but is not subject to any limitations imposed on the
Pension Plan by the Code. The benefit under the SERP is integrated with Social
Security, and the formula incorporates a deduction for Social Security
benefits.
- --------
(/1/) Mr. Honor retired under the pension plan of CCH Australia in 1992 prior to
relocating to the United States to establish the International
Organization for the parent company.
I-7
<PAGE>
SHAREHOLDER RETURN PERFORMANCE INFORMATION
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Class A Common Stock against
the change in the cumulative total return of the Russell 2500 market index and
the Information Industry Bulletin 45 U.S. Cumulative Total Return Index for
the five-year period that commenced January 1, 1990 and ended December 31,
1994.
Russell 2500
The Company believes that the companies listed in the S&P 500 are too large
to be representative of the market influences on the Company's stock. The
Company is not within the S&P 500 Stock Index. The Russell 2500 index is made
up of the next 2500 largest companies by market capitalization after the S&P
500. The Company believes that the Russell 2500 is more representative than
the S&P 500 because the average market capitalization of the companies
comprising the Russell 2500 approximates that of the Company.
Peer Group
The Company has chosen the Information Industry Bulletin 45 U.S. Index for
its peer group index. The IIB 45, a published and readily available index,
tracks companies that derive at least 50% of their annual revenues from
information activities. The Company believes that the industry factors and
market conditions faced by the IIB 45 companies are similar to those
encountered by the Company. Moreover, since this group consists of domestic
companies only, it provides an index that is not subject to the fluctuations
of overseas stock markets.
[CHART]
Five-Year Cumulative Return Comparison*
CCH Class A, Russell 2500 Index and IIB 45 U.S. Index
CCH Class A, IIB 45 and Russell 2500 Indicies, Trailing
Twelve Months
December 31, 1994
CCH Russell 2500 IIB 45 Index
Annual Indexed Index Annual Indexed Index
Annual Indexed Index
Year Return Return Value Return Return Value
Return Return Value
1989 100.00 100.00 100.00
1990 6.74% 1.0674 106.74 (14.87%) 0.8513 85.13
(17.00%) 0.8300 83.00
1991 (4.72%) 0.9528 101.70 46.68% 1.4668
124.87 23.00% 1.2300 102.09
1992 (7.56%) 0.9244 94.01 16.17% 1.1617
145.06 12.20% 1.1220 114.54
1993 3.84% 1.0384 97.62 16.54% 1.1654
169.05 16.50% 1.1650 133.44
1994 (3.10%) 0.9690 94.60 (1.60%) 0.9840
166.35 (8.15%) 0.9185 122.57
- --------
*Total return assumes reinvestment of dividends.
**Returns are based on information from outside sources. Stocks in the index
are selected from the Information Industry Bulletin's index for domestic
companies.
I-8
<PAGE>
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS, NOMINEE DIRECTORS, AND MANAGEMENT
The following table shows the number of shares of Class A Common Stock and
Class B Common Stock beneficially owned and the percentage of the outstanding
shares of Class A Common Stock and Class B Common Stock so owned, as of
February 10, 1995, as to (1) each person known to the management of the
Company to be the beneficial owner of more than five percent of the
outstanding shares of Class A Common Stock or Class B Common Stock, (2) each
nominee director, and (3) the Named Executive Officers. Unless otherwise
indicated, the Shares owned are less than 1% of the indicated class. Unless
otherwise indicated, the owner has sole voting and investment power with
respect to the listed Shares.
