<PAGE> 1
Exhibit (a)(1)
Offer To Purchase For Cash
All Outstanding Shares of Common Stock
and
All Outstanding Shares of Series A Cumulative Convertible Stock
of
Harcourt General, Inc.
at
$59.00 Net Per Share for each Share of Common Stock
and
$77.29 Net Per Share for each Share of
Series A Cumulative Convertible Stock
by
REH Mergersub Inc.
a wholly owned subsidiary of
Reed Elsevier Inc.
------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, DECEMBER 7, 2000,
UNLESS THE OFFER IS EXTENDED.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES OF COMMON STOCK OF HARCOURT GENERAL, INC. (THE "COMPANY" or "HARCOURT")
WHICH, TOGETHER WITH ANY SHARES OWNED, DIRECTLY OR INDIRECTLY, BY REED ELSEVIER
INC. OR REH MERGERSUB INC. OR ANY SUBSIDIARY OR CONTROLLED AFFILIATE REPRESENT,
ON THE DATE OF PURCHASE, AT LEAST A MAJORITY IN VOTING POWER OF COMMON STOCK OF
THE COMPANY (DETERMINED ON A FULLY DILUTED BASIS) AND (II) ANY APPROVALS,
CLEARANCES OR WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS
ACT OF 1976 AND OTHER REQUISITE OR ADVISABLE APPROVALS, CLEARANCES OR WAITING
PERIODS UNDER ANY OTHER MATERIAL ANTITRUST LAWS APPLICABLE TO THE OFFER, THE
MERGER OR THE SUBSEQUENT TRANSACTION HAVING BEEN OBTAINED, EXPIRED OR
TERMINATED. THE OFFER IS ALSO SUBJECT TO OTHER CONDITIONS. SEE "THE
OFFER -- CONDITIONS TO THE OFFER".
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE OFFER
AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S
STOCKHOLDERS AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES.
------------------------
IMPORTANT
If you are a holder of Harcourt common stock or preferred stock and wish to
tender your shares in the offer, you must (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal and mail or deliver the Letter of Transmittal and all
other required documents to the Depositary (as defined herein) together with
certificates representing the shares tendered or follow the procedure for
book-entry transfer set forth in "The Offer -- Procedures for Accepting the
Offer and Tendering Shares", or (2) request your broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for you. If your
shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee, you must contact that person if you wish to tender
your shares.
If you wish to tender your shares and cannot deliver certificates representing
your shares and all other required documents to the Depositary on or prior to
the Expiration Date (as defined herein) or you cannot comply with the procedures
for book-entry transfer on a timely basis, you may tender your shares pursuant
to the guaranteed delivery procedure set forth in "The Offer -- Procedures for
Accepting the Offer and Tendering Shares".
Questions and requests for assistance may be directed to MacKenzie Partners,
Inc. (the "Information Agent") or Morgan Stanley & Co. Incorporated (the "Dealer
Manager") at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other
related materials may be obtained from the Information Agent. You may also
contact your broker, dealer, commercial bank, trust company or other nominee for
copies of these documents.
------------------------
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
November 8, 2000
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
SUMMARY TERM SHEET.......................................... 1
INTRODUCTION................................................ 5
THE OFFER................................................... 7
Terms of the Offer; Expiration Date....................... 7
Acceptance for Payment and Payment for Shares............. 9
Procedures for Accepting the Offer and Tendering Shares... 10
Withdrawal Rights......................................... 12
Material United States Federal Income Tax Consequences to
Holders of Shares...................................... 13
Price Range of Shares..................................... 14
Certain Information Concerning the Company................ 15
Certain Information Concerning Reed Elsevier and
Purchaser.............................................. 17
Source and Amount of Funds................................ 19
Background of the Offer................................... 20
Purpose and Structure of the Offer........................ 22
Plans for the Company..................................... 23
The Merger Agreement...................................... 24
The Stockholder Agreement................................. 36
Appraisal Rights.......................................... 37
Certain Effects of the Offer.............................. 37
Conditions to the Offer................................... 38
Certain Legal Matters; Regulatory Approvals............... 40
Fees and Expenses......................................... 43
Miscellaneous............................................. 44
SCHEDULE I Directors and Executive Officers of Reed
Elsevier Inc., REH Mergersub Inc., Reed Elsevier
U.S. Holdings Inc., Reed Elsevier Overseas BV,
Reed Elsevier Holdings BV, Reed Elsevier plc,
Reed International P.L.C., and Elsevier NV...... I-1
</TABLE>
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<PAGE> 3
SUMMARY TERM SHEET
Reed Elsevier Inc. ("Reed Elsevier"), through its wholly owned subsidiary,
REH Mergersub Inc. ("REH"), is offering to purchase all of the outstanding
common stock, par value $1.00 per share ("common stock"), of Harcourt General,
Inc. ("Harcourt") for $59.00 per share in cash and all of the outstanding series
A cumulative convertible stock, par value $1.00 per share ("preferred stock"),
of Harcourt for $77.29 per share in cash. The following are some of the
questions you, as a stockholder of Harcourt, may have and the answers to those
questions. We urge you to carefully read the remainder of this Offer to Purchase
and the accompanying Letter of Transmittal because the information in this
summary is not complete and additional important information is contained in the
remainder of this Offer to Purchase and the Letter of Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
We are Reed Elsevier Inc., a Massachusetts corporation, and through our
wholly owned subsidiary, REH Mergersub Inc., a Delaware corporation, we are
offering to purchase all of the outstanding common stock and preferred stock of
Harcourt. REH was formed for the purpose of making this tender offer. Both Reed
Elsevier and REH are wholly owned subsidiaries of Reed Elsevier plc, a public
limited company registered in England.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding common stock and all of
the outstanding preferred stock.
HOW MUCH ARE YOU OFFERING TO PAY FOR MY SECURITIES AND WHAT IS THE FORM OF
PAYMENT?
We are offering to pay in cash the price of $59.00 per share, net to
holders of common stock, and $77.29 per share, net to holders of preferred
stock. Since each share of preferred stock is convertible into 1.31 shares of
common stock, the amount we are offering to pay for each share of preferred
stock was determined by multiplying 1.31 by the amount we are offering to pay
for each share of common stock.
WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
If you tender your shares to us in the offer, you will not have to pay
brokerage fees, commissions or similar expenses. If you own your shares through
a broker or other nominee, and your broker tenders your shares on your behalf,
your broker or nominee may charge you a fee for doing so. You should consult
your broker or nominee to determine whether any charges will apply.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
We will provide REH with sufficient funds to purchase all of the shares
tendered to us in the offer and to complete the merger which is expected to
follow the successful completion of the offer. It is anticipated that the funds
will be obtained from commercial paper and other short term borrowings, and if
necessary by drawdown against committed bank facilities. See "The
Offer -- Source and Amount of Funds".
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender your shares in the offer because the form of payment consists
solely of cash and the offer is not conditioned on our ability to obtain
financing. See "The Offer -- Certain Information Concerning Reed Elsevier and
Purchaser" and "The Offer -- Source and Amount of Funds".
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, New York City time, on
Thursday, December 7, 2000, to decide whether to tender your shares in the
offer, unless we decide to extend the offer. Further, if you are unable to
deliver the required documents in order to make a valid tender by that time, you
may be able to use the guaranteed delivery procedure described in this Offer to
Purchase. See "The Offer -- Terms of the Offer; Expiration Date" and "The
Offer -- Procedures for Accepting the Offer and Tendering Shares".
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HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform Citibank, N.A., the depositary for
the offer, of that fact. We will also make a public announcement of the
extension, not later than 9:00 a.m., New York City time, on the next business
day after the day on which the offer was scheduled to expire.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We are not obligated to purchase any shares in the offer unless there are
validly tendered and not withdrawn prior to the expiration of the offer a number
of shares of common stock which, together with any other shares owned, directly
or indirectly, by Reed Elsevier, or REH or any subsidiary or controlled
affiliate, represent at least a majority in voting power of common stock of
Harcourt (determined on a fully diluted basis). We calculate the minimum number
of shares required to be tendered to be approximately 38,309,690 shares of
common stock immediately prior to expiration of this offer. In addition, our
obligation to purchase shares in the offer is conditioned upon any approvals,
clearances or waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and other requisite or advisable approvals, clearances or waiting
periods under any other material antitrust laws applicable to the offer, the
merger or the subsequent transaction between Reed Elsevier and The Thomson
Corporation, described below, having been obtained, expired or terminated, as
well as certain other conditions. See "The Offer -- Conditions to the Offer" and
"The Offer -- Plans for the Company".
HOW DO I TENDER MY SHARES?
If you are a record holder, you may tender your shares by delivering the
certificates representing your shares, together with a completed Letter of
Transmittal, to Citibank, N.A., the depositary for the offer, or following the
procedures for a book-entry transfer, not later than the time the offer expires.
If your shares are held in street name, you must instruct your nominee to tender
the shares. If you are unable to deliver the required documents to the
depositary by the expiration of the offer, you may get some extra time to do so
by having a broker, a bank or other fiduciary which is a member of the
Securities Transfer Agents Medallion Program or other eligible institution
guarantee that the missing items will be received by the depositary within three
New York Stock Exchange trading days. However, the depositary must receive the
missing items within that three day period. See "The Offer -- Procedures for
Accepting the Offer and Tendering Shares".
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a properly executed written notice of
withdrawal (or a facsimile of one) with the required information to the
depositary prior to the expiration of the offer. See "The Offer -- Withdrawal
Rights".
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares at any time until the offer has expired. See "The
Offer -- Withdrawal Rights".
IS THERE AN AGREEMENT GOVERNING THE OFFER?
Yes. Reed Elsevier, REH and Harcourt have entered into a merger agreement
dated as of October 27, 2000. The merger agreement provides, among other things,
for the terms and conditions of the offer and the merger of REH into Harcourt
following the offer. See "The Offer -- The Merger Agreement".
WHAT DOES THE BOARD OF DIRECTORS OF HARCOURT THINK OF THE OFFER?
The board of directors of Harcourt has unanimously determined that the
offer and the merger are fair to and in the best interests of the stockholders
of Harcourt, and recommends that Harcourt stockholders accept the offer and
tender their shares. See "The Offer -- Background of the Offer" and "The
Offer -- The Merger Agreement".
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<PAGE> 5
HAVE ANY STOCKHOLDERS AGREED TO TENDER THEIR SHARES?
Yes. Members of the Smith family, including Richard A. Smith, Chairman of
the Board, and Robert A. Smith and Brian J. Knez, Presidents and Co-Chief
Executive Officers of Harcourt, have collectively agreed to convert their shares
of Class B stock of Harcourt into shares of common stock of Harcourt and to
tender those shares in the offer. We believe the shares of Class B stock of
Harcourt held by the Smith family along with the shares of common stock held by
the Smith family which the Smith family has agreed to tender represent
approximately 27.3% of the outstanding common stock of Harcourt and Class B
stock of Harcourt and approximately 25.8% of the common stock of Harcourt on a
fully diluted basis. See "The Offer -- The Stockholder Agreement".
HOW DO I TENDER MY SHARES IF I HOLD SHARES OF CLASS B STOCK, BUT AM NOT PART OF
THE SMITH FAMILY DESCRIBED ABOVE?
The offer is only for shares of common stock and preferred stock of
Harcourt. If you hold shares of Class B stock and wish to participate in the
offer, you must first convert your shares of Class B stock into common stock.
You can call Fleet National Bank, care of EquiServe, in its capacity as transfer
agent for Harcourt at (800) 736-3001 for instructions on how to convert. Even if
you do not convert your shares of Class B stock into common stock, your shares
will become automatically converted into common stock immediately prior to the
consummation of the offer as a result of the conversion by the Smith family of
its Class B stock. If you do not convert your Class B stock into common stock
and tender those shares in the Offer, you will not receive consideration for
your shares unless and until the merger occurs.
IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL HARCOURT
CONTINUE AS A PUBLIC COMPANY?
No. Following the purchase of the shares in the offer, we expect to
consummate the merger. If the merger takes place, Harcourt will be privately
owned. Even if the merger does not take place, if we purchase all the tendered
shares, there may be so few remaining stockholders and publicly held shares that
Harcourt's common stock will no longer be eligible to be traded on the New York
Stock Exchange, there may not be a public trading market for Harcourt's stock,
and Harcourt may cease making filings with the Securities and Exchange
Commission or otherwise cease being required to comply with the rules of the
Securities and Exchange Commission relating to publicly held companies.
WILL THE OFFER BE FOLLOWED BY A MERGER IF ALL HARCOURT SHARES ARE NOT TENDERED
IN THE OFFER?
Yes. If the offer is consummated, Reed Elsevier and Harcourt plan to merge
REH into Harcourt. The merger is subject to additional conditions, including the
condition that no statute, rule, regulation, executive order, decree, ruling,
injunction or other permanent order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or other
governmental body located or having jurisdiction within the United States, any
foreign state, county, city or other provincial subdivision which prohibits,
restrains or enjoins the consummation of the merger and, if required, the
stockholders of Harcourt shall have approved the merger. If that merger takes
place, Reed Elsevier will own all of the shares of Harcourt and all remaining
public stockholders (other than stockholders properly exercising appraisal
rights) will receive $59.00 per share (or any other higher price per share that
is paid in the offer) in cash in the case of holders of common stock, and $77.29
per share (or any other higher price that is paid in the offer) in cash in the
case of holders of preferred stock.
HOW WILL I BE TAXED FOR U.S. FEDERAL INCOME TAX PURPOSES?
Your receipt of cash for shares of Harcourt's common stock or Harcourt's
preferred stock in the offer will be a taxable transaction for U.S. federal
income tax purposes. You will generally recognize gain or loss in an amount
equal to the difference between (1) the cash you receive in the offer and (2)
your adjusted tax basis in the shares of Harcourt's common stock or Harcourt's
preferred stock you surrender in the offer. That gain or loss will be a capital
gain or loss if the shares are a capital asset in your hands, and will be long
term capital gain or loss if the shares have been held for more than one year at
the time the offer is completed. You are urged to consult your own tax advisor
as to the particular tax consequences to you of the offer and the merger.
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IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, stockholders (other than those
properly exercising appraisal rights) who do not tender in the offer will
receive the same amount of cash per share that they would have received had they
tendered their shares in the offer. Therefore, if the merger takes place, the
only difference to you between tendering your shares and not tendering your
shares is that if you tender your shares in the offer, you will be paid earlier
and will not have dissenters' rights. However, even if the merger does not take
place, the number of stockholders and shares of Harcourt that are still in the
hands of the public may be so small that there no longer will be an active
public trading market (or, possibly, there may not be any public trading market)
for Harcourt's shares. Also, as described above, Harcourt may cease making
filings with the Securities and Exchange Commission or may no longer be required
to comply with the rules of the Securities and Exchange Commission relating to
publicly held companies.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On October 26, 2000, the last full trading day before we announced the
merger agreement with Harcourt, the last sale price of Harcourt's common stock
reported on the New York Stock Exchange was $52.10 per share and on October 25,
2000, the last full trading day on which shares of Harcourt's preferred stock
were traded before we announced the merger agreement with Harcourt, the last
sale price of preferred stock reported on the New York Stock Exchange was $69.00
per share. On November 7, 2000 the last full trading day before the date of this
offer to purchase, the last sale price of Harcourt's common stock was $54.51 per
share and on November 2, 2000, the last full trading day on which shares of
Harcourt's preferred stock were traded before the date of this offer, the last
sale price of preferred stock reported on the New York Stock Exchange was $71.40
per share. We advise you to obtain a recent quotation for shares of Harcourt's
common stock or preferred stock, as the case may be, in deciding whether to
tender your shares.
WILL I RECEIVE MY QUARTERLY DIVIDEND IF I HAVE TENDERED MY SHARES AND THE OFFER
HAS NOT YET BEEN CONSUMMATED?
Yes.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE OFFER?
You can call our representatives MacKenzie Partners, Inc. at (212) 929-5500
(call collect) or (800) 322-2885 (toll free) or Morgan Stanley Dean Witter at
(212) 761-4834. MacKenzie Partners, Inc. is acting as the information agent and
Morgan Stanley & Co. Incorporated is acting as the dealer manager for our offer.
4
<PAGE> 7
TO THE HOLDERS OF SHARES OF COMMON STOCK AND PREFERRED STOCK OF HARCOURT
GENERAL, INC.:
INTRODUCTION
REH Mergersub Inc. ("Purchaser"), a Delaware corporation and a wholly owned
subsidiary of Reed Elsevier Inc., a Massachusetts corporation ("Reed Elsevier"),
hereby offers to purchase (i) all of the outstanding shares of common stock, par
value $1.00 per share (the "Common Shares"), of Harcourt General, Inc. (the
"Company" or "Harcourt") at a price of $59.00 per Common Share, net to the
seller in cash (the "Common Offer Price"), and (ii) all of the outstanding
shares of series A cumulative convertible stock, par value $1.00 per share (the
"Preferred Shares"), of the Company at a price of $77.29 per Preferred Share,
net to the seller in cash (the "Preferred Offer Price"), in each case, upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). The Common Shares
collectively with the Preferred Shares are referred to herein as the Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of October 27, 2000 (the "Merger Agreement") among Reed Elsevier, Purchaser
and the Company. The Merger Agreement provides that, following completion of the
Offer and the satisfaction or waiver of certain conditions in the Merger
Agreement, Purchaser will be merged into the Company (the "Merger") with the
Company continuing as the surviving corporation (the "Surviving Corporation"),
which will be wholly owned by Reed Elsevier. At the effective time of the Merger
(the "Effective Time"), each Common Share and each Preferred Share outstanding
immediately prior to the Effective Time (other than Common Shares and Preferred
Shares owned by Reed Elsevier or Purchaser or by the Company as treasury stock
or the subsidiaries of the Company, all of which will be cancelled (other than
Common Shares held by the subsidiaries of the Company), and other than Shares
that are held by stockholders, if any, who properly exercise their appraisal
rights under the Delaware General Corporation Law (the "DGCL")), will be
converted into the right to receive $59.00 (or any greater per Common Share
price paid in the Offer) in cash, without interest in the case of the Common
Shares (the "Common Stock Merger Consideration") or $77.29 (or any greater per
Preferred Share price paid in the Offer) in cash, without interest in the case
of the Preferred Shares (the "Preferred Stock Merger Consideration"). The Merger
Agreement is more fully described in "The Offer -- The Merger Agreement", which
also contains a discussion of the treatment of stock options.
