PROSPECTUS
[LOGO]
2,000,000 Shares
Harcourt General, Inc.
Common Stock
This prospectus relates to 2,000,000 shares of common stock, which may be
sold from time to time by the selling stockholder named in this prospectus
acting as principal for its own account. We will not receive any of the
proceeds from the sale of the common stock.
Our common stock is listed on the New York Stock Exchange under the
symbol H. On May 4, 2000, the closing price of our common stock was $36.38 per
share.
Salomon Smith Barney Inc., the selling stockholder and a broker-dealer,
may offer and sell the common stock from time to time directly or through
underwriters, dealers or agents, to one or more purchasers in fixed price
offerings, in negotiated transactions, at market prices prevailing at the
time of sale or at prices related to market prices. The selling stockholder
may be deemed to have received certain compensation in connection with the
sale of our common stock, see "Selling Stockholder" and "Plan of
Distribution." The terms of the offering and sale of the common stock,
including any public offering price, any discounts, commissions or
concessions allowed, reallowed or paid to underwriters, dealers or agents,
the purchase price of the common stock and the proceeds to the selling
stockholder, and any other material terms will be set forth in the applicable
prospectus supplement.
______________
These securities have not been approved by the Securities and Exchange
Commission or by any state securities commission, nor have those
organizations determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
May 30, 2000
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Table of Contents
Page
WHERE YOU CAN FIND INFORMATION . . . . . . . . . . . . . . . . . . . . . . 3
INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . 3
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SELLING STOCKHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . 6
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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WHERE YOU CAN FIND INFORMATION
We have filed with the SEC a registration statement on Form S-3 to
register the common stock offered by this prospectus. However, this
prospectus does not contain all of the information contained in the
registration statement and the exhibits and schedules to the registration
statement. We strongly encourage you to carefully read the registration
statement and the exhibits and schedules to the registration statement.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any materials on file with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, as well as at the SEC's regional
offices at 500 West Madison Street, Suite 1400, Chicago, Il 60661 and 7 World
Trade Center, Suite 1300, New York, NY 10048. Our filings are available to
the public over the Internet at the SEC's website at http://www.sec.gov.
Please call the SEC at 1-800-SEC-0330 for further information on the Public
Reference Room.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference
is an important part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings
made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until the selling stockholder sells all of the
securities:
- Our Annual Report on Form 10-K for the fiscal year ended October 31,
1999; and
- Our Quarterly Report on Form 10-Q for the quarter ended January 31,
2000.
You can get a free copy of any of the documents incorporated by reference by
making an oral or written request directed to:
Corporate Relations Department
Harcourt General, Inc.
27 Boylston Street
Chestnut Hill, MA 02467
Telephone (617) 232-8200
You should rely only on the information contained or incorporated in this
prospectus or any supplement. We have not authorized anyone else to provide
you with different information. You should not rely on any other
representations. Our affairs may change after this prospectus or any
supplement is distributed. You should not assume that the information in this
prospectus or any supplement is accurate as of any date other than the date
on the front of those documents. You should read all information supplementing
this prospectus.
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THE COMPANY
Harcourt General, Inc., is a leading global multiple-media publisher
providing educational, training and assessment products and services to
classroom, corporate, professional and consumer markets.
Prior to October 22, 1999, we owned a controlling interest in The Neiman
Marcus Group, Inc., a high-end specialty retailer. On October 22, 1999, we
distributed to our stockholders approximately 21.4 million of the 26.4
million shares of Neiman Marcus common stock held by us. For more information
about this distribution and the relationship between us and Neiman Marcus,
see Note 2 to the Consolidated Financial Statements for the fiscal year ended
October 31, 1999 incorporated by reference in this prospectus.
We operate our business through four principal segments, described below
and in Note 3 to the Consolidated Financial Statements incorporated by
reference in this prospectus.