<TABLE>
<CAPTION>
CLASS A PERCENT OF CLASS B PERCENT OF
BENEFICIAL OWNER COMMON STOCK CLASS A COMMON STOCK CLASS B
AND ADDRESS(1) OWNED COMMON STOCK OWNED(2) COMMON STOCK
---------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Ariel Capital Management
Inc.(3).................. 1,429,585 8.4% 0
307 North Michigan Avenue
Chicago, Illinois
David L. Babson & Co.,
Inc.(4).................. 0 1,259,110 7.4%
One Memorial Drive
Cambridge, Massachusetts
John C. Burton............ 2,000 2,000
Jonathan Copulsky......... 245 7,782
William C. Egan, III...... 0 0
Richard G. Honor.......... 1,000 15,000
Edward L. Massie.......... 13,545 75,391
Robert H. Mundheim........ 500 2,000
Daniel K. Thorne.......... 1,546,852 9.0% 1,546,852 9.2%
Oakleigh B. Thorne(5)..... 8,017,427 47.0% 8,021,272 47.4%
Oakleigh Thorne........... 1,370 14,042
Ralph C. Whitley.......... 4,249 17,373
Hugh J. Yarrington........ 0 0
All Executive Officers and
Directors as a group (18
persons)................. 9,581,973 56.2% 9,750,933 57.2%
All Executive Officers and
Directors as a group (16
persons) other than
Oakleigh B. and
Daniel K. Thorne......... 27,694 182,809 1.1%
</TABLE>
- --------
(1) Address of 5% stockholders is 2700 Lake Cook Road, Riverwoods, IL, except
where specified.
(2) Shares of Class B Common Stock owned includes shares issuable upon the
exercise of options that will be exercisable within 60 days as follows:
Edward L. Massie, 60,000; Jonathan Copulsky, 7,500; Richard G. Honor,
15,000; Oakleigh Thorne, 12,500; Ralph Whitley, 12,500; all other
executive officers and directors as a group, 43,750; all executive
officers and directors as a group, 151,250.
(3) Based on the most recent report on Schedule 13G filed with the SEC, Ariel
Capital Management Inc. reported sole voting power with respect to 940,150
shares of Class A Common Stock, shared voting power with respect to 91,975
shares of Class A Common Stock, and sole investment discretion for
1,429,585 shares of Class A Common Stock.
(4) Based on the most recent report on Schedule 13G filed with the SEC, David
L. Babson & Co., Inc. reported sole voting power with respect to 568,370
shares of Class B Common Stock, shared voting power with respect to
690,740 shares of Class B Common Stock, and sole investment discretion for
1,259,110 shares of Class B Common Stock.
(5) Includes 7,673,945 Shares held by certain trusts over which Oakleigh B.
Thorne has sole or shared voting and investment authority and 200,009
Shares held by a charitable foundation of which Oakleigh B. Thorne is a
co-trustee. Chemical Banking Corporation and its subsidiary, Chemical
Bank, 277 Park Avenue, New York, New York, have advised the Company that
they have shared voting authority over 1,912,852 Shares, sole voting
authority over 3,000 shares of Class A Common Stock, and shared investment
authority over 1,912,852 Shares (11.2% and 11.3% of shares of Class A
Common Stock and shares of Class B Common Stock, respectively). Oakleigh
B. Thorne has advised CCH that substantially all of the Shares that are
held by various trusts of which he is co-trustee with Chemical Bank are
included in the table above. CCH has been advised that an additional
1,268,816 Shares (7.4% and 7.5% of shares of Class A Common Stock and
shares of Class B Common Stock, respectively) included in the table above
are held by Oakleigh B. Thorne and John Akin of Seattle, Washington, as
co-trustees under a trust in which voting authority over such shares of
Class A Common Stock is held by Mr. Thorne and investment authority over
all such Common Stock is shared with Mr. Akin.