Tendering stockholders who are record owners of their Shares and tender
directly to the Depositary (as defined below) will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction 6
of the Letter of Transmittal, stock transfer taxes resulting from the
acquisition of Shares by Purchaser pursuant to the Offer. Stockholders who hold
their Shares through a broker or bank should consult such institution as to
whether it charges any service fees. Reed Elsevier or Purchaser will pay all
charges and expenses of Morgan Stanley & Co. Incorporated as dealer manager
("Morgan Stanley" or the "Dealer Manager"), Citibank, N.A., as depositary (the
"Depositary"), and MacKenzie Partners, Inc., as information agent (the
"Information Agent"), incurred in connection with the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS
OF, THE STOCKHOLDERS OF HARCOURT AND RECOMMENDS THAT HARCOURT STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES.
Goldman, Sachs & Co. ("Goldman Sachs"), financial advisor to the Company,
has delivered to the Company Board its opinion dated October 27, 2000 (the
"Financial Advisor Opinion"), to the effect that, as of such date, and based on
and subject to the matters stated in such opinion, the $59.00 per Common Share
in cash to be received by holders of Common Shares (other than members of the
Smith Family Group as defined below) in the Offer and the Merger is fair from a
financial point of view to such holders. The full text of the Financial Advisor
Opinion, which sets forth the assumptions made, procedures followed, matters
considered and limits on the review undertaken, is attached as Annex A to the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9"), which has been filed by the Company with the SEC in connection with the
Offer and which is being mailed to the Company's stockholders concurrently
herewith. Stockholders are urged to, and should read the Financial Advisor
Opinion carefully.
5
<PAGE> 8
The Company has been advised that each of its directors and executive
officers intends to tender all of his or her Shares pursuant to the Offer except
to the extent that such tender would require disgorgement of profits from any
such tender to the Company under Section 16 of the Securities and Exchange Act
of 1934, as amended (the "Exchange Act").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
COMMON SHARES WHICH, TOGETHER WITH ANY SHARES OWNED, DIRECTLY OR INDIRECTLY, BY
REED ELSEVIER OR PURCHASER, OR ANY SUBSIDIARY OR CONTROLLED AFFILIATE,
REPRESENT, ON THE DATE OF PURCHASE, AT LEAST A MAJORITY IN VOTING POWER OF THE
COMMON SHARES (DETERMINED ON A FULLY DILUTED BASIS) (THE "MINIMUM CONDITION").
THE OFFER IS ALSO CONDITIONED UPON ANY APPROVALS, CLEARANCES OR WAITING PERIODS
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 (THE "HSR ACT")
AND OTHER REQUISITE OR ADVISABLE APPROVALS, CLEARANCES OR WAITING PERIODS UNDER
ANY OTHER MATERIAL ANTITRUST LAWS APPLICABLE TO THE OFFER, THE MERGER OR THE
SUBSEQUENT TRANSACTION (THE "SUBSEQUENT TRANSACTION") BETWEEN REED ELSEVIER AND
THE THOMSON CORPORATION ("THOMSON") HAVING BEEN OBTAINED, EXPIRED OR TERMINATED
AND THE SATISFACTION OF CERTAIN OTHER CONDITIONS. SEE "THE OFFER -- CONDITIONS
TO THE OFFER" AND "THE OFFER -- PLANS FOR THE COMPANY".
The Company has advised Reed Elsevier that, on October 26, 2000, 55,049,531
Common Shares were issued and outstanding; 3,289,353 Common Shares were subject
to issuance upon the exercise or conversion of employee options; 18,111,768
Common Shares were subject to issuance upon conversion of the Class B Stock, par
value $1.00 per share, of the Company (the "Class B Stock") and 1,016,184 Common
Shares were subject to issuance upon conversion of the Preferred Shares.
Purchaser believes that the Minimum Condition would be satisfied if
approximately 38,309,690 Common Shares were validly tendered and not withdrawn
immediately prior to the expiration of the Offer. Pursuant to the Stockholder
Agreement, dated as of October 27, 2000 (the "Stockholder Agreement"), Richard
A. Smith, Chairman of the Company, Nancy L. Marks, Mr. Smith's sister, Robert A.
Smith and Brian J. Knez, Presidents and Co-Chief Executive Officers and
directors of the Company, Jeffrey R. Lurie, a director of the Company, and other
members of their families and various family corporations, trusts and charitable
foundations (the "Smith Family Group") (each, a "Stockholder"), have
collectively agreed to convert all of their shares of the Class B Stock
(19,955,998 shares as of October 20, 2000) into Common Shares and tender such
shares in the Offer. Collectively, the shares of Class B Stock held by the Smith
Family Group, along with the Common Shares held by the Smith Family Group which
the Smith Family Group has agreed to tender, represent approximately 27.3% of
the outstanding Common Shares and shares of Class B Stock and approximately
25.8% of the Common Shares on a fully diluted basis. See "The Offer -- The
Stockholder Agreement".
The Merger Agreement provides that if requested by Reed Elsevier, the
Company shall, as soon as reasonably practicable following the purchase of
Shares pursuant to the Offer, and from time to time thereafter, use its best
efforts to cause a majority of directors of the Company to consist of persons
designated or elected by Reed Elsevier. See "The Offer -- The Merger Agreement".
The Merger is subject to the satisfaction or waiver of certain conditions,
including, if required, the approval of the Merger Agreement by the Company's
stockholders. If the Minimum Condition is satisfied, Purchaser would have
sufficient voting power to approve the Merger without the affirmative vote of
any other stockholder of the Company. The Company has agreed, if required, to
cause a meeting of its stockholders to be held as promptly as practicable
following consummation of the Offer for the purposes of considering and taking
action upon the approval and adoption of the Merger Agreement. Reed Elsevier,
Purchaser and the Smith Family Group have agreed to vote their Shares in favor
of the approval and adoption of the Merger Agreement. See "The Offer -- The
Merger Agreement".
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
6
<PAGE> 9
THE OFFER
TERMS OF THE OFFER; EXPIRATION DATE
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not properly withdrawn as permitted
under "The Offer -- Withdrawal Rights". The term "Expiration Date" means 12:00
midnight, New York City time, on Thursday, December 7, 2000, unless Purchaser
shall have extended the period of time for which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by Purchaser, shall expire.
The Offer is conditioned upon the satisfaction of the Minimum Condition and
the other conditions set forth in "The Offer -- Conditions to the Offer".
Subject to the provisions of the Merger Agreement, Purchaser may waive, in whole
or in part at any time or from time to time, any such condition; provided that,
unless previously approved by the Company in writing, Purchaser may not waive
the Minimum Condition or the following conditions set forth in clauses (a), (e),
and (f) under "The Offer -- Conditions to the Offer":
- condition (a) that, among other things, provides that no laws or court
orders applicable to Reed Elsevier, Purchaser, Harcourt, Thomson, the
Offer or the Merger makes illegal, restrains or prohibits the Offer or
the consummation of the Merger, or prohibits or limits in any material
respect the ownership or operation by Harcourt or Reed Elsevier of a
material portion of Harcourt's business or assets, or the ownership or
operation by Thomson of a material portion of the business or assets to
be acquired by Thomson in the Subsequent Transaction;
- condition (e) that the Merger Agreement shall not have been terminated in
accordance with its terms and the Offer shall not have been terminated
with the consent of Harcourt; and
- condition (f) that any approvals, clearances or waiting periods under the
HSR Act and other requisite or advisable approvals, clearances or waiting
periods under any other material antitrust law applicable to the Offer,
the Merger or the Subsequent Transaction having been obtained, expired or
terminated.
"The Offer -- Conditions to the Offer" sets forth these conditions in their
entirety. See "The Offer -- Plans for the Company" for a discussion of certain
additional limitations on Purchaser's right to waive conditions to the Offer.
Purchaser may not, unless previously approved by the Company in writing:
- decrease the price per Share payable in the Offer,
- change the form of consideration payable in the Offer,
- reduce the maximum number of Shares to be purchased in the Offer,
- impose conditions to the Offer in addition to the conditions set forth in
"The Offer -- Conditions to the Offer", or
- modify or amend the Offer Conditions or the Offer, in each case, in a
manner which is adverse to the holders of Shares.
Purchaser may, without the consent of the Company, (i) in its sole
discretion, extend the expiration date of the Offer for one or more periods (not
in excess of ten business days) but in no event later than July 24, 2001, if any
condition of the Offer has not been satisfied or waived (other than as a result
of the failure by Reed Elsevier or Purchaser to perform any of its obligations
under the Merger Agreement) and (ii) extend the expiration date of the Offer as
required by applicable law.
Purchaser shall, at the request of the Company, extend the expiration date
of the Offer for one or more periods (not in excess of ten business days each)
but in no event later than July 24, 2001, if at the then-scheduled expiration
date any of the Offer Conditions are not satisfied or waived. Purchaser shall
also extend
7
<PAGE> 10
the Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, such announcement in the
case of an extension to be made no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date, in
accordance with the public announcement requirements of Rule 14e-1(d) under the
Exchange Act. Subject to applicable law (including Rules 14d-4(d) and 14d-6(c)
under the Exchange Act, which require that material changes in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to inform
them of such changes), and without limiting the manner in which Purchaser may
choose to make any public announcement, Purchaser shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a press release to the Dow Jones News Service.
If Purchaser extends the time during which the Offer is open, is delayed in
its acceptance for payment of or payment for Shares or is unable to pay for
Shares pursuant to the Offer for any reason, then, without prejudice to
Purchaser's rights under the Offer, the Depositary may retain tendered Shares on
behalf of Purchaser, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to withdrawal rights as described herein
under "The Offer -- Withdrawal Rights". However, the ability of Purchaser to
delay the payment for Shares that Purchaser has accepted for payment is limited
by (i) Rule 14e-1(c) under the Exchange Act which requires that a bidder pay the
consideration offered or return the securities deposited by or on behalf of
stockholders promptly after the termination or withdrawal of such bidder's offer
and (ii) the terms of the Merger Agreement, which require that, on the terms and
subject to prior satisfaction or waiver of the Offer Conditions, Purchaser shall
accept for payment and pay for Shares as soon as it is permitted to do so under
applicable law.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will disseminate additional tender offer materials (including
by public announcement as set forth above) and extend the Offer to the extent
required by Rules 14d-4(d), 14d-6(c) and 14e-1 under the Exchange Act. The
minimum period during which an offer must remain open following material changes
in the terms of the Offer, other than a change in price, percentage of
securities sought or inclusion of or changes to a dealer's soliciting fee, will
depend upon the facts and circumstances, including the materiality, of the
changes. In the SEC's view, an offer should remain open for a minimum of five
business days from the date the material change is first published, sent or
given to stockholders. However, a minimum of ten (10) business days from the
date of such change may be required to allow for adequate dissemination and
investor response if a change relates to the price to be paid or, subject to
certain limitations, a change in the percentage of securities sought or the
inclusion of or change to a dealer's soliciting fee. Accordingly, if, prior to
the Expiration Date, Purchaser decreases the number of Shares being sought or
increases or decreases the consideration offered pursuant to the Offer, and if
the Offer is scheduled to expire at any time earlier than the tenth (10th)
business day from the date that notice of such increase or decrease is first
published, sent or given to stockholders, Purchaser will extend the Offer until
at least the expiration of such tenth (10th) business day. For purposes of the
Offer, a "business day" means any day other than a Saturday, Sunday or a U.S.
federal holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, New York City time.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished, for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing.
8
<PAGE> 11
ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer, the Merger
Agreement and applicable law (including, if the Offer is extended or amended,
the terms and conditions of any such extension or amendment), Purchaser will
accept for payment and will pay for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn pursuant to the Offer as soon as it
is permitted to do so under applicable law. Subject to the Merger Agreement and
compliance with Rule 14e-1(c) under the Exchange Act, Purchaser expressly
reserves the right to delay payment for Shares in order to comply in whole or in
part with any applicable law. See "The Offer -- Certain Legal Matters;
Regulatory Approvals".
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) the certificates
evidencing such Shares (the "Share Certificates") or confirmation of a
book-entry transfer (a "Book-Entry Confirmation") of such Shares into the
Depositary's account at The Depository Trust Company (the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in "The Offer -- Procedures for
Accepting the Offer and Tendering Shares", (2) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message (as defined below) in lieu of the Letter of Transmittal and (3) any
other documents required by the Letter of Transmittal. Accordingly, payment may
be made to tendering stockholders at different times if delivery of the Shares
and other required documents occur at different times.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
Common Offer Price or the Preferred Offer Price, as the case may be, therefor
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payments from Purchaser and transmitting such payments to
tendering stockholders whose Shares have been accepted for payment. If, for any
reason whatsoever, acceptance for payment of any Shares tendered pursuant to the
Offer is delayed, or Purchaser is unable to accept for payment Shares tendered
pursuant to the Offer, then, without prejudice to Purchaser's rights under "The
Offer -- Terms of the Offer; Expiration Date", the Depositary may, nevertheless,
on behalf of Purchaser, retain tendered Shares, and such Shares may not be
withdrawn, except to the extent that the tendering stockholders are entitled to
withdrawal rights as described in "The Offer -- Withdrawal Rights" and as
otherwise required by Rule 14e-1(c) under the Exchange Act.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE COMMON OFFER PRICE FOR COMMON
SHARES OR THE PREFERRED OFFER PRICE FOR PREFERRED SHARES BE PAID, REGARDLESS OF
ANY DELAY IN MAKING SUCH PAYMENT.
If Purchaser increases the consideration to be paid for Shares pursuant to
the Offer, Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedure set forth in "The Offer -- Procedures for Accepting the Offer and
Tendering Shares", such Shares will be credited to an account maintained at the
Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
Reed Elsevier reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates, the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but any such
transaction or assignment will not relieve Reed Elsevier of its obligations
under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
9
<PAGE> 12
PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES
Valid Tenders. In order for a stockholder validly to tender Shares
pursuant to the Offer, either (1) the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message in lieu of the Letter of Transmittal) and any other documents required
by the Letter of Transmittal must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and either the
Share Certificates evidencing tendered Shares must be received by the Depositary
at such address or such Shares must be tendered pursuant to the procedure for
book-entry transfer described below and a Book-Entry Confirmation must be
received by the Depositary, in each case prior to the Expiration Date, or (2)
the tendering stockholder must comply with the guaranteed delivery procedures
described below.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, that states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against such participant.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two (2) business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the system of the Book-Entry
Transfer Facility may make a book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer at the Book-Entry Transfer
Facility, either the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees, or
an Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must, in any case, be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedure described below.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (1) if the Letter of Transmittal is signed by the registered holder
of the Shares tendered therewith, unless such holder has completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal or (2) if the Shares are
tendered for the account of a firm that is participating in the Security
Transfer Agents Medallion Program (an "Eligible Institution"). In all other
cases, all signatures on a Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a Share
Certificate is registered in the name of a person or persons other than the
signer of the Letter of Transmittal, or if payment is to be made or delivered
to, or a Share Certificate not accepted for payment or not tendered is to be
issued in the name of, a person other than the registered holder(s), then the
Share Certificate must be endorsed or accompanied by appropriate duly executed
stock powers, in either case signed exactly as the name(s) of the registered
holder(s) appear on the Share Certificate, with the signature(s) on such Share
Certificate or stock powers guaranteed by an Eligible Institution as provided in
the Letter of Transmittal. See Instructions 1 and 5 of the Letter of
Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and the Share Certificates evidencing such stockholder's Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date,
10
<PAGE> 13
or such stockholder cannot complete the procedure for delivery by book-entry
transfer on a timely basis, such Shares may nevertheless be tendered if all of
the following conditions are satisfied:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by Purchaser, is received
prior to the Expiration Date by the Depositary as provided below; and
(3) the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any
other documents required by the Letter of Transmittal are received by
the Depositary within three (3) New York Stock Exchange, Inc. ("NYSE")
trading days after the date of execution of such Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the form of Notice
of Guaranteed Delivery made available by Purchaser.
In all cases, Shares will not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) is
received by the Depositary.
THE METHOD OF DELIVERY OF SHARES, SHARE CERTIFICATES, THE LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE
BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING
STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, RECEIPT OF A
BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders of any Shares determined by it not
to be in proper form or if the acceptance for payment of such Shares may, in the
opinion of its counsel, be unlawful. Purchaser also reserves the absolute right
to waive any defect or irregularity in the tender of any Shares of any
particular stockholder, whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed to
have been validly made until all defects and irregularities have been cured or
waived to the satisfaction of Purchaser. None of Purchaser, the Dealer Manager,
the Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification. Purchaser's interpretation
of the terms and conditions of the Offer (including the Letter of Transmittal
and the instructions thereto) will be final and binding.
Other Requirements. By executing the Letter of Transmittal (or delivering
an Agent's Message) as set forth above, a tendering stockholder irrevocably
appoints designees of Purchaser as such stockholder's proxies, each with full
power of substitution, in the manner set forth in the Letter of Transmittal, to
the full extent of such stockholder's rights with respect to the Shares tendered
by such stockholder and accepted for payment by Purchaser (including, with
respect to any and all other Shares or other securities issued or issuable in
respect of such Shares on or after the date of this Offer to Purchase). All such
proxies shall be considered coupled with an interest in the tendered Shares.
Such appointment will be effective when, and only to the extent that, Purchaser
accepts such Shares for payment. Upon such acceptance for payment, all prior
proxies given by such stockholder with respect to such Shares (and such other
Shares and securities) will be revoked without further action, and no subsequent
proxies may be given nor any subsequent written consent executed by such
stockholder (and, if given or executed, will not be deemed to be effective) with
respect thereto. The designees of Purchaser will, with respect to the Shares
(and other securities) for which the appointment is effective, be empowered to
exercise any voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders or any adjournment or
11
<PAGE> 14
postponement thereof, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares to the extent such Shares have voting rights (including voting at
any meeting of stockholders then scheduled or acting by written consent without
a meeting).
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the Offer, as well as
the tendering stockholder's representation and warranty that (i) such
stockholder owns the Shares being tendered within the meaning of Rule 14e-4
promulgated under the Exchange Act, (ii) the tender of such Shares complies with
Rule 14e-4 and (iii) such stockholder has the full power and authority to tender
and assign the Shares tendered, as specified in the Letter of Transmittal.
Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the tendering stockholder and Purchaser
upon the terms and subject to the conditions of the Offer.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO
STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES PURSUANT TO THE OFFER, EACH UNITED
STATES HOLDER IS URGED TO PROVIDE THE DEPOSITARY WITH THE STOCKHOLDER'S CORRECT
SOCIAL SECURITY NUMBER OR OTHER TAXPAYER IDENTIFICATION NUMBER, OR CERTIFY THAT
THE STOCKHOLDER IS NOT SUBJECT TO BACKUP WITHHOLDING, BY COMPLETING THE
SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL. IF THE STOCKHOLDER DOES NOT
ESTABLISH THAT BACKUP WITHHOLDING DOES NOT APPLY TO THAT STOCKHOLDER, THE
DEPOSITARY IS REQUIRED TO WITHHOLD 31% OF ANY PAYMENTS MADE TO SUCH STOCKHOLDER.
SEE INSTRUCTIONS TO THE LETTER OF TRANSMITTAL. IF A STOCKHOLDER IS A NONRESIDENT
ALIEN OR FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, THE STOCKHOLDER IS
URGED TO GIVE THE DEPOSITARY A COMPLETED W-8BEN (CERTIFICATE OF FOREIGN STATUS)
PRIOR TO RECEIPT OF PAYMENT.
WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after January 6, 2001, unless theretofore accepted
for payment as provided in this Offer to Purchase.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to Purchase.
Any such notice of withdrawal must specify the name and address of the person
who tendered the Shares to be withdrawn, the class and number of Shares to be
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If Share Certificates
evidencing Shares to be withdrawn have been delivered or otherwise identified to
the Depositary, then, prior to the physical release of such Share Certificates,
the serial numbers shown on such Share Certificates must be submitted to the
Depositary and the signature(s) on the notice of withdrawal must be guaranteed
by an Eligible Institution, unless such Shares have been tendered for the
account of an Eligible Institution. If Shares have been tendered pursuant to the
procedure for book-entry transfer as set forth in "The Offer -- Procedures for
Accepting the Offer and Tendering Shares", any notice of withdrawal must also
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares and must otherwise comply with the
Book-Entry Transfer Facility's procedures.
If Purchaser extends the periods of time during which the Offer is open, is
delayed in its acceptance for payment of Shares or is unable to accept Shares
for payment pursuant to the Offer for any reason, then, without prejudice to
Purchaser's rights under the Offer, the Depositary may, nevertheless, on behalf
of Purchaser, retain tendered Shares, and such Shares may not be withdrawn
except to the extent that tendering stockholders are entitled to withdrawal
rights as described herein.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
the Dealer Manager, the Depositary, the Information Agent or any other person
will be under duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
12
<PAGE> 15
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in "The Offer --
Procedures for Accepting the Offer and Tendering Shares".
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO HOLDERS OF SHARES
This summary of the material United States federal income tax consequences
to the Company's stockholders of the Offer and the Merger is based on the law as
currently in effect. This summary does not discuss all of the tax consequences
that may be relevant to a stockholder in light of its particular circumstances
or to stockholders subject to special rules, such as financial institutions,
broker-dealers, tax-exempt organizations, stockholders who are not citizens or
residents of the United States or that are foreign corporations, foreign
partnerships or foreign estates or trusts as to the United States, dissenting
stockholders, stockholders that hold their Shares as part of a straddle or a
hedging, constructive sale or conversion transaction and stockholders who
acquired their Shares through the exercise of an employee stock option or
otherwise as compensation.
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE OFFER AND THE MERGER, INCLUDING THE
EFFECT OF UNITED STATES STATE AND LOCAL TAX LAWS OR FOREIGN TAX LAWS.
Offer
The receipt by a stockholder of cash for Shares pursuant to the Offer will
be a taxable transaction for United States federal income tax purposes. A
stockholder will recognize gain or loss in an amount equal to the difference
between the cash received by the stockholder pursuant to the Offer and the
stockholder's adjusted tax basis in the Shares surrendered by the stockholder
pursuant to the Offer. That gain or loss will be a capital gain or loss if the
Shares are a capital asset in the hands of the stockholder, and will be long
term capital gain or loss if the Shares have been held for more than one year at
the time of the completion of the Offer. Long term capital gain of individuals
is subject to tax at a maximum rate of 20%. The ability to deduct capital loss
is subject to limitations.
A stockholder of the Company may be subject to backup withholding at a rate
of 31% unless, at the time it surrenders Shares, it provides its taxpayer
identification number and certifies that the number is correct or properly
certifies that it is awaiting a taxpayer identification number, or unless an
exemption is demonstrated to apply. Backup withholding is not an additional tax.
Amounts so withheld can be refunded or credited against the federal income tax
liability of the stockholder, provided appropriate information is forwarded to
the IRS. A stockholder of the Company should complete the Substitute Form W-9
that is included in the Letter of Transmittal.
Merger
The receipt by a stockholder of cash pursuant to the Merger would result in
federal income tax consequences similar to those described above. Stockholders
that receive cash pursuant to the Merger are urged to consult their own tax
advisors.
13
<PAGE> 16
PRICE RANGE OF SHARES
The Common Shares are authorized for quotation on the New York Stock
Exchange under the symbol "H". The following table sets forth, for the periods
indicated, the high and low sales prices per Common Share for the periods
indicated. Common Share prices are as reported on the New York Stock Exchange
based on published financial sources.
<TABLE>
<CAPTION>
COMMON SHARES
----------------
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR 1999:*
First Quarter............................................ $54.94 $47.63
Second Quarter........................................... $50.00 $43.94
Third Quarter............................................ $54.00 $46.31
Fourth Quarter........................................... $47.13 $36.75
FISCAL YEAR 2000:
First Quarter............................................ $41.50 $33.13
Second Quarter........................................... $40.50 $33.19
Third Quarter............................................ $57.56 $36.25
Fourth Quarter........................................... $62.38 $51.50
FISCAL YEAR 2001:
First Quarter (through November 7, 2000)................. $55.74 $54.20
</TABLE>
---------------
* With the exception of the fourth quarter "low" price in fiscal 1999, these
stock prices are prior to the tax-free distribution of shares in The Neiman
Marcus Group, which was effective on October 22, 1999.
On June 16, 2000, the last full trading day before the public announcement
that the Company was exploring strategic alternatives, the last sale price per
Common Share on the New York Stock Exchange was $38.01. On October 26, 2000, the
last full trading day before the public announcement of the Merger Agreement,
the last sale price per Common Share on the New York Stock Exchange was $52.10.
On November 7, 2000, the last full day of trading before the commencement of the
Offer, the last sale price per Common Share on the New York Stock Exchange was
$54.51 per Common Share. Stockholders are urged to obtain a current market
quotation for the Common Shares. As of November 3, 2000 there were approximately
6,987 holders of record of Common Shares and 55,113,075 outstanding Common
Shares.
The Preferred Shares are authorized for quotation on the New York Stock
Exchange under the symbol "HPRA". The following table sets forth, for the
periods indicated, the high and low sales prices per Preferred Share for the
periods indicated. Preferred Share prices are as reported on the New York Stock
Exchange based on published financial sources.
<TABLE>
<CAPTION>
PREFERRED SHARES
----------------
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR 1999:
First Quarter............................................ $60.00 $55.00
Second Quarter........................................... $51.25 $48.13
Third Quarter............................................ $56.75 $49.75
Fourth Quarter........................................... $52.00 $45.00
FISCAL YEAR 2000:
First Quarter............................................ $52.38 $42.50
Second Quarter........................................... $50.00 $43.75
Third Quarter............................................ $75.00 $46.75
Fourth Quarter........................................... $80.00 $69.00
FISCAL YEAR 2001:
First Quarter (through November 7, 2000)................. $71.40 $71.40
</TABLE>
On June 9, 2000, the last full trading day on which Preferred Shares were
traded before the public announcement that the Company was exploring strategic
alternatives, the last sale price per Preferred Share
14
<PAGE> 17
on the New York Stock Exchange was $54.38. On October 25, 2000, the last full
trading day on which Preferred Shares were traded before the public announcement
of the Merger Agreement, the last sale price per Preferred Share on the New York
Stock Exchange was $69.00. On November 2, 2000, the last full trading day on
which Preferred Shares were traded before the commencement of the Offer, the
last sale price per Preferred Share on the New York Stock Exchange was $71.40
per Preferred Share. Stockholders are urged to obtain a current market quotation
for the Preferred Shares. As of November 3, 2000 there were approximately 394
holders of record of Preferred Shares and 727,235 outstanding Preferred Shares.
CERTAIN INFORMATION CONCERNING THE COMPANY
The Company. Harcourt General, Inc. is a Delaware corporation. The address
of the Company's principal executive offices is 27 Boylston Street, Chestnut
Hill, Massachusetts 02467. The telephone number of the Company at such offices
is (617) 232-8200.
The Company 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, the
Company owned a controlling interest in The Neiman Marcus Group, Inc. ("NMG"), a
high-end specialty retailer. On October 22, 1999, the Company distributed to its
stockholders approximately 21.4 million of the 26.4 million shares of NMG common
stock held by the Company. The Company operates its business through four
principal segments, as described briefly below.
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 ("HRW"); 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 HRW. 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.
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 HRW imprints. Harcourt Learning Direct and Harcourt Higher
Education provide 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, including reference guides and
newsletters for financial, legal and human resources professionals.
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 NETglobal (including NETg and
Knowledge Communication, Inc. ("KCI")); The Psychological Corporation ("TPC");
Assessment Systems, Inc. ("ASI"); and Drake Beam Morin ("DBM"). 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. KCI provides technology-based
professional development and business skills training. TPC provides tests and
related products and services for educational and psychological assessment. ASI
develops and administers computer-based tests and related services for
professional and regulatory licensing and credentialing and corporate
pre-employment testing. DBM is one of
15
<PAGE> 18
the world's leading organizational and individual transition consulting firms,
assisting organizations and individuals worldwide in outplacement, career and
transition management and employee selection.
The Worldwide Scientific, Technical and Medical ("STM") Group is a leading
provider of information products through both traditional and new
technology-enabled channels to health, scientific and technical professionals
worldwide. The STM 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.
Capital Structure. The authorized capital of the Company consists of (a)
150,000,000 shares of Common Stock, par value $1.00 per share, (b) 80,000,000
shares of Class B Stock, par value $1.00 per share, (c) 100,000,000 shares of
Class C Stock, par value $1.00 per share, and (d) 40,000,000 shares of preferred
stock, par value $1.00 per share, of which 10,000,000 shares of such preferred
stock were designated as Series A cumulative convertible stock.
As of November 3, 2000, the Company had 55,113,075 Common Shares
outstanding, 18,111,768 shares of Class B Stock outstanding, and 727,235
Preferred Shares outstanding. As of November 3, 2000, 2,276,750 Common Shares
were held in the treasury of the Company.
The Company has issued options to acquire shares of common stock pursuant
to the Harcourt General, Inc. 1988 Stock Incentive Plan and the Harcourt
General, Inc. 1997 Incentive Plan. As of November 3, 2000, there were options
outstanding to purchase 3,289,353 Common Shares.
Available Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational reporting requirements
of the Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the SEC relating to its
business, financial condition and other matters. Such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the SEC's regional offices located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Information regarding the
public reference facilities may be obtained from the SEC by telephoning
1-800-SEC-0330. The Company's filings are also available to the public on the
SEC's Internet site (http://www.sec.gov). Copies of such materials may also be
obtained by mail from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or is based upon
reports and other documents on file with the SEC or otherwise publicly
available. Although neither Purchaser nor Reed Elsevier has any knowledge that
would indicate that any statements contained herein based upon such reports and
documents are untrue, neither Purchaser nor Reed Elsevier takes any
responsibility for the accuracy or completeness of the information contained in
such reports and other documents or for any failure by the Company to disclose
events that may have occurred and may affect the significance or accuracy of any
such information but that are unknown to Purchaser or Reed Elsevier.
Certain Projections. The Company does not, as a matter of course, make
public any forecasts as to its future financial performance. However, in
connection with Reed Elsevier's review of the transactions contemplated by the
Merger Agreement, the Company provided Reed Elsevier with certain projected
financial information concerning the Company. Such information included, among
other things, the Company's projections of consolidated Revenue, Gross Profit,
and Total Operating Income for the Company's operating subsidiaries and excluded
central corporate expenses and financing items. Set forth below is a
16
<PAGE> 19
summary of such projections. These projections should be read together with the
financial statements of the Company that can be obtained from the SEC as
described above.
<TABLE>
<CAPTION>
FISCAL YEARS ENDING OCTOBER 31,
--------------------------------------------------------------------
2000 2001 2002 2003 2004 2005
-------- -------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Revenue..................... $2,383.9 $2,597.6 $2,869.3 $3,173.6 $3,562.8 $3,910.3
Gross Profit................ 1,595.8 1,743.4 1,947.0 2,172.9 2,469.5 2,725.8
Total Operating Income*..... 384.8 437.0 514.2 611.2 734.3 835.7
</TABLE>
---------------
* Total Operating Income is presented after amortization of goodwill and
intangible assets.
REED ELSEVIER AND PURCHASER UNDERSTAND THAT THE PROJECTIONS WERE NOT
PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH PUBLISHED
GUIDELINES OF THE SEC OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS OR FORECASTS AND ARE INCLUDED
HEREIN ONLY BECAUSE SUCH INFORMATION WAS PROVIDED TO REED ELSEVIER AND PURCHASER
IN CONNECTION WITH THEIR EVALUATION OF A BUSINESS COMBINATION TRANSACTION. THESE
FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE PROJECTIONS. THE
COMPANY HAS ADVISED PURCHASER AND REED ELSEVIER THAT THESE PROJECTIONS WERE TO
BE USED INTERNALLY FOR BUDGETING AND OTHER MANAGEMENT DECISIONS AND ARE
SUBJECTIVE IN MANY RESPECTS AND THUS SUSCEPTIBLE TO INTERPRETATIONS AND PERIODIC
REVISION BASED ON ACTUAL EXPERIENCE AND BUSINESS DEVELOPMENTS. ALTHOUGH
PRESENTED WITH NUMERICAL SPECIFICITY, THE PROJECTIONS ALSO REFLECT NUMEROUS
ASSUMPTIONS (NOT ALL OF WHICH WERE PROVIDED TO REED ELSEVIER AND PURCHASER), ALL
MADE BY MANAGEMENT OF THE COMPANY, WITH RESPECT TO INDUSTRY PERFORMANCE, GENERAL
BUSINESS, ECONOMIC, MARKET, COMPETITIVE AND FINANCIAL CONDITIONS AND OTHER
MATTERS INCLUDING THE IMPACT OF TECHNOLOGY, ALL OF WHICH ARE DIFFICULT TO
PREDICT, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL, AND NONE OF WHICH WERE
SUBJECT TO APPROVAL BY REED ELSEVIER OR PURCHASER. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS, INCLUDING
WITHOUT LIMITATION ASSUMPTIONS ON THE IMPACT OF NEW AND DEVELOPING BUSINESSES
AND MARKETS, WILL PROVE ACCURATE OR THAT ANY OF THE PROJECTIONS WILL BE
REALIZED. MOREOVER SUCH PROJECTIONS ARE SUBJECT TO SIGNIFICANT UNCERTAINTIES AND
CONTINGENCIES WHICH ARE COMPOUNDED TO THE EXTENT THE PROJECTIONS ARE FURTHER
REMOVED FROM THE DATE OF PREPARATION. THE COMPANY EXPECTS THAT THERE WILL BE
DIFFERENCES BETWEEN ACTUAL AND PROJECTED RESULTS, AND ACTUAL RESULTS MAY BE
MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE PROJECTIONS. THE
INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT
ANY OF REED ELSEVIER, PURCHASER, THE COMPANY OR THEIR RESPECTIVE AFFILIATES OR
REPRESENTATIVES CONSIDERED OR CONSIDER THE PROJECTIONS TO BE A RELIABLE
PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED UPON AS
SUCH. NONE OF REED ELSEVIER, PURCHASER, THE COMPANY OR ANY OF THEIR RESPECTIVE
AFFILIATES OR REPRESENTATIVES HAS MADE OR MAKES ANY REPRESENTATION TO ANY PERSON
REGARDING THE ULTIMATE PERFORMANCE OF THE COMPANY COMPARED TO THE INFORMATION
CONTAINED IN THE PROJECTIONS, AND NONE OF THEM INTENDS TO UPDATE OR OTHERWISE
REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN
MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT THAT ANY OR
ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN ERROR.
THE PROJECTIONS DO NOT REFLECT THE CONSEQUENTIAL EFFECTS OF THE MERGER NOR
THE IMPACT ON THE COMPANY OF THE SUBSEQUENT TRANSACTION, NOR DO THEY TAKE ANY
ACCOUNT OF THE MANNER IN WHICH REED ELSEVIER MAY WISH TO MANAGE THE BUSINESS OF
THE COMPANY NOR THE EFFECTS OF COMBINING THE BUSINESS OF THE COMPANY WITH THE
BUSINESS OF REED ELSEVIER.
CERTAIN INFORMATION CONCERNING REED ELSEVIER AND PURCHASER
Reed Elsevier is a Massachusetts corporation with its principal offices
located at 275 Washington Street Newton, MA 02458. The telephone number of Reed
Elsevier is (617) 964-3030. Reed Elsevier, through its several divisions and
subsidiaries, is principally engaged in the following sectors: scientific and
technical information; business-to-business information; and legal information.
17
<PAGE> 20
Purchaser is a Delaware corporation with its principal offices located at
275 Washington Street Newton, MA 02458, c/o Reed Elsevier Inc. The telephone
number of Purchaser is (617) 558-4227. Purchaser is a wholly-owned subsidiary of
Reed Elsevier. Purchaser has not carried on any activities other than in
connection with the Merger Agreement.
Each of Reed Elsevier and Purchaser are wholly-owned subsidiaries of Reed
Elsevier U.S. Holdings Inc., a Delaware corporation ("Reed Elsevier US"). Reed
Elsevier US's principal offices are located at 1105 North Market Street, 9th
Floor, Wilmington, Delaware 19801 and its telephone number is (302) 427-2672. It
is a holding company for companies that are principally engaged in the following
sectors: scientific and technical information; business-to-business information;
and legal information.