Education Group. The education group is a leading content provider to
classroom and at-home K-12 and supplemental learners offering a complementary
array of value-added products and services through school, library and
direct-to-consumer channels. The education group includes the operations of
Harcourt School Publishers; Holt, Rinehart and Winston; Steck-Vaughn; and
Harcourt Trade Publishers. The education group publishes textbooks and
related instructional materials for kindergarten to grade eight through
Harcourt School and for the middle and secondary education markets through
Holt Rinehart and Winston. Steck-Vaughn publishes supplemental educational
materials used in elementary, secondary and adult education, test preparation
materials, and offers English language literacy programs for training workers
for whom English is a second language. Harcourt Trade publishes children's
books, general adult fiction and nonfiction hardcover books, and trade
paperbacks under the Harvest imprint.
Higher Education Group. The higher education group brings traditional and
technology-enabled content to adults seeking higher education in traditional
and non-traditional settings, offering a broad array of products and services
to the campus-based, direct-to-consumer and corporate markets. The higher
education group includes Harcourt College Publishers, Harcourt Learning
Direct, Archipelago Productions and Harcourt Professional Education. Harcourt
College publishes textbooks and other materials for the college and
university market under the Harcourt, Saunders, Dryden and Holt Rinehart
imprints. Harcourt Learning Direct provides traditional and technology-based
distance learning opportunities in vocational, degree and professional
self-study programs. Harcourt Professional Education conducts review courses
under the BAR/BRI name for individuals preparing for bar examinations, as
well as live-lecture and computer-based review courses for law and accounting
examinations, and publishes print and electronic information resources,
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including reference guides and newsletters for financial, legal and human
resources professionals.
Corporate and Professional Services Group. The corporate and professional
services group produces technology-based training, assessment and educational
products and services for the corporate learner market and individual
professionals. The corporate and professional services group includes the
operations of NETg; The Psychological Corporation; Harcourt Assessment
Systems, Inc.; Drake Beam Morin; and Knowledge Communication, Inc. NETg
develops and sells self-study information technology and related professional
training products and services which are delivered by CD-ROM, the Internet
and corporate intranets to information technology professionals. The
Psychological Corporation provides tests and related products and services
for educational and psychological assessment. Harcourt Assessment Systems
develops and administers computer-based tests and related services for
professional and regulatory licensing and credentialing and corporate
pre-employment testing. Drake Beam Morin is one of the world's leading
organizational and individual transition consulting firms, assisting
organizations and individuals worldwide in outplacement, career and
transition management and employee selection. Knowledge Communication
provides technology-based professional development and business skills
training.
Worldwide Scientific, Technical and Medical Group. The worldwide
scientific, technical and medical group is a leading provider of information
products through both traditional and new technology-enabled channels to
health, scientific and technical professionals worldwide. The scientific,
technical and medical group includes Harcourt Health Sciences, comprised of
the global medical publishing operations of W.B. Saunders, Mosby and
Churchill Livingstone; Academic Press; and Harcourt Publishers International.
Harcourt Health Sciences publishes books, periodicals and electronic products
in the health sciences, and advertising-based newsletters for health
professionals. Academic Press publishes scholarly books, journals, data bases
and products and value-added services in print and electronic media, in the
life, physical, social and computer sciences. Harcourt Publishers
International is responsible for international distribution of Harcourt
English language products and the publication of adaptations, translations
and indigenous materials worldwide.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common stock
offered by the selling stockholder.
SELLING STOCKHOLDER
Citibank N.A., an affiliate of the selling stockholder listed below,
purchased shares of common stock in a transaction exempt from the
registration requirements of the Securities Act at the then market price on
April 20, 2000. The shares of common stock were subsequently transferred to
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Salomon Smith Barney Inc., the selling stockholder. Concurrent with the
purchase of the stock, Citibank N.A. entered into an equity swap agreement
under which Citibank N.A. or an affiliate thereof receives consideration and
may receive additional shares of common stock from us if the market price of
our common stock declines.
The following table states the number of shares of our outstanding common
stock that the selling stockholder owns and the number of shares of common
stock that may be sold for the account of the selling stockholder.