I-9
<PAGE>
INFORMATION WITH RESPECT TO DESIGNEES
Set forth below is the name, age, business address, principal occupation or
employment and five year employment history of the persons who will be the
Parent Designees. Unless otherwise indicated, each such person has held the
occupation listed opposite his name for at least the past five years and each
occupation refers to employment with the Parent. Unless otherwise indicated,
the business address of all persons listed below is c/o Wolters Kluwer nv,
Stadhouderskode 1, 1054 ES Amsterdam, The Netherlands. Unless otherwise
indicated, all persons listed below are citizens of The Netherlands. None of
the persons listed below owns any Shares.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
BUSINESS ADDRESS AGE EMPLOYMENT HISTORY
---------------- --- ----------------------------
<S> <C> <C>
C. J. Brakel.......................... 58 Chairman of the Executive Board since 1995;
Member of Executive Board since 1987
C. H. van Kempen...................... 50 Member of the Executive Board since 1993;
Chief Executive Officer of Wolters Kluwer
Italy, an indirect wholly owned subsidiary
of Wolters Kluwer nv from 1990 through
1993
Robert Pieterse....................... 53 Member of the Executive Board since 1987
Peter W. van Wel...................... 49 Member of the Executive Board since 1993;
Chief Executive Officer of Wolters Kluwer
U.S. Corporation, an indirect wholly owned
subsidiary of Wolters Kluwer nv ("Wolters
Kluwer U.S.") from 1990 through 1993
Hans E. M. van Dinter................. 50 Chief Financial Officer for more than the
past five years
Bruce C. Lenz......................... 52 Executive Vice President and Chief
c/o Wolters Kluwer U.S. Corporation Financial Officer of Wolters Kluwer U.S.
1185 Avenue of the Americas for more than the past five years
New York, New York 10036
(United States citizen)
F. H. Simons.......................... 47 Head of Legal Department for more than the
past five years
John Marozsan......................... 54 President of Aspen Publishers, Inc., an
c/o Aspen Publishers, Inc. indirect wholly owned subsidiary of
1185 Avenue of the Americas Parent, for more than the past five years
New York, New York 10036
(United States citizen)
Paul C. Kooijmans..................... 47 Director of Accounting and Control for more
than the past five years
</TABLE>
I-10
<PAGE>
EXHIBIT 4
N E W S R E L E A S E
CCH INCORPORATED
2700 Lake Cook Road
Riverwoods, IL 60015-3888
CONTACT: Mary Dale Walters
212-906-2627 on 11/27/95
708-267-2038 after 11/27/95
CCH INCORPORATED ACCEPTS $1.9 BILLION OFFER
-------------------------------------------
FROM WOLTERS KLUWER,
--------------------
SALE CREATES LEADING GLOBAL PROFESSIONAL PUBLISHER
--------------------------------------------------
(Riverwoods, ILL., November 27, 1995) -- CCH INCORPORATED (NASDAQ: CCHI), a
leading provider of tax and business law information, software and services,
said today that it has entered into a definitive agreement for the sale of the
company to Wolters Kluwer NV, the international publisher of print and
electronic information for professionals and businesses, for approximately
US $1.9 billion, or $55.50 per share, net to the seller in cash.
Wolters Kluwer (WK) will be launching a tender offer for all the outstanding
shares of CCH. Holders of a majority of CCH's shares, including members of the
Thorne family, have entered into a definitive agreement with Wolters Kluwer to
tender their shares into the tender offer and vote for the merger, and have
given Wolters Kluwer an option to purchase their shares. The same per share
price is payable for Class A (voting) and Class B (non-voting) common stock.
-- MORE --
<PAGE>
ADD 1-1-1
The acquisition by Wolters Kluwer of CCH, with estimated 1995 revenues of
$600 million, places Wolters Kluwer in the position of being one of the world's
leading professional publishers, with combined anticipated revenues of more than
US $2.4 billion.
The purchase by the US $1.8 billion (revenues) Wolters Kluwer moves the
Dutch company dramatically forward in its strategy of developing greater in
North America.
The acquisition brings together two of the world's most respected
business-to-business publishing companies specializing in electronic and print
products for legal, tax and health care professionals. CCH is the leading
provider of print, CD-ROM, computer disk and online tax and business law
information in the U.S. and operates subsidiaries in Australia, Canada, United
Kingdom, New Zealand, Singapore and Japan. Amsterdam-based Wolters Kluwer is a
major business-to-business publisher of legal, tax and medical/scientific
information with operations throughout the U.S. and Europe, including Belgium,
Germany, France, Italy, Spain, Sweden and the Netherlands.