92.04% of the outstanding shares of capital stock of Reed Elsevier US is
owned by Reed Elsevier Overseas BV, a company organized under the laws of The
Netherlands ("Reed Elsevier Overseas") and the remaining 7.96% is owned by Reed
Elsevier (7.50%) and Reed Technology & Information Services Inc., a Delaware
corporation ("Reed Technology & Information Services") (0.46%). Reed Elsevier
Overseas' principal offices are located at Van de Sande Bakhuyzenstraat 4, 1061
AG, Amsterdam, The Netherlands, and its telephone number is (31) (20) 515-9341.
It is a holding company for companies that are principally engaged in the
following sectors: scientific and technical information; business-to-business
information; and legal information. Reed Technology & Information Services is a
wholly-owned subsidiary of Reed Elsevier that is principally involved in
electronic database management. Reed Technology & Information Services'
principal offices are located at 1 Progress Drive, Horsham, Pennsylvania 19044
and its telephone number is (215) 682-5000.
95% of the outstanding shares of capital stock of Reed Elsevier Overseas is
owned by Reed Elsevier Holdings BV, a company organized under the laws of The
Netherlands ("Reed Elsevier Holdings") and the remaining 5% is owned by Elsevier
NV, a public limited company organized under the laws of The Netherlands
("Elsevier"). Reed Elsevier Holdings' principal offices are located at Van de
Sande Bakhuyzenstraat 4, 1061 AG Amsterdam, The Netherlands, and its telephone
number is (31)(20) 515-9341. It is a holding company for companies that are
principally engaged in the following sectors: scientific and technical
information; business-to-business information; and legal information. Elsevier's
principal offices are located at Van de Sande Bakhuyzenstraat 4, 1061 AG
Amsterdam, The Netherlands, and its telephone number is (31)(20) 515-9341. It is
a holding company for companies that are principally engaged in the following
sectors: scientific and technical information; business-to-business information;
and legal information. Shares of Elsevier are listed on the Amsterdam Stock
Exchange and London Stock Exchange and, through American Depositary Shares, on
the New York Stock Exchange.
Reed Elsevier Holdings is a wholly-owned subsidiary of Reed Elsevier plc, a
public limited company registered in England. Reed Elsevier plc's principal
offices are located at 25 Victoria Street, London SW1H 0EX, England, and its
telephone number is (44)(20) 7222-8420. Reed Elsevier plc is a world leading
publisher and information provider with its principal operations in the
following sectors: scientific and technical information; business-to-business
information and legal information.
50% of the voting power of Reed Elsevier plc is owned by Elsevier, and 50%
is owned by Reed International P.L.C., a public limited company registered in
England ("Reed International"). Reed International is a holding company for
companies that are principally engaged in the following sectors: scientific and
technical information; business-to-business information; and legal information.
Reed International's principal offices are located at 25 Victoria Street, London
SW1H 0EX, England, and its telephone number is (44)(20) 7222-8420. Shares of
Reed International are listed on the London Stock Exchange, Amsterdam Stock
Exchange and, through American Depositary Shares, on the New York Stock
Exchange. Reed International owns indirectly a 5.8% interest in Elsevier.
The name, citizenship, business address, business phone number, principal
occupation or employment and five-year employment history for each of the
directors and executive officers of Reed Elsevier, Purchaser, Reed Elsevier US,
Reed Elsevier Overseas, Reed Elsevier Holdings, Reed Elsevier plc, Reed
International and Elsevier and certain other information are set forth in
Schedule I hereto.
18
<PAGE> 21
Except as described in this Offer to Purchase, (1) none of Reed Elsevier,
Purchaser nor, to the best knowledge of Reed Elsevier and Purchaser, any of the
persons listed in Schedule I to this Offer to Purchase or any associate or
majority-owned subsidiary of Reed Elsevier or Purchaser or any of the persons so
listed beneficially owns or has any right to acquire, directly or indirectly,
any Shares and (2) none of Reed Elsevier, Purchaser nor, to the best knowledge
of Reed Elsevier and Purchaser, any of the persons or entities referred to above
nor any director, executive officer or subsidiary of any of the foregoing has
effected any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement or as otherwise described in
this Offer to Purchase, none of Reed Elsevier, Purchaser nor, to the best
knowledge of Reed Elsevier and Purchaser, any of the persons listed in Schedule
I to this Offer to Purchase, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or voting of such securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
loans, guarantees against loss, guarantees of profits, division of profits or
loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, during the past two years,
none of Reed Elsevier, Purchaser nor, to the best knowledge of Reed Elsevier and
Purchaser, any of the persons listed on Schedule I hereto, has had any business
relationship or transaction with the Company or any of its executive officers,
directors or affiliates that is required to be reported under the rules and
regulations of the SEC applicable to the Offer. Except as set forth in this
Offer to Purchase, there have been no contacts, negotiations or transactions
between Reed Elsevier or any of its subsidiaries or, to the best knowledge of
Reed Elsevier, any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets. None of the persons listed in Schedule I has,
during the past five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). None of the persons listed in
Schedule I has, during the past five years, been a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws.
SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned upon any financing arrangements. The total
amount of funds available to Purchaser to consummate the Offer and the Merger is
approximately $6.5 billion, covering the acquisition cost, the potential
refinancing of Harcourt debt and the funding of working capital and net
corporate liabilities. This amount has not been reduced by proceeds to be
received from Thomson in connection with the Subsequent Transaction.
Purchaser will acquire all such funds from Reed Elsevier, which intends to
obtain funds from commercial paper and other short term borrowings and if
necessary by drawing against committed facilities, in accordance with the terms
of a commitment letter dated November 7, 2000 ("Commitment Letter") among Reed
International P.L.C., Elsevier NV, Reed Elsevier, Elsevier Finance SA, Deutsche
Bank AG London ("Deutsche Bank"), Morgan Stanley Dean Witter Bank Limited
(together with Deutsche Bank, the "Lead Arrangers") and Morgan Stanley Senior
Funding Inc. (together with Deutsche Bank, the "Underwriters"). Pursuant to the
Commitment Letter, the Underwriters have committed to make available to Reed
Elsevier, Elsevier Finance SA and their wholly owned subsidiaries, including
Purchaser, up to $8.5 billion of credit facilities. These facilities include the
$6.5 billion available to complete the Offer and the Merger, together with the
replacement and retirement of an existing $1 billion bilateral bank facility
with Morgan Stanley Senior Funding Inc. and other existing facilities totaling
$1 billion, should these facilities not be renewed prior to December 11, 2000.
The interest rate payable on any funds made available under these credit
facilities will generally be in a range from 0.35% to 0.625% over the relevant
London Interbank Offered Rate (LIBOR).
19
<PAGE> 22
The credit facilities are expected to be reduced by the $2.06 billion of
gross proceeds, less applicable taxes, to be received from Thomson in connection
with the Subsequent Transaction and by any of the $0.85 billion of Harcourt
public long term debt assumed at the Effective Time. It is also intended,
subject to market conditions, that the facilities will be reduced through the
issuance of term debt securities. New equity of up to 10% of the issued share
capitals of Reed International P.L.C. and Elsevier NV, will also be considered,
subject to market conditions. The proceeds from any such new equity would also
be used to reduce the indebtedness outstanding under these facilities.
BACKGROUND OF THE OFFER
On June 19, 2000, the Company announced to the public that it was exploring
strategic alternatives. Shortly thereafter Reed Elsevier received a telephone
call from a representative of Goldman Sachs who inquired as to Reed Elsevier's
possible interest in acquiring the Company and whether Reed Elsevier would be
interested in receiving further information.
On June 28, 2000, the Company and Reed Elsevier entered into the
confidentiality and standstill agreement for the purpose of facilitating the
delivery of confidential information regarding the Company to Reed Elsevier. On
June 30, 2000, Reed Elsevier received a confidential memorandum from Goldman
Sachs, on behalf of the Company. On July 27, 2000, Reed Elsevier received a
letter from Goldman Sachs inviting Reed Elsevier to provide a preliminary
indication of its interest by August 18, 2000.
On August 18, 2000, Reed Elsevier expressed its preliminary indication of
interest in acquiring the Company as a whole. During the period following the
delivery of its preliminary indication of interest, Reed Elsevier and its
representatives were given access to a confidential data room to conduct
business, legal and financial due diligence on the business and properties of
the Company. In addition, on September 13, 2000 the Company made management
presentations to Reed Elsevier in Boston, Massachusetts and on September 27,
2000, the Company made management presentations to Reed Elsevier in New York,
New York.
On October 2, 2000, Reed Elsevier received a letter from Goldman Sachs, on
behalf of the Company, outlining the procedures for submitting a final bid for
the Company as a whole by October 12, 2000, accompanied by a draft merger
agreement that had been prepared by the Company's legal counsel.
Early in the week of October 2, 2000, representatives of Thomson informed
Goldman Sachs that Thomson was not prepared to make a bid for the entire Company
but wished to acquire certain of the Company's assets. Representatives of Reed
Elsevier also informed Goldman Sachs that it was their intention to acquire the
entire Company and then resell certain portions of the Company at the close of
the transaction. To minimize its risk in connection with the resale, Reed
Elsevier stated that it wished to arrange the resale in advance of the
finalization of its bid for the Company. Later that week, after consulting with
Goldman Sachs, the Company granted Thomson and Reed Elsevier permission to
coordinate efforts with each other to facilitate such a resale. Subsequently,
representatives of Thomson and Reed Elsevier negotiated the terms of such
resale.
On October 11, 2000, GC Companies, Inc. which had been spun-out from
Harcourt in 1993, filed for Chapter 11 bankruptcy and as a result the Company
announced that it anticipated recording a one-time charge of $100 million, or
about $1.38 per share, to cover potential liabilities associated with the
Company's liability with respect to certain leases assigned to GC Companies,
Inc. and others. In anticipation of this announcement, at the direction of the
Company, Goldman Sachs extended the due date for final bids to October 16, 2000.
On October 16, 2000, shortly before Reed Elsevier submitted its bid for the
Company to Goldman Sachs, Reed Elsevier and Thomson executed a letter agreement
pursuant to which Thomson agreed to enter into the Sale and Purchase Agreement
(as defined below) with Reed Elsevier, substantially in the form attached to
such letter agreement. Such agreement was subject to the condition that at the
time Reed Elsevier entered into a definitive merger agreement with the Company,
the definitive merger agreement contained substantially the same terms and
conditions as set forth in Reed Elsevier's mark-up of the draft merger agreement
attached to such letter, with only such changes that would not in any manner
materially prejudice the position or obligations of Thomson under the Sale and
Purchase Agreement.
20
<PAGE> 23
In its bid Reed Elsevier proposed a cash tender offer to purchase all of
the outstanding Common Shares and Preferred Shares for $55.00 per share and
$72.05 per share, respectively. The Reed Elsevier bid stated that Reed Elsevier
and Thomson would, simultaneously with the execution of the Merger Agreement,
enter into an agreement whereby a portion of the Company's assets would be sold
to Thomson in the event that the transaction was completed and that,
accordingly, the proposal was conditioned on the receipt of regulatory approvals
for the sale to Thomson. In addition, Reed Elsevier proposed that members of the
Smith Family Group sign a Stockholder Agreement committing them to tender their
shares in the Offer and vote against all other transactions until one year after
the termination of the Merger Agreement.
Between October 18 and October 20, 2000, representatives of Reed Elsevier's
financial advisor, Morgan Stanley and its outside legal counsel, Davis Polk &
Wardwell, were contacted by the Company's advisors to clarify the material terms
reflected in Reed Elsevier's proposal and to identify aspects of its proposal
which raised issues for the Company. The Company's advisors stated that the
Company required a direct commitment from Thomson to obtain antitrust approvals.
The Company's advisors also stated that the commitments of the Smith Family
Group in the Stockholder Agreement surviving the termination of the Merger
Agreement was problematic from the perspective of both the Smith Family Group
and the Company.
On October 19, 2000, a meeting of the Board of Directors of the Company was
convened. The Company's outside legal counsel again reviewed the Board's legal
duties in light of a possible sale of the Company. Representatives of Goldman
Sachs outlined for the Board a summary of the sale process that had been
conducted since the Board meeting in June. Goldman Sachs and Simpson Thacher &
Bartlett then reviewed for the Board the bids that had been received by the
Company including Reed Elsevier's bid. The Board discussed the proposals and
posed questions to the Company's management and its financial and legal
advisors. Based on these presentations and discussions, the Board authorized
management and its advisors to pursue negotiations with Reed Elsevier and
another bidder with respect to the sale of the entire Company.
On October 21, 2000, the Company's outside legal counsel sent to Reed
Elsevier's outside legal counsel a revised draft of the Merger Agreement
reflecting aspects of the Reed Elsevier proposal that the Company was prepared
to accept. Between October 22 and October 25, 2000, representatives of the
Company's and Reed Elsevier's respective legal advisors had numerous discussions
relating to the terms of the Merger Agreement and, together with Goulston &
Storrs, the Smith Family Group's legal counsel, the Stockholder Agreement. On
October 25, 2000, representatives of Simpson Thacher & Bartlett, Axinn, Veltrop
& Harkrider, the Company's outside antitrust counsel, and Shearman & Sterling,
Thomson's outside legal counsel, finalized the terms of a letter agreement
reflecting Thomson's commitments to the Company with respect to seeking
antitrust approvals in connection with its proposed transaction with Reed
Elsevier.
On October 24, 2000, representatives of Reed Elsevier were contacted by
representatives of Goldman Sachs to inform them that a meeting of the Smith
Family Group had been scheduled for the evening of October 25, 2000 to discuss
the proposals from Reed Elsevier and the other bidder and that a meeting of the
Board of Directors had been scheduled for the following day. Reed Elsevier was
requested to present its best and final proposal on October 25.
On October 25, 2000, Reed Elsevier submitted a revised proposal to purchase
all of the outstanding Common Shares and Preferred Shares for $59.00 per share
and $77.29 per share, respectively. In consideration of an increased bid, Reed
Elsevier proposed that the termination fee be increased to $180 million and
agreed that the Stockholder Agreement would terminate upon termination of the
Merger Agreement. Later that evening, the Smith Family Group meeting was held.
During the course of the day on October 26, 2000, counsel for the parties
negotiated substantially all of the remaining terms of the Merger Agreement and
the Stockholder Agreement.
On October 26, 2000, the Board of Directors of the Company met to consider
and review the terms of the revised offers submitted by Reed Elsevier and the
other bidder. The Company's outside legal counsel reviewed
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for the Board its fiduciary and other legal duties. Management reviewed again,
among other matters, the rationale for the transaction and the outlook of the
Company on a stand-alone basis. Goldman Sachs gave a presentation that analyzed,
among other matters, on a comparative basis the financial aspects of the two
proposals, the Company's strategic plan and certain other strategic alternatives
available to the Company. The Board requested that Goldman Sachs render an
opinion as to whether the transaction proposed by Reed Elsevier was fair from a
financial point of view. After its presentation, Goldman Sachs delivered its
oral opinion, subsequently confirmed in writing (the "Financial Advisor
Opinion"), that as of such date, and subject to the assumptions made, matters
considered and limitations on the review undertaken, the $59.00 per share
proposed to be received by the holders of Common Shares (other than members of
the Smith Family Group) pursuant to the Offer and the Merger was fair from a
financial point of view to such holders. The full text of the Financial Advisor
Opinion, which sets forth the assumptions made, procedures followed, matters
considered and limits on the review undertaken, is attached as Annex A to the
Schedule 14D-9, which has been filed by the Company with the SEC in connection
with the Offer and which is being mailed to the Company's stockholders
concurrently herewith.
STOCKHOLDERS ARE URGED TO AND SHOULD READ THE FINANCIAL ADVISOR OPINION
CAREFULLY AND IN ITS ENTIRETY.
After the Goldman Sachs presentation, representatives of Axinn, Veltrop &
Harkrider gave a presentation relating to the antitrust aspects of the
transaction. Representatives of Simpson Thacher & Bartlett then reviewed for the
Board in detail the terms of the Merger Agreement and the Stockholder Agreement
and the other legal aspects of the revised proposals of both Reed Elsevier and
the other bidder. Management and the advisors responded to numerous questions
from the Board. The Board discussed, among other matters, the risks and benefits
of the two proposals and compared them, taking into account the presentations
and analyses provided for the Board, with the values anticipated to be obtained
for stockholders pursuant to the Company's strategic plan, along with the
execution risks relating to such plan. After additional discussion and
deliberation, the Board of Directors approved the Merger Agreement and the
transactions contemplated thereby and resolved to recommend that holders of
Shares accept the Offer and tender their Shares pursuant thereto.
On October 27, 2000, the Merger Agreement was executed by the Company and
Reed Elsevier and the Stockholder Agreement was executed by the Smith Family
Group and Reed Elsevier. On that day, each of the Company and Reed Elsevier
issued separate press releases announcing the execution of the Merger Agreement
and the Stockholder Agreement. Also on October 27, 2000, the definitive Sale and
Purchase Agreement between Reed Elsevier and Thomson was executed by such
parties.
PURPOSE AND STRUCTURE OF THE OFFER
The purpose of the Offer is for Reed Elsevier to acquire control of, and
the entire equity interest in, the Company. The purpose of the Merger is for
Reed Elsevier to acquire all outstanding Shares not tendered and purchased
pursuant to the Offer. If the Offer is successful, Reed Elsevier and Purchaser
intend to consummate the Merger as promptly as practicable. Upon consummation of
the Merger, the Company will become a wholly owned subsidiary of Reed Elsevier.
Depending upon the number of Common Shares purchased by Purchaser pursuant
to the Offer or otherwise, the Company's Board may be required to submit the
Merger Agreement to the Company's stockholders for approval at a stockholders'
meeting convened for that purpose in accordance with the DGCL. If stockholder
approval is required, the Merger Agreement must be approved by a majority of all
votes cast by stockholders at a meeting at which a quorum is present.
If the Minimum Condition is satisfied, Purchaser will have sufficient
voting power to approve the Merger Agreement at the stockholders' meeting
without the affirmative vote of any other stockholder. If Purchaser acquires at
least 90% of the then outstanding Common Shares pursuant to the Offer or
otherwise, the Merger may be consummated without a stockholders' meeting and
without the approval of the Company's stockholders. If, however, Purchaser does
not acquire at least 90% of the outstanding Common Shares
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<PAGE> 25
pursuant to the Offer or otherwise and a vote of the Company's stockholders is
required under the DGCL, a significantly longer period of time may be required
to effect the Merger.
Under the DGCL, holders of Shares do not have appraisal rights in the Offer
but will have appraisal rights in the Merger.