<TABLE>
<CAPTION>
Number of shares of Number of shares of
Selling Stockholder Common Stock Owned Common Stock to be Sold
------------------------ ---------------------- ------------------------
<S> <C> <C>
Salomon Smith Barney Inc. 1,372,213<F1> 1,372,213
390 Greenwich Street
New York, NY 10013
_______________
<FN>
<F1> Plus any additional shares, not anticipated to exceed 627,787 shares,
that the selling stockholder may receive from us under the equity
swap agreement.
</TABLE>
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DESCRIPTION OF CAPITAL STOCK
As of the date of this prospectus, we are authorized to issue up to
370,000,000 shares of capital stock:
- 150,000,000 shares of Common Stock with a par value of $1.00 per
share;
- 80,000,000 shares of Class B Stock with a par value of $1.00 per
share;
- 100,000,000 shares of Class C Stock with a par value of $1.00 per
share; and
- 40,000,000 shares of Preferred Stock with a par value of $1.00 per
share, of which 10,000,000 have been designated Series A Cumulative
Convertible Stock.
As of April 25, 2000, we had 53,125,371 shares of common stock issued and
outstanding, 19,985,762 shares of Class B Stock issued and outstanding, no
shares of Class C Stock issued and outstanding and 806,921 shares of Series A
Cumulative Preferred Stock issued and outstanding.
Description of Common Stock
The following summary is not complete. You should refer to the applicable
provisions of the Restated Certificate of Incorporation and the Delaware
General Corporation Law for a complete statement of the terms and rights of
the common stock, Class B Stock and Class C Stock.
Dividends. Holders of our common stock are entitled to receive dividends
when, as and if declared by our board, out of funds legally available for
their payment (subject to the rights of holders of the preferred stock, if
any). If a cash dividend is paid to holders of our common stock, a cash
dividend equal to 90% of the amount paid to holders of the common stock must
be paid to holders of the Class B Stock. Cash dividends paid to holders of
Class C Stock, if issued, would be equal to that paid to holders of our
common stock.
Stock dividends are paid to holders of our common stock, Class B Stock and
Class C Stock only in the form of stock corresponding to that class held by
the holder. Holders of our common stock are paid stock dividends in common
stock, holders of our Class B Stock are paid stock dividends in Class B Stock
and holders of our Class C Stock, if issued, would be paid stock dividends in
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Class C Stock. With respect to property dividends, shares of common stock and
Class C Stock are entitled to receive the same per share property dividends,
when, as and if declared, and are entitled to receive any rights to purchase
shares of their respective class on the same per share basis.
Voting Rights. Each share of common stock entitles the holder to one vote
on all matters submitted to the stockholders, and each share of Class B Stock
entitles the holder to one vote on all these matters, except that each share
of Class B Stock entitles the holder to ten votes on the election of
directors at any stockholders' meeting if more than 20% of the shares of
common stock outstanding on the record date for the meeting is beneficially
owned by, or if more than 20% of the total voting power attributable to the
shares of the common stock outstanding on the record date for the meeting is
voted either directly or by proxy for a person or persons other than those
nominated by our board by, a person or group of persons acting in concert
(unless a person or group is also the beneficial owner of a majority of the
shares of Class B Stock on the record date).
If Class C Stock were issued, Holders of Class C Stock would be entitled
to one-tenth (1/10th) of one vote on all matters submitted to the
stockholders.
Except as otherwise required by law or the Restated Certificate of
Incorporation, holders of our common stock, Class B Stock and Class C Stock
vote together as a single class. However, the holders of common stock and the
holders of Class B Stock are each entitled to vote separately as a class on a
number of significant matters. For example, the holders of common stock and
Class B Stock would each vote separately as a class on any:
- merger or consolidation of Harcourt General with or into any other
corporation, any sale, lease, exchange or other disposition of all or
substantially all of our assets to or with any other person, or any
dissolution of Harcourt General,
- additional issuances of Class B Stock other than in connection with
stock splits and stock dividends, and
- amendments to our Restated Certificate of Incorporation.