-- MORE --
<PAGE>
ADD 2-2-2
"The decision to sell CCH was not an easy one," said Oakleigh Thorne,
president and CEO of the company, whose great, great grandfather founded the
company more than 103 years ago. "However, after a thoughtful, thorough
analysis of advantages it offered CCH and its shareholders -- combined with
dramatic and rapid changes in the industry -- we found the offer very
compelling.
"The advantages for CCH are many," added Thorne, "particularly when we look
at the long term growth opportunities. CCH is firmly established as the leader
in our core market segments and will achieve substantial earnings growth in
future years. Now, in combination with Wolters Kluwer, new opportunities for
long term growth in new markets are clearly within reach."
Thorne said the acquisition by WK creates a strong partnership between two
organizations of similar corporate philosophies and strategic directions.
"Both companies have similar visions of how future growth and continued
profitability -- in a rapidly evolving, global information industry -- can be
achieved," said Thorne. "In recent years, CCH has emerged as the industry's
technology innovator with a clear commitment to using that technology to provide
authoritative, quality content to global customers.
-- MORE --
<PAGE>
ADD 3-3-3
"Wolters Kluwer shares this philosophy with us, is committed to expanding
our technology leadership and dedicated to delivering products via the most
desired proprietary and non-proprietary media."
"This is a strategic break-through for Wolters Kluwer. CCH is a wonderful
partner for us and will be our flagship legal publishing company in the U.S. We
are particularly impressed with their position in the tax markets and their
state of the art electronic products and services," said Cor Brakel, chairman of
the executive board, Wolters Kluwer.
The transition in ownership is expected to be a smooth one, according to
Thorne.
"We don't expect the purchase to create changes in the current management
staff and the basic corporate structure is likely to remain in place," he said.
"We anticipate no disruptions in the day-to-day operations or customer service
and no substantial impact on our global employee base.
The acquisition is subject to customary conditions, including Hart-Scott-
Rodino clearance. The tender offer is expected to terminate on January 4, 1996,
subject to extension.
-- MORE --
<PAGE>
ADD 4-4-4
Wolters Kluwer is a multinational publishing company established in 16
European countries and the United States. Annual sales are approximately
Dfl 2.8 billion. The number of employees is around 8,000. Core activities are
business publishing (for the profit and non profit sector), legal and tax
publishing, medical and scientific publishing, educational publishing and
professional training.
Originally founded in 1913, CCH INCORPORATED has served four generations of
business professionals, offering more than 600 print and electronic products for
the tax, legal, securities, financial planning, health care and human resources
markets. The company employs approximately 5,100 people worldwide with major
U.S. facilities in Riverwoods and Chicago, Ill.; New York, NY; Washington, DC;
St. Petersburg, Fla.; Torrance and San Rafael, Calif.; Wichita, Kan.; and Cedar
Rapids, Iowa.
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EXHIBIT 5
December 1, 1995
Dear Fellow Stockholder:
I am pleased to inform you that CCH Incorporated has entered into an
agreement and plan of merger with Wolters Kluwer nv pursuant to which a wholly
owned subsidiary of Wolters Kluwer has commenced a tender offer to purchase
all of the outstanding shares of CCH for $55.50 per share in cash. Under the
agreement, consummation of the tender offer will be followed by a merger in
which non-tendering stockholders will receive $55.50 per share in cash or the
highest price paid per share pursuant to the tender offer and CCH will become
a wholly owned subsidiary of Wolters Kluwer. Holders of shares of Class A
Common Stock and holders of shares of Class B Common Stock will receive the
same consideration in the tender offer and subsequent merger. Members of the
Thorne family and certain trusts with Thorne family members as trustees have
agreed to tender their shares (including an aggregate of approximately 58% of
the outstanding shares of voting stock (i.e., Class A Common Stock)) into the
tender offer and to vote such shares in favor of the Merger, and have granted
an option to Wolters Kluwer to purchase such shares.