PLANS FOR THE COMPANY
Pursuant to the terms of the Merger Agreement, Reed Elsevier currently
intends, promptly after consummation of the Offer, to exercise its right under
the Merger Agreement to appoint a majority of directors to the Company Board.
Purchaser currently intends, as soon as practicable after consummation of the
Offer, to consummate the Merger.
Reed Elsevier has entered into a definitive agreement dated as of October
27, 2000 (the "Sale and Purchase Agreement") with Thomson (headquartered in
Toronto, Canada) to sell to Thomson for a total purchase price of $2.06 billion
in cash (to be paid by Thomson upon consummation of the sale) the Company's
Higher Education business and the Company's Corporate and Professional Services
business, other than the Company's educational and clinical testing businesses.
Reed Elsevier will retain the other businesses of the Company, including the
Company's Scientific, Technical and Medical (STM) business, its K-12
(kindergarten to grade 12) Education businesses and its educational and clinical
testing businesses. The obligations of Reed Elsevier and Thomson to consummate
the transactions contemplated by the Sale and Purchase Agreement are subject to
the satisfaction of the following conditions:
(a) the approvals, clearances or waiting periods referred to in paragraph
(f) of "The Offer -- Conditions to the Offer" insofar as they relate to
the transactions contemplated by the Sale and Purchase Agreement, also
referred to as the Subsequent Transaction, shall have been obtained,
expired or been terminated;
(b) none of the events set forth in paragraph (a) of "The
Offer -- Conditions to the Offer" insofar as they relate to the
transactions contemplated by the Sale and Purchase Agreement, also
referred to as the Subsequent Transaction, shall have occurred;
(c) the Merger shall have been consummated; and
(d) Steck-Vaughn Publishing Corporation and its subsidiaries shall have
been separated from the businesses being sold to Thomson.
In addition, (i) the obligation of Thomson to consummate the closing under
the Sale and Purchase Agreement (the "Subsequent Transaction Closing") is
subject to (A) Reed Elsevier having performed in all material respects all of
its obligations under the Sale and Purchase Agreement required to be performed
by it on or prior to the date of the Subsequent Transaction Closing, (B) the
representations and warranties of Reed Elsevier contained in the Sale and
Purchase Agreement and in any certificate or other writing delivered by Reed
Elsevier pursuant to such agreement being true in all material respects at and
as of the date of the Subsequent Transaction Closing as if made at and as of
such date except to the extent that such representations and warranties speak as
of an earlier date and (C) Thomson having received a certificate signed by an
appropriate officer of Reed Elsevier to the foregoing effect and (ii) the
obligation of Reed Elsevier to consummate the Subsequent Transaction Closing is
subject to (A) Thomson having performed in all material respects all of its
obligations under the Sale and Purchase Agreement required to be performed by it
on or prior to the date of the Subsequent Transaction Closing, (B) the
representations and warranties of Thomson contained in the Sale and Purchase
Agreement and in any certificate or other writing delivered by Thomson pursuant
to such agreement being true in all material respects at and as of the date of
the Subsequent Transaction Closing as if made at and as of such date except to
the extent that such representations and warranties speak as of an earlier date
and (C) Reed Elsevier having received a certificate signed by an appropriate
officer of Thomson to the foregoing effect.
Subject to satisfaction of the above conditions, the sale under the Sale
and Purchase Agreement will take place immediately following consummation of the
Merger.
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<PAGE> 26
In the Sale and Purchase Agreement, Thomson and Reed Elsevier have made
commitments to one another, including cooperating with one another, with respect
to obtaining applicable regulatory approvals required pursuant to the Sale and
Purchase Agreement.
Under the Sale and Purchase Agreement, Reed Elsevier has agreed not to take
certain actions under the Merger Agreement (including with respect to the Offer)
which would in any manner materially prejudice Thomson's position or obligations
under the Sale and Purchase Agreement, without the prior written consent of
Thomson (which consent shall not be unreasonably withheld). In addition, Reed
Elsevier has agreed not to terminate the Merger Agreement under certain
circumstances without the prior written consent of Thomson (which consent shall
not be unreasonably withheld).
Except as otherwise provided in this Offer to Purchase, it is expected
that, initially following the Merger, the business and operations of the Company
being retained by Reed Elsevier will be continued substantially as they are
currently being conducted. Reed Elsevier will continue to evaluate the business
and operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger and will take such actions as it deems
appropriate under the circumstances then existing. Reed Elsevier intends to seek
additional information about the Company during this period. Thereafter, Reed
Elsevier intends to review such information as part of a comprehensive review of
the Company's business, operations, capitalization and management with a view to
optimizing development of the Company's potential in conjunction with Reed
Elsevier's businesses.
Except as described above or elsewhere in this Offer to Purchase, Purchaser
and Reed Elsevier have no present plans or proposals that would relate to or
result in (i) any extraordinary corporate transaction involving the Company or
any of its subsidiaries (such as a merger, reorganization or liquidation), (ii)
any purchase, sale or transfer of a material amount of assets of the Company or
any of its subsidiaries, (iii) any change in the Company Board or management of
the Company, (iv) any material change in the Company's capitalization or
dividend policy, or (v) any other material change in the Company's corporate
structure or business.
THE MERGER AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE MATERIAL PROVISIONS OF THE MERGER
AGREEMENT, A COPY OF WHICH IS FILED AS AN EXHIBIT TO THE TENDER OFFER STATEMENT
ON SCHEDULE TO FILED BY REED ELSEVIER AND PURCHASER UNDER THE EXCHANGE ACT (THE
"SCHEDULE TO"). THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
COMPLETE TEXT OF THE MERGER AGREEMENT.
THE OFFER
The Merger Agreement provides for the making of the Offer. The obligation
of Purchaser to accept for payment and pay for Shares tendered pursuant to the
Offer is subject to the satisfaction or waiver of the Minimum Condition and
certain other conditions that are described below in "The Offer -- Conditions to
the Offer". Subject to the provisions of the Merger Agreement, Purchaser may
waive, in whole or in part at any time or from time to time, any such condition;
provided that, unless previously approved by the Company in writing, Purchaser
may not waive the Minimum Condition or the following conditions set forth in
clauses (a), (e), and (f) under "The Offer -- Conditions to the Offer":
- condition (a) that, among other things, provides that no laws or court
orders applicable to Reed Elsevier, Purchaser, Harcourt, Thomson, the
Offer or the Merger makes illegal, restrains or prohibits the Offer or
the consummation of the Merger; or prohibits or limits in any material
respect the ownership or operation by Harcourt or Reed Elsevier of a
material portion of Harcourt's business or assets, or the ownership or
operation by Thomson of a material portion of the business or assets to
be acquired by Thomson in the Subsequent Transaction;
- condition (e) that the Merger Agreement shall not have been terminated in
accordance with its terms and the Offer shall not have been terminated
with the consent of Harcourt; and
- condition (f) that any approvals, clearances or waiting periods under the
HSR Act and other requisite or advisable approvals, clearances or waiting
periods under any other material antitrust law applicable to the Offer,
the Merger or the Subsequent Transaction having been obtained, expired or
terminated.
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"The Offer -- Conditions to the Offer" sets forth these conditions in their
entirety. See "The Offer -- Plans for the Company" for a discussion of certain
additional limitations on Purchaser's right to waive conditions to the Offer.
Purchaser may not, unless previously approved by the Company in writing:
- decrease the price per Share payable in the Offer,
- change the form of consideration payable in the Offer,
- reduce the maximum number of Shares to be purchased in the Offer,
- impose conditions to the Offer in addition to the conditions set forth in
"The Offer -- Conditions to the Offer", or
- modify or amend the Offer Conditions or the Offer, in each case, in a
manner which is adverse to the holders of Shares.
Purchaser may, without the consent of the Company, (i) in its sole
discretion, extend the expiration date of the Offer for one or more periods (not
in excess of ten business days) but in no event later than July 24, 2001, if any
condition of the Offer has not been satisfied or waived (other than as a result
of the failure by Reed Elsevier or Purchaser to perform any of its obligations
under the Merger Agreement) and (ii) extend the expiration date of the Offer as
required by applicable law.
Purchaser shall, at the request of the Company, extend the expiration date
of the Offer for one or more periods (not in excess of ten business days each)
but in no event later than July 24, 2001, if at the then-scheduled expiration
date any of the Offer Conditions are not satisfied or waived. Purchaser shall
also extend the Offer for any period required by any rule, regulation,
interpretation or position of the SEC or the staff thereof applicable to the
Offer.
RECOMMENDATION
The Board of Directors has (i) unanimously determined that each of the
Merger Agreement, the Offer and the Merger is advisable and fair to, and in the
best interests of, the holders of Shares, (ii) approved the Merger Agreement and
the transactions contemplated thereby, including each of the Offer and the
Merger and (iii) resolved to recommend that the stockholders of the Company
accept the Offer and tender their Shares thereunder to Purchaser and adopt the
Merger Agreement. This recommendation of the Board of Directors of the Company
may be withdrawn or modified by the Board as described herein under "The
Offer -- The Merger Agreement -- Covenants -- Recommendations".
THE MERGER
The Merger Agreement provides that as soon as practicable after the
purchase of Shares pursuant to the Offer, the approval of the Merger Agreement
by the Company's stockholders (if required by the DGCL) and the satisfaction or
waiver of the other conditions to the Merger, Purchaser will be merged with and
into the Company. The Merger shall become effective at such time as a
certificate of merger (the "Certificate of Merger") is filed with the Secretary
of State of the State of Delaware or at such later time as is specified in the
Certificate of Merger (the "Effective Time"). As a result of the Merger, the
separate corporate existence of Purchaser will cease and the Company will be the
surviving corporation (the "Surviving Corporation").
The Merger Agreement provides that the directors of the Company immediately
prior to the Effective Time shall submit their resignation to be effective as of
the Effective Time. The directors of the Purchaser and the officers of the
Company at the Effective Time shall, from and after the Effective Time, be the
directors and officers of the Surviving Corporation, in each case until the
earlier of their resignation or removal or their respective successors are duly
elected or appointed and qualified.
At the Effective Time, (i) each Common Share issued and outstanding
immediately prior to the Effective Time will be converted into the right to
receive $59.00 in cash or any higher price that may be paid pursuant to the
Offer, without interest, and (ii) each Preferred Share issued and outstanding
immediately
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prior to the Effective Time will be converted into the right to receive $77.29
in cash or any higher price that may be paid pursuant to the Offer, without
interest, in each case, other than Shares owned by Reed Elsevier or Purchaser or
by the Company as treasury stock or by subsidiaries of the Company, all of which
will be canceled (except for Shares held by the subsidiaries of the Company, all
of which will remain issued), and other than Shares that are held by
stockholders, if any, who properly exercise their appraisal rights under the
DGCL. Stockholders who perfect their appraisal rights under the DGCL will be
entitled to the amounts determined pursuant to such proceedings. See "The
Offer -- Appraisal Rights".
EMPLOYEE STOCK OPTIONS AND RESTRICTED STOCK
The Merger Agreement provides that the Company shall take all action
necessary so that, immediately prior to the Effective Time, each outstanding
employee stock option that is, or shall become, vested and exercisable as of the
Effective Time (an "Employee Option"), shall be canceled and the holder thereof
shall be entitled to receive at the Effective Time from the Company or as soon
as practicable thereafter (but in no event later than ten (10) days after the
Effective Time) from the Surviving Corporation in consideration for such
cancellation an amount equal to the product of (A) the number of Common Shares
previously subject to such Employee Option and (B) the excess, if any, of the
Common Stock Merger Consideration over the exercise price per Common Share
previously subject to such Employee Option, less any withholding taxes.
Each restricted Common Share granted pursuant to any plan or program of the
Company providing for the issuance of restricted shares to employees or
directors which is outstanding immediately prior to the Effective Time shall
vest and become free of restrictions as of the Effective Time to the extent
provided by the terms thereof and the holder thereof shall be entitled to
receive at the Effective Time the Common Stock Merger Consideration with respect
to each such share, less any required withholding taxes.
REPRESENTATIONS AND WARRANTIES
Pursuant to the Merger Agreement, the Company has made customary
representations and warranties to Reed Elsevier and Purchaser, including
representations relating to its organization and qualification and subsidiaries;
its certificate of incorporation and bylaws; capitalization; corporate
authorizations; absence of conflicts; required filings and consents; compliance
with laws; SEC filings; financial statements; absence of certain changes or
events (including any material adverse effect on the business, results of
operations, assets or financial condition of the Company); absence of
undisclosed liabilities; litigation; employee benefit plans; tax matters;
intellectual property; environmental matters; contracts; and other matters.
Certain of the Company's representations and warranties are qualified as to
"materiality" or "Material Adverse Effect." When used in connection with the
Company or any of its subsidiaries, the term "Material Adverse Effect" means any
change or effect that would be materially adverse to the business, financial
condition, assets or results of operations of the Company and its subsidiaries
taken as a whole, other than any change or effect resulting from (i) changes in
general economic conditions, (ii) the announcement and performance of the Merger
Agreement and the transactions contemplated thereby and compliance with the
covenants set forth in the Merger Agreement, (iii) general changes or
developments in the industries in which the Company and its subsidiaries operate
or (iv) changes in any tax laws or regulations or applicable accounting
regulations or principles.
Pursuant to the Merger Agreement, Reed Elsevier and Purchaser have made
customary representations and warranties to the Company, including
representations relating to their corporate organization; authority relative to
the Merger Agreement; absence of conflicts; financing; delivery of the Sale and
Purchase Agreement and other matters.
COVENANTS
The Merger Agreement contains various covenants of the parties thereto.
Company Conduct of Business Covenants. Prior to the Effective Time and
except as permitted by the Merger Agreement and subject to certain exceptions,
unless Purchaser shall otherwise agree in writing, the
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Company and its subsidiaries (i) will conduct their business in the ordinary
course consistent with past practice, (ii) will use their reasonable best
efforts to comply with all applicable laws, rules and regulations, and (iii) to
the extent consistent therewith, use their reasonable best efforts to preserve
substantially intact their business organizations, and to preserve their
relationships with customers, suppliers, employees, licensors, licensees,
distributors, authors and other content providers and other persons with which
they have business relations.
Except as otherwise permitted by the Merger Agreement, neither the Company
nor any of its subsidiaries will, without the prior written consent of Reed
Elsevier, among other things and subject to certain exceptions:
(i) amend their organizational documents;
(ii) issue, deliver, sell, pledge, dispose of or encumber any shares of
capital stock of any class or rights of any kind to acquire any
shares of capital stock, except in connection with the conversion
of shares of Class B Stock or Preferred Shares into Common Shares;
(iii) declare, set aside, make or pay any dividend, except for (i) any
dividend by a wholly-owned subsidiary of the Company, (ii) regular
quarterly dividends of the Company in an amount not to exceed $0.21
per Common Share and $0.189 per share of Class B Stock or (iii)
quarterly dividends on the Preferred Stock as provided for in the
Company's Restated Certificate of Incorporation;
(iv) purchase, redeem or otherwise acquire any shares of their capital
stock or rights to acquire any such shares;
(v) reclassify, combine, split or subdivide any capital stock or other
securities, except in connection with the conversion of shares of
Class B Stock or Preferred Shares into Common Shares;
(vi) make material acquisitions or dispositions;
(vii) enter into, amend or terminate material contracts;
(viii) make or authorize any material new capital expenditures;
(ix) repurchase, prepay or incur any indebtedness or guarantee any
indebtedness of another person;
(x) make any loans, advances or capital contributions to, or investments
in, any other person;
(xi) pay, discharge, settle or satisfy any material claims, liabilities
or obligations;
(xii) waive, release, grant or transfer any right of material value;
(xiii) waive any material benefit of, or fail to enforce, any material
confidentiality agreement;
(xiv) increase the compensation or fringe benefits of any of its
directors, officers or employees, except in the ordinary course of
business consistent with past practice;
(xv) grant any severance or termination pay not provided for under any
agreement, benefit plan or program of the Company;
(xvi) enter into any employment, consulting, or severance agreement or
arrangement with any present or former director, officer or employee
of the Company or any of its subsidiaries, or establish, adopt,
enter into or amend in any material respect or terminate any
collective bargaining, bonus, profit sharing, stock option or other
plan, agreement, arrangement or practice for the benefit of any
directors, officers or employees;
(xvii) agree to materially limit in any respect the ability to sell any
product or service, engage in any line business or compete with any
person;
(xviii) make any significant change in any accounting principles;
(xix) accelerate the payment, right to payment or vesting of any
compensation or benefits;
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(xx) make any tax election or enter into settlement or compromise of any
tax liability that is material to the Company and its subsidiaries
as a whole;
(xxi) (a) agree to any modification, amendment, or waiver of any provision
of (i) the Amended and Restated Reimbursement and Security Agreement
dated as of January 26, 1999 between the Company and GC Companies,
Inc. ("GCX") or (ii) the Intercreditor Agreement dated as of January
26, 1999 among BankBoston, N.A., the Company and GCX, without Reed
Elsevier's consent; or (b) settle or compromise any claim made by
GCX, or any other person, or any liability or obligation of the
Company or its subsidiaries relating to GCX, any of its properties
or relating to any other matter arising in any reorganization,
recapitalization, liquidation or bankruptcy proceedings of GCX,
without Reed Elsevier's consent (provided that the Company may make
payments to any third party (which in the aggregate will not exceed
$1 million), or take any emergency or temporary action, in order to
preserve the assets or operations associated with any GCX
obligations for which the Company is liable). Further, the Company
agrees to assert and defend, consistent with advice of counsel, all
rights it may have with respect to any matter affecting GCX, and use
its reasonable best efforts, consistent with advice of counsel, to
mitigate any losses, obligations or claims relating to GCX or its
properties including any guarantee of leases or any other
obligations of GCX; provided, however, that Reed Elsevier consents
to the implementation of the Company's agreement dated October 13,
2000 with DJM Asset Management and W/S Discount Acquisition II, LLC.
In addition, the Company shall promptly notify Reed Elsevier of any
material development or change with respect to any matters related
to GCX after the date of the Merger Agreement and shall thereafter
keep Reed Elsevier informed in all respects as to the status of any
such material developments or changes.
(xxiii) authorize or agree to take any of the foregoing actions.