Transferability. Our shares of common stock are freely transferable and
publicly traded. The Class B Stock is not publicly traded and is not
transferable by a stockholder except to a "Permitted Transferee," as defined
in the Restated Certificate of Incorporation, which includes a holder's
spouse, certain of a holder's relatives, certain trusts established for their
benefit, corporations and partnerships principally owned by holders, their
relatives and the trusts, charitable organizations and a holder's estate.
Convertibility. The Class B Stock is convertible at all times, at the
option of the holder and without cost to the holder into common stock on a
share-for-share basis. The Smith- Lurie/Marks Stockholders' Agreement
restricts the convertibility of substantially all of the shares of Class B
Stock outstanding. The common stock is not convertible into any other class
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of stock of Harcourt General. If issued, the Class C Stock would not be
convertible at the option of the holder. However, it would be automatically
converted into common stock upon any dissolution, liquidation or winding up
of our affairs, whether voluntary or involuntary.
Rights Upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of our common stock
(including holders of Class B Stock and Class C Stock who become holders of
common stock through conversion) will be entitled to share equally in any of
our assets available for distribution after the payment in full of all debts
and distributions and after the holders of all series of outstanding
preferred stock, if any, have received their liquidation preferences in full.
Miscellaneous. The issued and outstanding shares of common stock and
Class B Stock are fully paid and nonassessable. Holders of shares of our
common stock are not entitled to preemptive rights. Shares of Class B Stock
are subject to certain transfer restrictions as described in the Restated
Certificate of Incorporation.
The Smith Family Group's Ownership of Harcourt General Stock
The Smith Family Group includes Richard A. Smith, Chairman of Harcourt
General; Nancy L. Marks, Mr. Smith's sister; Robert A. Smith and Brian J.
Knez, Presidents and Co-Chief Executive Officers and directors of Harcourt
General, who are, respectively, the son and son-in-law of Mr. Smith; Jeffrey
R. Lurie, a director of Harcourt General and the son of Nancy L. Marks, other
members of their families and various family corporations, trusts and
charitable foundations. The Smith Family Group is the beneficial owner of
260,511 shares of common stock (which constitutes less than 1% of all common
stock issued and outstanding and which includes 62,180 shares subject to
options exercisable within 60 days of April 25, 2000) and 19,956,398 shares
of Class B Stock (which constitutes 99.9% of all Class B Stock issued and
outstanding). These shares collectively represent 27.18% of the common stock,
Class B Stock and Series A Stock outstanding as of April 25, 2000, assuming
conversion of all Series A Stock into common stock.
As to any elections in which the Class B Stock would carry 10 votes per
share, the Smith Family Group had, as of April 25, 2000, 79% of the combined
voting power of the common stock and Class B Stock. The effect of this
significant voting power is to permit the Smith Family Group to exert
decisive control over the results of elections for our board in an event of a
substantial accumulation of our common stock by any person or group unrelated
to the Smith Family Group. The Smith-Lurie/Marks Stockholders' Agreement
provides that the members of the Smith Family Group will not convert any of
the 19,956,398 shares of Class B Stock subject to the Agreement into common
stock without first offering to sell these shares to the parties to the
Smith-Lurie/Marks Stockholders' Agreement.
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Anti-Takeover Effect of Smith Family Group's Ownership. The Smith Family
Group has:
- ownership of substantially all of the Class B Stock, which has the
right, among other things, to the class vote to approve those issues
described above,
- a substantial portion of Harcourt General's voting power, and
- the right to control the outcome of the election of directors in
contested and certain other situations.
Because any merger, consolidation or sale of all or substantially all of
Harcourt General's assets would have to, in effect, be approved by the Smith
Family Group, as the holders of the Class B Stock, as well as by holders of a
majority of our common stock, any individual, corporation or group that
desires to acquire or take control of Harcourt General, or to obtain approval
of Harcourt General's stockholders for any proposed merger, consolidation or
sale of assets, would probably not be able to do so without the approval of
the Smith Family Group. This could discourage attempts to acquire Harcourt
General and could deprive holders of our common stock and Class C Stock (if
any were to be issued) of an opportunity to sell their shares in an
acquisition at a premium over the then market price.