The Board of Directors of CCH has unanimously determined that the terms of
the Wolters Kluwer tender offer and the merger are fair to, and in the best
interests of, CCH and its stockholders and recommends that stockholders accept
the Wolters Kluwer offer and tender their shares pursuant to it.
Enclosed are the Wolters Kluwer Offer to Purchase, dated December 1, 1995,
Letter(s) of Transmittal and other related documents. These documents set
forth the terms and conditions of the tender offer. Attached is a copy of the
Company's Schedule 14D-9, as filed with the Securities and Exchange
Commission. The Schedule 14D-9 describes in more detail the reasons for the
Board's conclusions and contains other important information relating to the
tender offer. We urge you to consider this information carefully.
The Board of Directors and the management and employees of CCH thank you for
your support.
Sincerely,
Oakleigh Thorne
President and
Chief Executive Officer
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EXHIBIT 6
[Letterhead of Goldman, Sachs & Co.]
PERSONAL AND CONFIDENTIAL
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November 27, 1995
Board of Directors
CCH Incorporated
2700 Lake Cook Road
Riverwoods, IL 60015-3888
Gentlemen:
You have requested that we confirm our oral opinion as to the fairness to the
holders of the outstanding shares of Class A Common Stock, par value $1.00 per
share, and the outstanding shares of Class B Common Stock, par value $1.00 per
share (together, the "Shares"), of CCH Incorporated (the "Company") of the
$55.50 per Share in cash proposed to be paid by Wolters Kluwer N.V. ("Wolters
Kluwer") in the Tender Offer and Merger (as defined below) pursuant to the
Agreement and Plan of Merger dated as of November 27, 1995 among Wolters Kluwer,
WK Acquisition Sub, Inc. ("WK Acquisition"), a wholly-owned subsidiary of
Wolters Kluwer, and the Company (the "Agreement").
The Agreement provides for a tender offer for all of the Shares (the "Tender
Offer") pursuant to which WK Acquisition will pay $55.50 per Share in cash for
each Share accepted. The Agreement further provides that following completion of
the Tender Offer, WK Acquisition will be merged with and into the Company (the
"Merger") and each outstanding Share (other than Shares already owned by
Wolters Kluwer or WK Acquisition) will be converted into the right to receive
$55.50 in cash.
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement.
In connection with this opinion, we have reviewed, among other things, the
Agreement and the Stock Option and Tender Agreements referred to therein; Annual
Reports to Stockholders and Annual Reports on Form 10-K of the Company for the
five years ended December 31, 1994; certain interim reports to stockholders and
Quarterly Reports on Form 10-Q; certain other communications from the Company
to its stockholders; and certain internal financial analyses and forecasts for
the Company prepared by its management. We also have held discussions with
members of the senior management of the Company regarding its past and current
business operations, financial condition and future prospects. In addition, we
have reviewed the reported price and trading activity for the
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CCH Incorporated
November 27, 1995
Page Two
Shares, compared certain financial and stock market information for the Company
with similar information for certain other companies the securities of which are
publicly traded, reviewed the financial terms of certain recent business
combinations in the professional publishing industry specifically and in other
industries generally and performed such other studies and analyses as we
considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. In addition, we have not made an independent
evaluation or appraisal of the assets and liabilities of the Company or any of
its subsidiaries and we have not been furnished with any such evaluation or
appraisal.
Based upon the foregoing and such other matters as we considered relevant, we
confirm our oral opinion that as of the date hereof the $55.50 per Share in cash
to be received by the holders of Shares in the Tender Offer and the Merger is
fair to such holders.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
GOLDMAN, SACHS & CO.