Stockholder Meeting. The Merger Agreement provides that, if required by
applicable law and the Company's Restated Certificate of Incorporation and
By-Laws, as soon as reasonably practicable following the consummation of the
Offer, the Company will duly call, give notice of, convene and hold a meeting of
its stockholders for the purpose of adopting the Merger Agreement. In connection
with such meeting, the Company will use its reasonable best efforts to obtain
the necessary adoption of the Merger Agreement by its stockholders.
Recommendations. The Company's Board of Directors has determined that the
Offer and the Merger are advisable and fair to, and in the best interests of,
the holders of Shares and will recommend that the Company's stockholders accept
the Offer, tender their Shares in the Offer and adopt the Merger Agreement. The
Company's Board of Directors shall be permitted to withdraw (or modify in a
manner adverse to Reed Elsevier or Purchaser) or propose publicly to withdraw
(or modify in a manner adverse to Reed Elsevier or Purchaser) its recommendation
to its stockholders or declaration of advisability, or recommend, or propose
publicly to recommend, the approval or adoption of any Acquisition Proposal (as
defined below) (each such action being referred to as an "Adverse Recommendation
Change"), if the Company's Board of Directors or a committee thereof determines
in good faith, based on such matters as it deems appropriate, after consulting
with legal counsel, that such action is necessary for the Company's Board of
Directors to comply with its fiduciary duties under applicable law.
No Solicitation. The Company, its subsidiaries and their respective
officers, directors and employees will not, and the Company will use its
reasonable best efforts to cause its and its subsidiaries' agents and
representatives not to:
- directly or indirectly, initiate, solicit or knowingly encourage or
facilitate any inquiries or the making of any proposal or offer with
respect to any:
- tender offer or exchange offer,
- merger, consolidation, share exchange, business combination, sale of
substantially all of the assets, reorganization, recapitalization,
liquidation, dissolution or other similar transaction involving the
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<PAGE> 31
Company or any of its subsidiaries whose assets, individually or in the
aggregate, constitute more than 20% of the consolidated assets or the
earning power of the Company, or
- acquisition or purchase, direct or indirect, of more than 20% of the
consolidated assets of the Company and its subsidiaries or more than
20% of any class of equity or voting securities of the Company or
any of its subsidiaries whose assets, individually or in the
aggregate, constitute more than 20% of the consolidated assets or
earning power of the Company (other than the transactions
contemplated by the Merger Agreement) (any such proposal or offer
being referred to as an "Acquisition Proposal"); or
- directly or indirectly, continue, enter into or engage in any
negotiations or discussions concerning, any Acquisition Proposal, furnish
any information relating to the Company or any of its subsidiaries or
provide access to the properties, books and records or any confidential
information or data of the Company or any of its subsidiaries to, any
person relating to an Acquisition Proposal.
However, the Company or its Board of Directors shall not be prevented from:
(i) making any communication to its stockholders in connection with the
making or amendment of a tender offer or exchange offer or making any
legally required disclosure to stockholders with regard to an
Acquisition Proposal,
(ii) prior to the purchase of any Shares pursuant to the Offer, providing
access to properties, books and records and providing information or
data in response to a request therefor by a person who has made an
unsolicited bona fide written Acquisition Proposal if the Board of
Directors receives from the person so requesting such information an
executed confidentiality agreement on terms substantially similar to
those contained in the confidentiality agreement between the Company
and Reed Elsevier plc, or
(iii) prior to the purchase of any Shares pursuant to the Offer, engaging
in any negotiations or discussions with any person who has made an
unsolicited bona fide written Acquisition Proposal;
if and only to the extent that in connection with the foregoing clauses (ii) and
(iii), (A) the Board of Directors of the Company shall have determined in good
faith, after consultation with its legal counsel and financial advisors, that
such actions would reasonably be expected to lead to a Superior Proposal (as
defined below), and (B) the Board of Directors of the Company determines in good
faith after consultation with outside legal counsel that such action is
necessary in order for the directors to comply with their fiduciary duties under
applicable law.
The Company has ceased and caused to be terminated any existing activities,
discussions or negotiations with any persons conducted prior to the date of the
Merger Agreement with respect to any Acquisition Proposal and will use its
reasonable best efforts to cause any such person (or its agents and advisors) in
possession of confidential information about the Company or any of its
subsidiaries that was furnished by or on behalf of the Company to return or
destroy all such information.
The Company will notify Reed Elsevier promptly (but in no event later than
24 hours) after receipt of any Acquisition Proposal or any indication of
interest in making an Acquisition Proposal and will keep Reed Elsevier informed
in all material respects of the status and details of such Acquisition Proposal.
Superior Proposal. Neither the Board of Directors of the Company nor any
committee thereof will (i) adopt or approve, or propose publicly to adopt or
approve, any Acquisition Proposal, or (ii) cause or permit the Company to enter
into any letter of intent, memorandum of understanding or any kind of agreement
which is intended to, or is reasonably likely to lead to, any Acquisition
Proposal. However, if at any time prior to the purchase of any Shares pursuant
to the Offer, the Company's Board of Directors determines in good faith, after
consultation with its financial advisors and outside counsel, in response to an
Acquisition Proposal that was unsolicited and that did not otherwise result from
a breach of the terms of the Merger Agreement
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regarding an Acquisition Proposal, that such proposal is a Superior Proposal,
the Company or its Board of Directors may terminate the Merger Agreement, if:
- the Company prior to or concurrently with such termination pays to Reed
Elsevier the Termination Fee described below under "Fees and Expenses"
and enters into a definitive agreement concerning the Superior Proposal;
- the Company has complied in all material respects with the requirements
of the Merger Agreement regarding an Acquisition Proposal;
- the Company has given Reed Elsevier at least three business days prior
written notice of its intention to terminate the Merger Agreement (it
being understood and agreed that any amendment to the amount or form of
consideration of the Superior Proposal shall require a new notice and a
new three business day period);
- during such three business days or greater period, the Company has
engaged in good faith negotiations with Reed Elsevier with respect to
such changes as Reed Elsevier may propose to the terms of the Merger and
the Merger Agreement; and
- Reed Elsevier has not made prior to such termination of the Merger
Agreement a definitive and binding offer to enter into a definitive
agreement which the Board of Directors of the Company determines, in good
faith after consultation with its financial advisors, is at least as
favorable to the stockholders of the Company as the Superior Proposal.
The term "Superior Proposal" means any bona fide written Acquisition
Proposal not solicited by or on behalf of the Company or any of its subsidiaries
made by a third party that the Board of Directors of the Company determines in
its good faith judgment (after consultation with a financial advisor of
nationally recognized reputation) would, if consummated, be superior from a
financial point of view to the stockholders of the Company, taking into account,
among other things, any changes to the terms of the Merger Agreement proposed by
Reed Elsevier in response to such Superior Proposal (provided that, for purposes
of this definition of "Superior Proposal," the term Acquisition Proposal shall
have the meaning assigned to such term, described above, except that the
reference to "more than 20%" in the definition of "Acquisition Proposal" shall
be deemed to be a reference to "a majority").
Employment and Employee Benefits Matters. As of the Effective Time, the
obligations of the Company and its subsidiaries under each Company plan and
employment agreement will continue as obligations of the Surviving Corporation
and its subsidiaries, respectively.
Without limiting any additional rights that any employee may have under any
employment agreement or Company plan, Reed Elsevier will cause the Surviving
Corporation and each of its subsidiaries, for a period commencing at the
Effective Time and ending on the first anniversary thereof (or such longer
period provided for in any such employment agreement or Company plan), to
maintain the severance-related provisions of existing Company plans and to
provide 100% of the cash severance payments required thereunder, reduced by any
severance payments otherwise required under existing severance and employment
agreements or applicable law, to any individual who is actively employed by the
Company or any of its subsidiaries immediately prior to the Effective Time
terminated during that twelve-month (or longer) period.
Without limiting any additional rights that any employee may have under any
employment agreement or Company plan, Reed Elsevier will cause the Surviving
Corporation, for the period commencing at the Effective Time and ending on the
first anniversary thereof, to maintain for any individual who is actively
employed by the Company or any of its subsidiaries immediately prior to the
Effective Time (other than employees covered by a collective bargaining
agreement) (i) compensation levels that in the aggregate are no less favorable,
(ii) Company plans that in the aggregate are no less favorable, and (iii)
severance plans that are no less favorable, than the overall compensation levels
and Company plans, and the severance plans, respectively, such employees are
entitled to immediately prior to the Effective Time, and employees covered by
collective bargaining agreements will be provided with such benefits as may be
required under the terms of any applicable collective bargaining agreement. The
Merger Agreement does not prevent the amendment or
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termination of any Company plan or interfere with the Surviving Corporation's
right or obligation to make such changes as are necessary to conform with
applicable law. After the expiration of the one-year period, Reed Elsevier will
provide employees who were actively employed by the Company or any of its
subsidiaries immediately prior to the Effective Time (other than those covered
by collective bargaining agreements) with employee benefits, in the aggregate,
that are no less favorable in the aggregate than those employee benefits
provided to similarly situated employees of Reed Elsevier or its subsidiaries.
Generally, any individual who is actively employed by the Company or any of
its subsidiaries immediately prior to the Effective Time will be given credit
for all service with the Company and its subsidiaries, to the same extent as
such service was credited for such purpose by the Company, under each employee
benefit plan, program or arrangement of Reed Elsevier in which such employees
are eligible to participate (the "Parent Plan"). With respect to each Parent
Plan that is a welfare benefit plan, Reed Elsevier or its subsidiaries will (a)
cause to be waived any pre-existing condition or eligibility limitations and (b)
to the extent administratively feasible, give effect, in determining any
deductible and maximum out-of-pocket limitations, to claims incurred and amounts
paid by, and amounts reimbursed to, such employees under similar plans
maintained by the Company and its subsidiaries immediately prior to the
Effective Time.
The Company will take all action necessary to provide for full vesting of
the account balances of any individual who is actively employed by the Company
or any of its subsidiaries immediately prior to the Effective Time after one
year of service under the Harcourt Savings Plan.
Further Action; Reasonable Best Efforts. Subject to the terms and
conditions of the Merger Agreement, each of Reed Elsevier, Purchaser and the
Company will use its reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the Offer, the
Merger, the Subsequent Transaction with Thomson and the other transactions
contemplated by the Merger Agreement.
The Merger Agreement provides further that each of Reed Elsevier, Purchaser
and the Company agrees, and Reed Elsevier agrees to use its reasonable best
efforts to cause Thomson:
- to make an appropriate filing of a Notification and Report Form pursuant
to the HSR Act and any other applicable Antitrust Law with respect to the
transactions contemplated by the Merger Agreement and the Subsequent
Transaction with Thomson as promptly as practicable after the date of the
Merger Agreement,
- to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act and
any other applicable Antitrust Law, and
- to use, subject to the terms set forth below, its reasonable best efforts
to take all other actions necessary, proper or advisable to cause the
expiration or termination of the applicable waiting periods under the HSR
Act and any other applicable Antitrust Law as soon as practicable.
Each of Reed Elsevier, Purchaser and the Company shall, in connection with
the efforts to obtain all requisite approvals and authorizations for the
transactions contemplated by the Merger Agreement under the HSR Act or any other
Antitrust Law, use its reasonable best efforts to, and Reed Elsevier shall use
its reasonable best efforts to cause Thomson to, subject to applicable law:
- cooperate in all respects with each of the other parties to the Merger
Agreement and the Sale and Purchase Agreement in connection with any
filing or submission and in connection with any investigation or other
inquiry, including any proceeding initiated by a private party;
- keep each of the other parties to the Merger Agreement and the Sale and
Purchase Agreement informed of any communication received by such party
from, or given by such party to, the Federal Trade Commission (the
"FTC"), the Antitrust Division of the Department of Justice (the "DOJ")
or any other U.S. or foreign governmental authority ("Governmental
Authority") and of any communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
transactions contemplated by the Merger Agreement, including the
Subsequent Transaction; and
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- permit each of the other parties to the Merger Agreement and the Sale and
Purchase Agreement to review in advance any communication intended to be
given by it to, and consult with the other parties in advance of any
meeting or conference with, the FTC, the DOJ or any such other
Governmental Authority or, in connection with any proceeding by a private
party, with any other person, and to the extent permitted by the FTC, the
DOJ or such other applicable Governmental Authority or other person, give
the other parties the opportunity to attend and participate in such
meetings and conferences.
For purposes of the Merger Agreement, "Antitrust Law" means the Sherman
Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal, state and foreign statutes,
rules, regulations, orders, decrees, administrative and judicial doctrines and
other laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
If any objections are asserted with respect to the transactions
contemplated by the Merger Agreement, including the Subsequent Transaction,
under any Antitrust Law or if any suit is instituted (or threatened to be
instituted) by the FTC, the DOJ or any other applicable Governmental Authority
or any private party challenging any of such transactions as violative of any
Antitrust Law or which would otherwise prohibit or materially impair or
materially delay the consummation of such transactions, each of Reed Elsevier,
Purchaser and the Company shall use its reasonable best efforts to resolve any
such objections or suits so as to permit consummation of the transactions
contemplated by the Merger Agreement, including the Subsequent Transaction,
including, without limitation, in order to resolve such objections or suits
which, in any case if not resolved, could reasonably be expected to prohibit or
materially impair or delay the consummation of the transactions contemplated by
the Merger Agreement, including the Subsequent Transaction, beyond July 24,
2001, selling, holding separate or otherwise disposing of or conducting its
business in a manner which would resolve such objections or suits or agreeing to
sell, hold separate or otherwise dispose of or conduct its business in a manner
which would resolve such objections or suits or permitting the sale, holding
separate or other disposition of, any of its assets or the assets of its
subsidiaries or the conducting of its business in a manner which would resolve
such objections or suits, provided, however, that nothing in the Merger
Agreement shall require Reed Elsevier or Purchaser or any of Reed Elsevier's
subsidiaries to agree to or take any action or limitation referred to in this
paragraph which would reasonably be expected to have either (i) a Parent
Material Adverse Effect (as defined below) or (ii) a Material Adverse Effect on
the Company. When used in connection with Reed Elsevier, Purchaser or any of
Reed Elsevier's other subsidiaries, the term "Parent Material Adverse Effect"
means any change or effect that would reasonably be expected to be materially
adverse to the business, financial condition, assets or results of operations of
Reed Elsevier, Purchaser and any of Reed Elsevier's other affiliates taken as a
whole.
In the event that any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) by a Governmental Authority or
private party challenging any transaction contemplated by the Merger Agreement,
including the Subsequent Transaction, each of Reed Elsevier, Purchaser and the
Company shall cooperate in all respects with each other and Thomson to the
extent any such action or proceeding principally involves assets to be acquired
by such third party in the Subsequent Transaction and use its respective
reasonable best efforts to contest any such action or proceeding and to have
overturned any decree, judgment, injunction or other order that is in effect and
that prohibits, prevents or restricts consummation of the transactions
contemplated by the Merger Agreement.
To the extent reasonably requested by Reed Elsevier, the Company will use
its reasonable best efforts to take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable to facilitate
the Subsequent Transaction; provided that no action or conduct that causes the
Company or its subsidiaries to incur meaningful costs or liabilities will be
required.
Reed Elsevier will not agree to any amendment or waiver of any provision of
the Sale and Purchase Agreement in any manner adverse to the Company. Further,
Reed Elsevier agrees to assert and defend consistent with the advice of counsel
all rights, and perform and comply with all obligations, it may have under the
Sale and Purchase Agreement with respect to compliance with any Antitrust Law.
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In connection with the Company entering into the Merger Agreement and
Thomson entering into the Sale and Purchase Agreement, Thomson and the Company
have made commitments to one another, including cooperation with one another,
with respect to obtaining the applicable regulatory approvals required pursuant
to the Sale and Purchase Agreement. Thomson and the Company have made
commitments to one another with respect to such matters to the same extent Reed
Elsevier and Thomson have made commitments to with respect to such matters under
the Sale and Purchase Agreement.
Directors' and Officers' Indemnification and Insurance. Reed Elsevier has
agreed that for six years after the Effective Time, it will, or will cause the
Surviving Corporation to, indemnify and hold harmless each present and former
officer and director of the Company and its subsidiaries (the "Indemnified
Parties") against all claims, losses, liabilities, damages, judgments, fines and
reasonable fees, costs and expenses (including attorney's fees and
disbursements) incurred in connection with any claim, action, suit, proceeding
or investigation, arising out of or pertaining to (i) the fact that the
Indemnified Party is or was an officer or director of the Company or any of its
subsidiaries and (ii) acts or omissions occurring at or prior to the Effective
Time, whether asserted or claimed prior to, at or after the Effective Time.
For a period of six years from the Effective Time, Reed Elsevier will, or
will cause the Surviving Corporation to, maintain in effect the current policies
of the directors' and officers' liability insurance maintained by the Company on
the date of the Merger Agreement (provided that Reed Elsevier or the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are not materially less advantageous to
any beneficiary thereof) with respect to acts or omissions occurring at or prior
to the Effective Time, provided that if the aggregate annual premium for such
insurance at any time during such period shall exceed 200% of the per annum rate
of premium paid by the Company as of the date of the Merger Agreement for such
insurance, then Reed Elsevier will, or will cause its subsidiaries to, provide
only such coverage as shall then be available at any annual premium equal to
200% of such rate.
CONDITIONS TO THE MERGER
The Merger Agreement provides that the respective obligations of Reed
Elsevier, Purchaser and the Company to effect the Merger are subject to the
satisfaction or waiver at or prior to the Effective Time of the following
conditions:
(a) if required by the DGCL, the Merger Agreement shall have been adopted
by the affirmative vote of the stockholders of the Company by a
requisite vote in accordance with the Company's Restated Certificate of
Incorporation and the DGCL;
(b) no statute, rule, regulation, executive order, decree, ruling
injunction or other permanent order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or other
governmental body located or having jurisdiction within the United
States, any foreign state, county, city or other provincial
subdivisions which prohibits, restrains or enjoins the consummation of
the Merger; and
(c) Purchaser shall have purchased the Shares pursuant to the Offer.