The Smith-Lurie/Marks Stockholders' Agreement restricts the ability of
the Smith Family Group to convert their Class B Stock subject to certain
limited exceptions. The Class B Stock may have the effect of discouraging
unsolicited takeover bids from third parties or efforts to remove incumbent
management, or make these actions more difficult to accomplish.
Description of Preferred Stock
The following summary is not complete. You should refer to the applicable
provisions of our Restated Certificate of Incorporation and the Delaware
General Corporation Law for a complete statement of the terms and rights of
the preferred stock. We are authorized to issue shares of preferred stock in
one or more series up to the amount authorized in our Restated Certificate of
Incorporation. Our Board is authorized by our Restated Certificate of
Incorporation to determine for each series of preferred stock:
- the voting powers, if any (which voting powers if granted may be full
or limited),
- designations,
- preferences,
- relative, participating, optional or other special rights and the
qualifications, limitations or restrictions of each series,
- the rate of dividend to which holders of preferred stock of any
series may be entitled (which may be cumulative or noncumulative),
- the rights of holders of preferred stock of any series in the event
of liquidation, dissolution or winding up of the affairs of Harcourt
General, and
- the rights (if any) of holders of preferred stock of any series to
convert or exchange shares of preferred stock of any series for
shares of any other class of capital stock (including the
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determination of the price or prices or the rate or rates applicable
to these rights to convert or exchange and the adjustment thereof,
the time or times during which the right to convert or exchange will
be applicable and the time or times during which a particular price
or rate will be applicable).
Series A Cumulative Convertible Stock
Number of Shares. We are authorized to issue up to 10,000,000 shares of
preferred stock designated Series A Cumulative Convertible Stock, of which
806,921 shares were outstanding as of April 25, 2000.
Dividends. Holders of the Series A Stock are entitled to receive cumulative
dividends, when, as and if declared by our board, out of funds legally
available for their payment (subject to the rights of holders of any series
of preferred stock ranking senior to them, if any). The quarterly dividend to
be paid on each share of Series A Stock will be the sum of (x) $.0075
(adjusted, as further described below)) and (y) the product of (1) the amount
of the dividend or dividends (including special dividends, if any) paid or to
be paid in cash on each share of common stock during the quarter ending on
the date on which the Series A Stock dividend is payable, and (2) the
conversion rate (as discussed further below).
Liquidation Rights. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, holders of the Series A Stock will be
entitled to be paid in cash from our net assets available for distribution
(after the prior claims of the holders of any preferred stock ranking senior
to the Series A Stock, if any, have been paid) the sum of $5.00 per share
(adjusted, if necessary, to reflect any stock dividend paid on common stock,
as discussed below) plus any accrued dividends, before any amount is paid to
holders of our common stock. If our net assets available for distribution are
insufficient to allow payment in full to be made to the holders of the Series
A Stock, the holders of the Series A Stock will be paid, on a pro rata basis,
in proportion to the full distributive amounts to which they are entitled.
Conversion Rights -- Conversion Rate and Procedures. Shares of Series A
Stock are convertible, at the option of the holders of Series A Stock, into
fully paid and nonassessable shares (calculated as to each conversion to the
nearest 1/100th of a share) of common stock at the rate of 1.31 shares of
common stock for each one share of Series A Stock surrendered for conversion,
subject to adjustments as described below. The term ?conversion rate? means
the number of shares or fraction of shares of common stock into which one
full share of Series A Stock is entitled to be converted. Upon conversion, we
will not make payment or adjustment on account of dividends accrued or in
arrears on Series A Stock surrendered for conversion or on account of any
dividends on our common stock issuable on a conversion.
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Adjustments. In the event that we:
- declare a stock dividend on our common stock in shares of capital
stock except in any case where a dividend on our Series A Stock has
also been declared
- subdivide outstanding shares of our common stock,
- combine outstanding shares of our common stock into a smaller number
of shares, or
- issue by reclassification of our shares of common stock (including
any reclassification in connection with a consolidation or merger in
which Harcourt General is the continuing corporation) any shares of
capital stock,
then the conversion rate in effect at the time of the record date for the
dividend or of the effective date of the subdivision, combination or
reclassification will be adjusted so that the holder of any Series A Stock
surrendered for conversion after one of these events has occurred will be
entitled to receive the number and kind of shares which he or she would have
owned or been entitled to receive had his or her Series A Stock been
converted immediately prior to the relevant event. Each time any of the
events set out above occur, a corresponding adjustment will be made.
Other events that trigger adjustments include:
- the fixing by us of a record date for the issuance of rights,
warrants or options to all holders of our common stock and/or Class B
Stock entitling them to subscribe for or purchase shares of our
common stock and/or Class B Stock at a price per share less than the
current market price per share of common stock on this record date;
and
- the fixing by us of a record date for the making of a distribution to
all holders of our common stock and/or Class B Stock of evidences of
our indebtedness or assets, or subscription rights, warrants or
options.
In case of any reclassification or change of outstanding common stock
and/or Class B Stock, or in case of any consolidation or merger of Harcourt
General with or into another corporation, or in case of any sale or
conveyance to another corporation or entity (other than by mortgage or
pledge) of all or substantially all of the properties and assets of Harcourt
General, Harcourt General (or its successor in the consolidation or merger,
or the purchaser of the properties and assets) will make appropriate
provision so that the holder of each share of Series A Stock then outstanding
will have the right thereafter to convert his or her share into the kind and
amount of shares of stock and other securities and property receivable upon
the occurrence of this type of event by a holder of the number of shares of
common stock into which the Series A Stock might have been converted
immediately prior to this event.
No adjustment in the conversion rate is required unless this adjustment
(plus any adjustments not previously made by reason of this paragraph) would
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require an increase or decrease of at least one percent in the rate; however,
any adjustments which are not required because they are less than one percent
will be carried forward and taken into account in any subsequent adjustment.
Except as expressly set out in the Restated Certificate of Incorporation,
no adjustment in the conversion rate will be made by reason of the issuance
or sale, in exchange for cash, property or services, of shares of common
stock and/or Class B Stock, or any securities convertible into or
exchangeable for shares of common stock and/or Class B Stock, or securities
carrying the right to purchase any of the foregoing.
Any determination as to fair market value or as to whether an adjustment
in the conversion rate in effect is required, or as to the amount of any
adjustment, will be binding on holders of Series A Stock and Harcourt General
if made in good faith by our board.
Transferability. Our shares of Series A Stock are freely transferable and
publicly traded.
Advance Notice of Certain Events. If at any time:
- we authorize the issuance to all holders of our common stock of
rights, warrants or options to subscribe for or purchase shares of
our common stock or of any other subscription rights, warrants or
options; or
- we authorize the distribution to all holders of our common stock of
evidences of our indebtedness or assets (other than dividends paid
in, or distributions of, cash to the extent permitted by law); or
- there is any consolidation or merger to which we are a party and for
which approval of any of our stockholders is required, or a
conveyance or transfer of all or substantially all of our properties
and assets, or a tender offer for at least a majority of our common
stock which has been recommended by our board as being in the best
interests of the holders of common stock; or
- there is a total voluntary or involuntary dissolution, liquidation or
winding up of Harcourt General; or
- we propose to take any actions which would require an adjustment of
the conversion rate;
then we will send a notice to the holders of record of the outstanding Series
A Stock, at least 20 days (or 10 days in any case specified in the first or
second clause above or in the case of a recommended tender offer as specified
in the third clause above) prior to the applicable record date (or effective
date if there is no record date) hereinafter specified, stating (A) the date
as of which the holders of common stock of record to be entitled to receive
any rights, warrants, options or distributions are to be determined, or (B)
the date on which any consolidation, merger, conveyance, transfer, tender
offer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of common
stock of record will be entitled to exchange their shares of common stock for
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securities or other property, if any, deliverable upon the distribution,
right, warrant, option, consolidation, merger, conveyance, transfer, tender
offer, dissolution, liquidation or winding up. The failure to give this
required notice or the inadequacy in the notice will not affect the legality
or validity of any distribution, right, warrant, option, consolidation,
merger, conveyance, transfer, tender offer, dissolution, liquidation, or
winding up, or the vote upon any of these actions.
Fractions Upon Conversion. No fractional shares of common stock will be
issued upon conversion, but in lieu of fractional shares we will pay a cash
adjustment (computed to the nearest cent) in an amount equal to the fraction
of the market price per share of common stock computed by our board.
Voting Rights. Except as described in the Restated Certification of
Incorporation and as required by applicable law, the holders of Series A
Stock are not entitled to vote. Holders of Series A Stock (as well as holders
of any other series of preferred stock) will be entitled to vote for a
certain number of members of our board (as further described in the Restated
Certificate of Incorporation) if and when accrued dividends on Series A Stock
have not been paid or declared and a sum sufficient for the payment of these
dividends set aside, in an amount equivalent to six quarterly dividends.
These special voting rights of the holders of Series A Stock may be exercised
until all dividends in default on the Series A Stock have been paid in full
or declared and funds sufficient for payment of these dividends set aside.
When these dividends have been paid or provided for, the special voting
rights of the holders of Series A Stock (as well as holders of any other
series of preferred stock) will cease.
As long as any shares of Series A Stock are outstanding, we will not amend
the Restated Certificate of Incorporation to increase the authorized number
of shares of preferred stock, without the affirmative vote or written consent
of the holders of a majority of the number of shares of Series A Stock at the
time outstanding.
As long as any shares of Series A Stock are outstanding, we will not amend
our Restated Certificate of Incorporation to:
- change the designations, preferences, limitations or other relevant
rights of the Series A Stock;
- effect an exchange, reclassification or cancellation of all or part
of the Series A Stock;
- effect an exchange or create a right of exchange of another class or
series into Series A Stock;
- change the Series A Stock into the same or a different number of
shares of the same or another class or series; or
- cancel or otherwise affect dividends on the shares of Series A Stock
which have accrued but have not been declared,
without the affirmative vote or written consent of the holders of two-thirds
of the number of shares of Series A Stock then outstanding.
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Anti-Takeover Effect of Harcourt General's Restated Certificate of
Incorporation and By-Laws and the Terms of Our Common Stock
Our Board is divided into three classes, only one of which is scheduled
for re-election each year. Consequently, a person considering the acquisition
of voting control of Harcourt General would be entitled to replace only one-
third of our board at each annual meeting, and thus might be dissuaded from
seeking the substantial equity position required for voting control without
the ability to install a Board which would be responsive to the person's
wishes during the period immediately following the person's acquisition of
control.
A two-thirds vote of the outstanding stock is required for the approval of
any merger or consolidation involving us, or of a sale of all or
substantially all of our assets, or of the issuance of any of our voting
securities or of any of our subsidiaries (except pursuant to employee stock
incentive plans), unless this transaction is approved by a two-thirds vote of
our board, in which event only the class voting rights of our common stock
and our Class B Stock granted in the Restated Certificate of Incorporation
(with respect to mergers, consolidations and asset sales) and the provisions
of Delaware law will apply in determining the percentage of stockholder
approval, if any, that is required.
Holders of our common stock and Class B Stock are each entitled to a
separate class vote to approve any merger or consolidation of us, any sale,
lease, exchange or other disposition of all or substantially all of our
assets or any dissolution of us. Holders of our common stock and Class B
Stock are also each entitled to a separate class vote with respect to any
amendment to the Restated Certificate of Incorporation and any issuance of
any additional shares of Class B Stock (other than in connection with stock
splits and stock dividends).
Both the Restated Certificate of Incorporation and the by-laws provide
that the affirmative vote of the holders of at least 66?% of the outstanding
stock entitled to vote generally for the election of directors of Harcourt
General, voting together as a single class, is required to modify, revise,
alter, amend, repeal or rescind certain provisions of the Restated
Certificate of Incorporation or the by-laws or to adopt any inconsistent
provision.
These provisions in the Restated Certificate of Incorporation are:
- paragraph (b) of Article Eighth requiring a two-thirds vote of the
outstanding stock for any merger, sale of all or substantially all of
Harcourt General's assets or issuance of voting securities (as
described above);
- paragraph (c) of Article Eighth stating that the election of
directors need not be by ballot unless the By-Laws so require and
that no director need be a stockholder;
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- paragraph (d) of Article Eighth concerning any alteration, amendment
or repeal of the By-Laws;
- Article Ninth concerning stockholders' meetings and the ability of
the stockholders to remove any director with or without cause; and
- Article Tenth concerning the ability of the stockholders to amend
provisions of the Restated Certificate of Incorporation and By-Laws.
These provisions in the By-Laws are:
- Section 3.1 concerning the number, classification and composition of
our board;
- Section 3.2 concerning the tenure of directors;
- Section 3.3 concerning vacancies in our board;
- Section 3.4 concerning the removal of directors; and
- Section 13 concerning amendment of the By-Laws.
These "supermajority" voting requirements may discourage or deter a person
from attempting to obtain control of us by rendering more difficult amendment
of our Restated Certificate of Incorporation or by-laws to eliminate
provisions that have an anti-takeover effect or that protect the interests of
minority stockholders.
The Restated Certificate of Incorporation authorizes Harcourt General to
issue 40,000,000 shares of preferred stock, and empowers our board to set the
voting and other rights of the preferred stockholders. At present, 10,000,000
shares have been designated as the Series A Stock, and the remaining
30,000,000 shares are available for designation. This "blank check" preferred
stock will be available for issuance without further action by stockholders,
unless action is required by applicable law or the rules of any exchange on
which the securities may be listed. This "blank check" preferred stock could
discourage a person from acquiring our common stock because of the
possibility that our board would issue preferred stock with terms that
significantly disadvantage the rights of our common stockholders.
There is no provision in the Restated Certificate of Incorporation
permitting cumulative voting.
PLAN OF DISTRIBUTION
We have been advised that the distribution of our common stock may be
effected from time to time in one or more transactions by the selling
stockholder acting as principal for its own account, which may involve block
transactions (1) on the New York Stock Exchange in transactions that may
include special offerings and exchange distributions pursuant to and in
accordance with the rules of the exchange, (2) in the over-the-counter market
or (3) in transactions otherwise than on the exchange or in the
over-the-counter market, or in a combination of any of these transactions.
The transactions may be effected by the selling stockholder in negotiated
transactions, at market prices prevailing at the time of sale or at prices
related to market prices. Salomon Smith Barney Inc., the selling stockholder
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and a broker-dealer may effect transactions by selling our common stock
directly or through underwriters, dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholder and may receive commissions from the purchasers of the
common stock for whom they may act as agent (which discounts or commissions
from the selling stockholder or purchasers will not exceed those customary in
the type of transactions involved).
The selling stockholder and any dealers, agents or underwriters that
participate with the selling stockholder in the distribution of our common
stock may be deemed to be "underwriters" within the meaning of the Securities
Act, and any commissions or discounts received by them and any profit on the
resale of the common stock by them might be deemed to be underwriting
discounts and commissions under the Act.
Upon being notified by the selling stockholder that any material
arrangement has been entered into with a broker or dealer for the sale of our
common stock through a secondary distribution, or a purchase by a broker or
dealer, a supplemented prospectus will be filed, if required, pursuant to
Rule 424(b) under the Securities Act, disclosing:
- The names of the brokers or dealers;
- The number of shares involved;
- The price at which the shares are being sold;
- The commission paid or the discounts or concessions allowed to the
broker or dealer; and
- Other facts material to the transaction.
LEGAL MATTERS
Certain legal matters relating to the validity of the common stock are
being passed upon by Eric P. Geller, Senior Vice President, General Counsel
and Secretary.
EXPERTS
The financial statements and schedule incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports which
have been incorporated by reference and are included herein in reliance upon
the reports of such firm given upon their authority as experts in accounting
and auditing.
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