TERMINATION
The Merger Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time (notwithstanding approval of the Merger
Agreement by the stockholders of the Company):
(a) prior to the purchase of any Shares pursuant to the Offer, by mutual
written agreement of the Company, Purchaser and Reed Elsevier;
(b) by either the Company or Reed Elsevier if any court of competent
jurisdiction or other governmental body located or having jurisdiction
within the United States, any foreign country or any domestic or
foreign state, county, city or other provincial subdivision (other than
any such court or governmental body having jurisdiction outside the
United States in a territory in which no significant assets,
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properties or rights of either the Company and its subsidiaries or Reed
Elsevier and its affiliates are located and whose statutes, rules,
regulations, executive orders, decrees, rulings, injunctions or other
orders would not be reasonably expected to have a Material Adverse
Effect on the Company or a Parent Material Adverse Effect) shall have
issued a final order, decree or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the Offer or the Merger
and such order, decree, ruling or other action is or shall have become
final and nonappealable;
(c) by Reed Elsevier if, due to an occurrence or circumstance which
resulted in a failure to satisfy any of the Offer Conditions, Purchaser
shall have
- not purchased Shares pursuant to the Offer and the Offer shall have
expired or been terminated, or
- failed to pay for Shares pursuant to the Offer on or prior to July 24,
2001;
provided that the right to terminate the Merger Agreement pursuant to
this clause (c) shall not be available to Reed Elsevier if the failure
by Reed Elsevier or Purchaser to perform any of its obligations under
the Merger Agreement results in the failure of the Offer to be
consummated;
(d) by the Company
- if there shall have been a breach of any representation, warranty,
covenant or agreement on the part of Reed Elsevier or Purchaser
contained in the Merger Agreement which materially adversely affects
Reed Elsevier's or Purchaser's ability to consummate (or materially
delays commencement or consummation of) the Offer or the Merger, and
- in the case of any such representation or warranty, there is no
reasonable possibility that such breach can be cured prior to July
24, 2001 and
- in the case of such covenant or agreement, such breach cannot be
and has not been cured prior to the earlier of (i) 10 business days
following notice of such breach and (ii) the Expiration Date of the
Offer, as it may be extended;
provided that the Company shall not have the right to terminate the
Merger Agreement pursuant to this clause if the Company is then in
material breach of any of its covenants or agreements contained in
the Merger Agreement,
- if Purchaser fails to pay for Shares pursuant to the Offer on or prior
to July 24, 2001, or Purchaser shall have not purchased Shares
pursuant to the Offer and the Offer shall have expired or been
terminated; provided that the right to terminate the Merger Agreement
pursuant to this clause shall not be available to the Company if the
failure by the Company to perform any of its obligations under the
Merger Agreement results in the failure of the Offer to be
consummated, or
- prior to the purchase of any Shares pursuant to the Offer, if the
Company receives a Superior Proposal subject to the terms and
conditions set forth under "The Offer -- The Merger
Agreement -- Covenants -- Superior Proposal"; or
(e) by Reed Elsevier prior to the purchase of Shares pursuant to the Offer
if
- there shall have been a breach of any representation, warranty,
covenant or agreement on the part of the Company contained in the
Merger Agreement such that the conditions set forth in clause (c) or
clause (d) under "The Offer -- Conditions to the Offer" would not be
satisfied and
- in the case of any such representation or warranty, there is no
reasonable possibility that such breach can be cured prior to July
24, 2001 and
- in the case of such covenant or agreement, such breach cannot be and
has not been cured prior to the earlier of (i) 10 business days
following notice of such breach and (ii) the Expiration Date of the
Offer, as it may be extended;
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provided that Reed Elsevier shall not have the right to terminate the
Merger Agreement pursuant to this clause if Reed Elsevier or
Purchaser is then in material breach of any of its covenants or
agreements contained in the Merger Agreement, or
- in the event an Adverse Recommendation Change has occurred (see "The
Offer --The Merger Agreement --Covenants --Recommendations").
If the Merger Agreement is terminated, the Merger Agreement will become
void and of no effect with no liability on the part of the Company, Reed
Elsevier or Purchaser other than obligations of Reed Elsevier under certain
provisions of the Merger Agreement with respect to the treatment of confidential
non-public information concerning the Company and its subsidiaries, and
obligations of the Company under certain provisions of the Merger Agreement to
pay certain fees to Reed Elsevier or Purchaser as described in "Fees and
Expenses" below.
FEES AND EXPENSES
Except as otherwise specified below, all fees and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
will be paid by the party incurring such expenses.
The Company will pay $180,000,000 to Reed Elsevier if the Merger Agreement
is terminated in any of the following circumstances:
- by the Company because it has received a Superior Proposal as described
under "The Offer -- The Merger Agreement -- Covenants -- Superior
Proposal",
- by Reed Elsevier because an Adverse Recommendation Change has occurred,
or
- by Reed Elsevier as described in clause (c) under "Termination" (solely
due to the failure to satisfy the Minimum Condition or the conditions
described in (c) and (d) under "Conditions to the Offer") and
- after the date of the Merger Agreement and prior to such termination,
there shall have been made and publicly announced or publicly
communicated to the Company's stockholders an Acquisition Proposal
(which shall not have been withdrawn in good faith) and
- concurrently with or within twelve (12) months of the date of such
termination the Company enters into a definitive agreement with
respect to an Acquisition Proposal (which is subsequently consummated)
or an Acquisition Proposal is consummated (provided that for purposes
of this provision, the term Acquisition Proposal shall have the
meaning assigned to such term, described in "Covenants -- No
Solicitation" above, except that the reference to "more than 20%" in
the definition of "Acquisition Proposal" shall be deemed to be a
reference to "a majority").
AMENDMENT
At any time prior to the Effective Time, the Merger Agreement may be
amended by the parties by an instrument in writing signed by the parties.
However, after adoption of the Merger Agreement by the stockholders of the
Company, no amendment may be made which by law requires the further approval of
the stockholders of the Company without such further approval.
PERFORMANCE
Reed Elsevier plc agrees to take all action necessary to cause Reed
Elsevier, Purchaser or the Surviving Corporation, as applicable, to perform all
of its respective agreements, covenants and obligations under the Merger
Agreement and whenever the Merger Agreement requires Purchaser to take any
action, such requirement shall be deemed to include an undertaking of Reed
Elsevier and Reed Elsevier plc to cause Purchaser to take such action.
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THE STOCKHOLDER AGREEMENT
THE FOLLOWING IS A SUMMARY OF THE MATERIAL PROVISIONS OF THE STOCKHOLDER
AGREEMENT, A COPY OF WHICH IS FILED AS AN EXHIBIT TO THE SCHEDULE TO. THIS
SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE COMPLETE TEXT OF THE
STOCKHOLDER AGREEMENT.
In connection with the execution of the Merger Agreement, Reed Elsevier and
Purchaser entered into the Stockholder Agreement with Richard A. Smith, Chairman
of the Company, Nancy L. Marks, Mr. Smith's sister, Robert A. Smith and Brian J.
Knez, Presidents and Co-Chief Executive Officers and directors of the Company,
Jeffrey R. Lurie, a director of the Company, and/or other members of their
families and various family corporations, trusts and charitable foundations (the
"Smith Family Group") (each, a "Stockholder"). The Smith Family Group has agreed
to convert all of its shares of Class B Stock (19,955,998 shares as of October
20, 2000) into Common Shares and tender such Shares in the Offer. Collectively,
the shares of Class B Stock held by the Smith Family Group, along with the
Common Shares held by the Smith Family Group which the Smith Family Group has
agreed to tender, represent approximately 27.3% of the outstanding Common Shares
and shares of Class B Stock and approximately 25.8% of the Common Shares on a
fully diluted basis. All of the shares of Class B Stock owned by the Smith
Family Group as at October 20, 2000 (being a total of 19,955,998 shares)
(together with any other shares of Class B Stock acquired by any Stockholder and
any Common Shares acquired by any Stockholder by conversion of Class B Stock, in
each case from October 20, 2000 through the term of the Stockholder Agreement)
are subject to the Stockholder Agreement (the "Subject Shares"), and during the
term of the Stockholder Agreement, each Stockholder has agreed to take the
following action with respect to the Subject Shares beneficially owned by such
Stockholder:
- to convert all of its Subject Shares into Common Shares immediately prior
to the expiration of the Offer provided that Reed Elsevier shall have
delivered an irrevocable binding notice to the Stockholders and the
Company that each of the Offer Conditions have been satisfied (or would
be satisfied, in the case of the Minimum Condition, upon such conversion
of the Subject Shares and the tender of the Common Shares issuable upon
such conversion into the Offer) or waived in accordance with the Merger
Agreement together with a certificate from the Depositary setting forth
the number of Common Shares validly tendered into the Offer and not
withdrawn as immediately prior to such time as practicable;
- immediately after such conversion, to tender pursuant to the Offer, and
not withdraw, all of the Subject Shares (including all Common Shares
issuable upon the conversion of the Subject Shares) promptly upon request
by Reed Elsevier;
- to vote its Subject Shares in favor of the approval and adoption of the
Merger and the Merger Agreement and against (1) any Acquisition Proposal,
(2) any extraordinary dividend or distribution by the Company or any of
its subsidiaries, (3) any change in the capital structure of the Company
or any of its subsidiaries (other than pursuant to the Merger Agreement)
or (4) any other action that would reasonably be expected to, in any
material respect, prevent, impede, interfere with, delay, postpone,
frustrate the purposes of or attempt to discourage the transactions
contemplated by the Merger Agreement; each Stockholder has granted to
Purchaser an irrevocable proxy to vote or otherwise use such voting power
in the manner contemplated by the foregoing; and
- not to sell, pledge or otherwise dispose of any of its Subject Shares
(other than (i) transfers to persons becoming bound by the Stockholder
Agreement, (ii) transfers of an aggregate total of 100,000 Common Shares
(including shares transferred by any other Stockholder) to charitable
organizations) or (iii) the transfer of 847,458 Subject Shares to the
Company in exchange for a $50 million contingent promissory note from the
Company.
Each Stockholder has also agreed not to solicit or initiate any Acquisition
Proposal or furnish information to or participate in any discussions or
negotiations with any person that is considering making or has made an
Acquisition Proposal.
The Stockholder Agreement will terminate upon the earlier of the Effective
Time and the date of termination of the Merger Agreement in accordance with its
terms.
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Immediately upon the conversion by the Smith Family Group of its shares of
Class B Stock into Common Shares pursuant to the Stockholder Agreement, all
other outstanding shares of Class B Stock will become automatically converted
into Common Shares. If a stockholder does not convert its shares of Class B
Stock into Common Shares and tender those shares in the Offer, such stockholder
will not receive any consideration for such shares unless and until the Merger
has occurred.
APPRAISAL RIGHTS
Holders of Shares do not have appraisal rights as a result of the Offer.
However, if the Merger is consummated, each holder of Shares who has neither
voted in favor of the Merger nor consented thereto in writing will be entitled
to an appraisal by the Delaware Court of Chancery of the fair value of his
Shares, exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, if any, to be
paid. In determining such fair value, the Court may consider all relevant
factors. The value so determined could be more or less than the consideration to
be paid in the Offer and the Merger. Any judicial determination of the fair
value could be based upon considerations other than or in addition to the market
value of the Shares, including, among other things, asset value and earning
capacity.
If any holder of Shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his rights to appraisal as
provided in the DGCL, the Shares of such stockholder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A stockholder may
withdraw his demand for appraisal by delivery to Purchaser of a written
withdrawal of his demand for appraisal and acceptance of the Merger.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
CERTAIN EFFECTS OF THE OFFER
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly, which could adversely affect the liquidity and market
value of the remaining Shares held by stockholders other than Purchaser. Neither
Reed Elsevier nor the Purchaser can predict whether the reduction in the number
of Shares that might otherwise trade publicly would have an adverse or
beneficial effect on the market price for, or marketability of, the Shares or
whether such reduction would cause future market prices to be greater or less
than the Common Offer Price or Preferred Offer Price, as the case may be.
Stock Exchange Listing. Depending upon the number of Common Shares and
Preferred Shares purchased pursuant to the Offer, either the Common Shares, the
Preferred Shares or both may no longer meet the requirements of the NYSE for
continued listing and may, therefore, be delisted from such exchange. According
to the NYSE's published guidelines, the NYSE would consider delisting the Common
Shares or the Preferred Shares, as the case may be, if, among other things, with
respect to either the Common Shares or the Preferred Shares (i) there were fewer
than 400 stockholders, (ii) there were fewer than 1,200 stockholders and the
average monthly trading volume was less than 100,000 shares for the most recent
12 months, (iii) the number of publicly-held shares (excluding shares held by
directors, officers, or their immediate families and by any other beneficial
owners of 10% or more) was less than 600,000, (iv) the Company's total global
market capitalization was less than $50,000,000 and total stockholders' equity
was less than $50,000,000, or (v) the Company's average global market
capitalization over a consecutive 30 trading-day period was less than
$15,000,000. The Company informed Reed Elsevier and Purchaser that there were
approximately 6,987 holders of record of Common Shares as of November 3, 2000
and 394 holders of record of Preferred Shares as of November 3, 2000. If, as a
result of the purchase of the Common Shares and the Preferred Shares pursuant to
the Offer, either the Common Shares or the Preferred Shares no longer meet the
requirements of the NYSE for continued listing and the listing of such Shares is
discontinued, the market for such Shares could be adversely affected.
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If the NYSE were to delist the Common Shares and the Preferred Shares
(which delisting Purchaser intends to cause the Company to seek if it acquires
control of the Company and the Common Shares and the Preferred Shares no longer
meet the NYSE listing requirements), it is possible that the Common Shares and
the Preferred Shares would trade on another securities exchange or in the
over-the-counter market and that price quotations for the Common Shares and the
Preferred Shares would be reported by such exchange or through the National
Association of Securities Dealers Automated Quotation Systems or other sources.
The extent of the public market for the Common Shares and the Preferred Shares
and availability of such quotations would, however, depend upon such factors as
the number of holders and/or the aggregate market value of the publicly held
Common Shares and the Preferred Shares at such time, the interest in maintaining
a market in the Common Shares and the Preferred Shares on the part of securities
firms, the possible termination of registration of the Common Shares and the
Preferred Shares under the Exchange Act and other factors.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit using such Shares as collateral. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible, that following the Offer the Common Shares and/or the Preferred Shares
might no longer constitute "margin securities" for the purposes of the Federal
Reserve Board's margin regulations in which event the Shares could no longer be
used as collateral for loans made by brokers.
Exchange Act Registration. Each of the Common Shares and the Preferred
Shares are currently registered under the Exchange Act. Either such registration
may be terminated upon application of the Company to the SEC if the Common
Shares and the Preferred Shares, as the case may be, are neither listed on a
national securities exchange nor held by 300 or more holders of record.
Termination of the registration of the Common Shares and the Preferred Shares
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the SEC and would make
certain of the provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement pursuant to Section 14(a) in connection with a stockholders' meeting
and the related requirement of furnishing an annual report to stockholders, no
longer applicable to the Company. Furthermore, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended. If registration of the Common Shares and the
Preferred Shares under the Exchange Act were terminated, the Common Shares and
the Preferred Shares would no longer be "margin securities" or be eligible for
NYSE listing. Reed Elsevier and Purchaser currently intend to seek to cause the
Company to terminate registration of the Common Shares and the Preferred Shares
under the Exchange Act as soon after consummation of the Offer as the
requirements for termination of registration of the Common Shares and the
Preferred Shares are met.
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, but subject to the terms
and conditions of the Merger Agreement, Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for any Shares tendered pursuant to the Offer, and
may postpone the acceptance for payment or, subject to the restriction referred
to above, payment for any Shares tendered pursuant to the Offer (whether or not
any Shares have theretofore been purchased or paid for) and may terminate or
amend the Offer in accordance with the Merger Agreement if, (i) at the
expiration of the Offer as it may be extended pursuant to the provisions of the
Merger Agreement, a number of Common Shares which, together with any Shares
owned, directly or indirectly, by Reed Elsevier or Purchaser, or any subsidiary
or controlled affiliate, represent, on the date of purchase, at least a majority
in voting power of the Company's Common Stock (determined on a fully-diluted
basis) shall not have been validly tendered and not properly withdrawn prior to
the expiration of the Offer (the "Minimum
38
<PAGE> 41
Condition") or (ii) at any time on or after the date of the Merger Agreement and
at or prior to the acceptance for payment of Shares, any of the following
conditions occurs or has occurred:
(a) there shall have been entered any order, preliminary or permanent
injunction, decree, judgment or ruling in any action or proceeding
before any court of competent jurisdiction or governmental,
administrative or regulatory authority or agency, or any statute, rule
or regulation, enacted, entered, enforced, promulgated, amended or
issued that is applicable to Reed Elsevier, Purchaser, the Company or
Thomson, or any subsidiary of Reed Elsevier, Thomson, or the Company or
to the Offer or the Merger, by any legislative body, court, government
or governmental, administrative or regulatory authority or agency
which:
- makes illegal or otherwise restrains or prohibits the making of the
Offer in accordance with the Merger Agreement or the consummation of
the Offer or the Merger,
- prohibits or limits in any material respect the ownership or operation
by (A) the Company, Reed Elsevier, or any of their respective
affiliates of a material portion of the business or assets of the
Company and its subsidiaries, taken as a whole, or (B) Thomson or any
of its affiliates of a material portion of the business or assets to
be acquired by Thomson under the Sale and Purchase Agreement; or
requires any such person to dispose of or hold separate any material
portion of the business or assets of the Company and its subsidiaries,
taken as a whole, or Reed Elsevier and its subsidiaries, taken as a
whole, as a result of the Offer, to the extent any such prohibition,
limitation or requirement would reasonably be expected to have either
a Material Adverse Effect on the Company or a Parent Material Adverse
Effect,
- prohibits the ownership or operation of a portion of the business of
the Company or its subsidiaries, taken as a whole, by Reed Elsevier or
Purchaser, to the extent any such prohibition would reasonably be
expected to have either a Material Adverse Effect on the Company or a
Parent Material Adverse Effect, or
- imposes material limitations on the ability of Reed Elsevier or
Purchaser to acquire or hold or to exercise full rights of ownership
of the Shares, including voting rights with respect to all matters
properly presented to stockholders of the Company (other than in a
jurisdiction outside the United States in a territory in which no
significant assets, properties or rights of either the Company and its
subsidiaries or Reed Elsevier and its affiliates are located and whose
statutes, rules, regulations, executive orders, decrees, rulings,
injunctions or other orders would not be reasonably expected to have a
Material Adverse Effect on the Company or a Parent Material Adverse
Effect);
(b) there shall have occurred (I) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange
(other than suspensions or limitations triggered by price fluctuations
on a trading day) for a period in excess of three hours (excluding
suspensions or limitations resulting solely from physical damage or
interference with such exchange not related to market conditions) or
(II) a declaration of a banking moratorium in the United States or any
suspension of payments in respect of banks in the United States or
Europe;
(c) (i) any representation or warranty of the Company contained in the
Merger Agreement that is qualified as to Material Adverse Effect shall
not be true and correct; (ii) any representation or warranty of the
Company in the Merger Agreement that is not so qualified shall not be
true and correct in all material respects, in each case as of the date
of consummation of the Offer as though made on or as of such date
(other than representations and warranties that by their terms address
matters only as of another specified date, which shall be true and
correct only as of another specified date), except where the failure of
such representations and warranties referred to in clause (ii) to be so
true and correct, individually or in the aggregate, has not had and
would not reasonably be expected to have a Material Adverse Effect on
the Company; or (iii) except to the extent disclosed in the disclosure
schedules delivered by the Company to Reed Elsevier in connection with
the Merger Agreement or the SEC reports filed by the Company prior to
the date of the Merger
39
<PAGE> 42
Agreement, since the date of the Merger Agreement, any change or event
shall have occurred that has had or is reasonably likely to have a
Material Adverse Effect on the Company;
(d) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed
or complied with by it under the Merger Agreement;
(e) the Merger Agreement shall have been terminated in accordance with its
terms or the Offer shall have been terminated with the consent of the
Company;
(f) any (i) approvals, clearances or waiting periods under the HSR Act
applicable to the purchase of Shares pursuant to the Offer, the Merger
or the Subsequent Transaction shall not have been obtained, expired or
been terminated or (ii) any other requisite or advisable approvals,
clearances or waiting periods under any other material Antitrust Law
applicable to the purchase of Shares pursuant to the Offer, the Merger
or the Subsequent Transaction shall not have been obtained, expired or
been terminated; or
(g) all shares of Class B Stock shall not have been converted into Common
Shares in accordance with the terms of the Stockholder Agreement;
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition or may be waived by Purchaser in whole or in part at any time and from
time to time in its sole discretion (subject to the terms of the Merger
Agreement and the Sale and Purchase Agreement). The failure by Purchaser at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time. See "The Offer -- Plans for the
Company" for a discussion of certain additional limitations on Purchaser's right
to waive conditions to the Offer.
CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
General. Purchaser is not aware of any pending legal proceeding relating
to the Offer. Except as described in this section, based on its examination of
publicly available information filed by the Company with the SEC and other
publicly available information concerning the Company, Purchaser is not aware of
any governmental license or regulatory permit that appears to be material to the
Company's business that might be adversely affected by Purchaser's acquisition
of Shares as contemplated herein or of any approval or other action by any
governmental, administrative or regulatory authority or agency, domestic or
foreign, that would be required for the acquisition or ownership of Shares by
Purchaser or Reed Elsevier as contemplated herein. Should any such approval or
other action be required, Purchaser currently contemplates that, except as
described below under "State Takeover Statutes," such approval or other action
will be sought. While Purchaser does not currently intend to delay acceptance
for payment of Shares tendered pursuant to the Offer pending the outcome of any
such matter (except as described below), there can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions or that if such approvals were not obtained or
such other actions were not taken, adverse consequences might not result to the
Company's business, or certain parts of the Company's business might not have to
be disposed of, any of which could cause Purchaser to elect to terminate the
Offer without the purchase of Shares thereunder under certain conditions. See
"The Offer -- Conditions to the Offer".
Delaware Law. In general, Section 203 of the DGCL prevents an "interested
stockholder" (generally, a stockholder owning 15% or more of a corporation's
outstanding voting stock or an affiliate thereof) from engaging in a "business
combination" (defined to include a merger and certain other transactions as
described below) with a Delaware corporation for a period of three years
following the time on which such stockholder
40
<PAGE> 43
became an interested stockholder unless (i) prior to such time the corporation's
board of directors approved either the business combination or the transaction
which resulted in such stockholder becoming an interested stockholder, (ii) upon
consummation of the transaction which resulted in such stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
corporation's voting stock outstanding at the time the transaction commenced
(excluding shares owned by certain employee stock option plans and persons who
are directors and also officers of the corporation) or (iii) on or subsequent to
such time, the business combination is approved by the corporation's board of
directors and authorized at an annual or special meeting of stockholders by the
affirmative vote of at least 66 2/3% of the outstanding voting stock not owned
by the interested stockholder; such action may not be taken by written consent.
The Board of Directors of the Company has determined that Section 203 of the
DGCL does not apply to the Merger Agreement, the Offer, the Merger or the
transactions contemplated thereby.
State Takeover Statutes. A number of states have adopted laws which
purport, to varying degrees, to apply to attempts to acquire corporations that
are incorporated in, or which have substantial assets, stockholders, principal
executive offices or principal places of business or whose business operations
otherwise have substantial economic effects in, such states. The Company,
directly or through subsidiaries, conducts business in a number of states
throughout the United States, some of which have enacted such laws. Except as
described herein, Purchaser does not know whether any of these laws will, by
their terms, apply to the Offer or any merger or other business combination
between Purchaser or any of its affiliates and the Company and has not complied
with any such laws. To the extent that certain provisions of these laws purport
to apply to the Offer or the Merger, Purchaser believes that there are
reasonable bases for contesting such laws.
In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Statute
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987 in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court of the United States held that the
State of Indiana could, as a matter of corporate law, constitutionally
disqualify a potential acquiror from voting shares of a target corporation
without the prior approval of the remaining stockholders where, among other
things, the corporation is incorporated, and has a substantial number of
stockholders, in the State of Indiana. Subsequently, in TLX Acquisition Corp. v.
Telex Corp., a Federal District Court in Oklahoma ruled that the Oklahoma
takeover statutes were unconstitutional insofar as they apply to corporations
incorporated outside Oklahoma in that they would subject such corporations to
inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a
Federal District Court in Tennessee ruled that four Tennessee takeover statutes
were unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a Federal District Court in Florida held in Grand
Metropolitan PLC v. Butterworth, that the provisions of the Florida Affiliated
Transactions Act and the Florida Control Share Acquisition Act were
unconstitutional as applied to corporations incorporated outside of Florida.
If any government official or third party should seek to apply any state
takeover law to the Offer or the Merger, Purchaser will take such action as then
appears desirable, which action may include challenging the applicability or
validity of such statute in appropriate court proceedings. In the event it is
asserted that one or more state takeover statutes is applicable to the Offer or
the Merger and an appropriate court does not determine that it is inapplicable
or invalid as applied to the Offer or Merger, Purchaser might be required to
file certain information with, or to receive approvals from, the relevant state
authorities or holders of Shares, and Purchaser might be unable to accept for
payment, or pay for, Shares tendered pursuant to the Offer, or be delayed in
continuing or consummating the Offer or the Merger. In such case, Purchaser may
not be obligated to accept for payment, or pay for, any tendered Shares. See
"The Offer -- Conditions to the Offer".
United States Antitrust Compliance. Under the HSR Act and the rules that
have been promulgated thereunder by the FTC, certain acquisition transactions
may not be consummated unless certain information has been furnished to the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
the FTC and certain waiting period requirements have been satisfied. Both the
purchase of Shares pursuant to the Offer and the Subsequent Transaction with
Thomson are subject to such requirements. Until such
41
<PAGE> 44
requirements have been satisfied Purchaser is not obligated to accept for
payment, or pay for, any tendered Shares. See "The Offer -- Conditions to the
Offer".
Pursuant to the requirements of the HSR Act, Purchaser filed, on November
2, 2000, and Thomson is expected, promptly after the date hereof, to file, a
Notification and Report Form with respect to the Offer and Merger and the
Subsequent Transaction, respectively, with the Antitrust Division and the FTC.
As a result, the waiting period applicable to the purchase of Shares pursuant to
the Offer is scheduled to expire at 11:59 p.m., New York City time, on November
17, 2000 and the waiting period with respect to the Subsequent Transaction with
Thomson is scheduled to expire at 11:59 p.m, New York City time, 30 days after
such filing. However, prior to such times, the Antitrust Division or the FTC may
extend either waiting period by requesting additional information or documentary
material relevant to the Offer from Purchaser or relevant to the Subsequent
Transaction from Thomson, as the case may be. If any such requests are made, the
waiting period subject to such request will be extended until 11:59 p.m., New
York City time, on the tenth day after substantial compliance by Purchaser or on
the 20th day after substantial compliance by Thomson, the Company and Reed
Elsevier, as the case may be, with such request. Thereafter, such waiting period
can be extended only by court order.
The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by Purchaser
pursuant to the Offer and the Subsequent Transaction. At any time before or
after the consummation of any such transactions, the Antitrust Division or the
FTC could take such action under the antitrust laws of the United States as it
deems necessary or desirable in the public interest, including seeking to enjoin
the purchase of Shares pursuant to the Offer or the Subsequent Transaction or
seeking divestiture of the Shares so acquired or divestiture of substantial
assets of Reed Elsevier, Thomson or the Company. Private parties (including
individual States) may also bring legal actions under the antitrust laws of the
United States. Purchaser does not believe that the consummation of the Offer or
the Subsequent Transaction will result in a violation of any applicable
antitrust laws. However, there can be no assurance that a challenge to the Offer
or the Subsequent Transaction on antitrust grounds will not be made, or if such
a challenge is made, what the result will be. See "The Offer -- Conditions to
the Offer", including conditions with respect to litigation and certain
governmental actions, "The Offer -- Plans for the Company" for a summary of the
material terms of the Subsequent Transaction and "The Offer -- The Merger
Agreement" for certain termination rights and obligations to make certain
divestitures.
Other Filings. Reed Elsevier and its affiliates, as well as the Company
and Thomson, conduct operations and/or have sales in a number of foreign
countries, and filings will have to be made with foreign governments under their
pre-merger notification statutes.
- United Kingdom. The United Kingdom Fair Trading Act 1973 (the "Fair
Trading Act") will apply to an acquisition of the Company by the
Purchaser. Under the Fair Trading Act, the Director General of Fair
Trading can recommend to the Secretary of State for Trade and Industry
that the Secretary refer the proposed acquisition to the Competition
Commission which would then be required to determine whether the proposed
acquisition "operates, or may be expected to operate, against the public
interest". The Secretary of State for Trade and Industry has statutory
powers to order, among other things, a disinvestment if the Competition
Commission reports unfavorably on any acquisition. Purchaser intends to
file notice of the Offer and Merger with the Office of Fair Trading and
to seek confirmation that the Secretary of State does not intend to refer
the Offer and Merger to the Competition Commission.
- Republic of Ireland. Under the Competition Act 1991, as amended, the
Offer and Merger must be notified to the Minister for Enterprise and
Employment (the "Minister") within one month of the date of the Merger
Agreement. Title to any shares or assets does not pass until clearance
has been obtained. The Minister has 30 days from notification to refer
the Offer and Merger to the Competition Authority. This period may be
extended by a request by the Minister for further information. If the
Minister refers the Offer and Merger to the Competition Authority, the
Competition Authority has a further 30 days to report on its
investigation (unless the Minister specifies a longer period). The
Minister must publish the Competition Authority's report within a further
two months.
42
<PAGE> 45
In view of the limited activities of the Company in Ireland, the Purchaser
intends to submit a short-form notification requesting a letter from the
Minister confirming that the transaction is not notifiable and that the Minister
does not intend to make a prohibition order or an order imposing
conditions.
- Federal Republic of Germany. Under the Act Against Restraints of
Competition of the Federal Republic of Germany (the "German Cartel Act"),
certain transactions may not be consummated unless a notification has
been filed with the German Cartel Office (the "Cartel Office") and
clearance has been obtained. The consummation of the Offer and the Merger
are subject to such requirements.
Pursuant to the requirements of the German Cartel Act, Purchaser expects
to file a notification with respect to the Offer and Merger with the
Cartel Office. The waiting period applicable to the purchase of Shares
pursuant to the Offer is scheduled to expire one month after such filing.
However, at the expiration of such time, the Cartel Office may instead of
approving the transaction decide to make further investigations and, in
connection with such further investigation, may extend the waiting period
to a date that is up to four months from the date of filing.
- Canada. Thomson has indicated that pre-notification to the Commissioner
of Competition (the "Commissioner") is likely to be required with respect
to the Subsequent Transaction pursuant to certain provisions of Canada's
Competition Act. If the Subsequent Transaction is notifiable, it may not
be completed prior to the expiration or earlier termination of the
applicable waiting period after notice of such transaction has been
delivered to the Commissioner. The waiting period may be 14 or 42 days
from the time information is provided to the Commissioner, depending upon
the type of information required to be provided to the Commissioner. If
the Commissioner determines that the Subsequent Transaction would have
the likely effect of lessening or preventing competition substantially,
the Commissioner may apply to the Competition Tribunal (a special purpose
Canadian tribunal) for an order to require, among other things, the
disposition of the Canadian assets or shares acquired in such Subsequent
Transaction. Thomson has indicated that it intends to file notice of its
intent to complete the Subsequent Transaction with the Commissioner, if
required.
- Other Jurisdictions. The filing requirements of various jurisdictions
are being analyzed by the parties and, where necessary, the parties
intend to make such filings.
If any requisite or advisable waiting period under applicable material
antitrust law shall not have expired or been terminated by the Expiration Date,
Purchaser may or, upon request of the Company, shall extend the Expiration Date.
Although Reed Elsevier and Purchaser believe that neither the acquisition of the
Shares pursuant to the Offer nor the Subsequent Transaction would violate or be
prohibited by applicable foreign antitrust or competition laws, there can be no
assurance that a challenge to the Offer or the Subsequent Transaction on
antitrust or competition grounds will not be made or, if such a challenge is
made, what the outcome will be. If the consummation of the Offer or the Merger
is prohibited by law, rule, regulation, judgment, injunction or certain similar
actions, Purchaser shall not be obligated to accept for payment or pay for any
tendered Shares and may terminate the Offer. See "The Offer -- Conditions to the
Offer" for certain conditions to the Offer, including conditions with respect to
litigation and certain government actions.
FEES AND EXPENSES
Morgan Stanley is acting as the Dealer Manager in connection with the Offer
and is acting also as financial advisor to Reed Elsevier in connection with Reed
Elsevier's proposed acquisition of the Company. Morgan Stanley will receive
reasonable and customary compensation for its services relating to the Offer and
will be reimbursed for certain out-of-pocket expenses. Reed Elsevier and
Purchaser will indemnify Morgan Stanley and certain related persons against
certain liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws. Morgan Stanley or its
affiliates may also receive fees in connection with the credit facilities
contemplated in the Commitment Letter and any contemplated equity offering.
Reed Elsevier and Purchaser have retained MacKenzie Partners, Inc. to be
the Information Agent and Citibank, N.A. to be the Depositary in connection with
the Offer. The Information Agent may contact holders
43
<PAGE> 46
of Shares by mail, telephone, telecopy, telegraph and personal interview and may
request banks, brokers, dealers and other nominees to forward materials relating
to the Offer to beneficial owners of Shares.
The Information Agent and the Depositary each will receive reasonable and
customary compensation for their respective services in connection with the
Offer, will be reimbursed for reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under federal securities laws.
Neither Reed Elsevier nor Purchaser will pay any fees or commissions to any
broker or dealer or to any other person (other than to the Dealer Manager, the
Depositary and the Information Agent) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and
trust companies will, upon request, be reimbursed by Purchaser for customary
mailing and handling expenses incurred by them in forwarding offering materials
to their customers.
MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF REED ELSEVIER OR PURCHASER NOT CONTAINED HEREIN OR
IN THE LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser has filed with the SEC a Tender Offer Statement on Schedule TO
pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange
Act, together with exhibits furnishing certain additional information with
respect to the Offer, and may file amendments thereto. In addition, the Company
has filed with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9, together with exhibits, pursuant to Rule 14d-9 under the Exchange Act,
setting forth the recommendation of the Company Board with respect to the Offer
and the reasons for such recommendation and furnishing certain additional
related information. A copy of such documents, and any amendments thereto, may
be examined at, and copies may be obtained from, the SEC (but not the regional
offices of the SEC) in the manner set forth under "The Offer -- Certain
Information about the Company".
REH MERGERSUB INC.
November 8, 2000
44
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
1. DIRECTORS AND EXECUTIVE OFFICERS OF REED ELSEVIER INC. The name,
citizenship, business address, current principal occupation or employment and
five-year employment history of each director and executive officer of Reed
Elsevier Inc. and certain other information are set forth below. None of the
directors and officers of Reed Elsevier Inc. listed below has, during the past
five years, (i) been convicted in a criminal proceeding or (ii) been a party to
any judicial or administrative proceeding that resulted in a judgment, decree or
final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws. Directors are identified by an
asterisk.
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
LOUIS J. ANDREOZZI........................... Executive Vice President, Reed Elsevier Inc.
(United States) (September 2000 to date); President and Chief
9443 Springboro Pike Executive Officer, North American Legal Markets of
Miamisburg, Ohio 45342 Lexis-Nexis, a division of Reed Elsevier Inc. (May
2000 to date); President, Martindale-Hubbell, a
division of Reed Elsevier Inc. (1996 to May 2000);
Corporate Lawyer, Lexis-Nexis, a division of Reed
Elsevier Inc. (1994 to 1996)
MARK ARMOUR*................................. Director and Chief Financial Officer, Reed
(British) International P.L.C. and Reed Elsevier plc (1996 to
25 Victoria Street date) (Deputy Chief Financial Officer, 1995 to
London SW1H 0EX 1996); Member of the Executive Board and Chief
United Kingdom Financial Officer, Elsevier NV (1999 to date);
Chair, Reed Elsevier Inc. (February 2000 to date);
Chair, REH Mergersub Inc. (October 2000 to date)
CHARLES P. FONTAINE*......................... Director, Vice President -- Tax and Assistant Clerk,
(United States) Reed Elsevier Inc. (1998 to date); Tax Director and
275 Washington Street Assistant Treasurer, Reed Elsevier Inc. (1994 to
Newton, MA 02458 1998); Assistant Treasurer and Assistant Secretary,
Reed Elsevier U.S. Holdings Inc. (1991 to date);
Director, Vice President and Treasurer, REH
Mergersub Inc. (October 2000 to date)
JULIE GOLDWEITZ.............................. Associate General Counsel (1999 to date) and Assistant
(United States) Clerk (1998 to date), Reed Elsevier Inc.; Corporate
275 Washington Street Counsel, Reed Elsevier Inc. (1995 to 1999)
Newton, MA 02458
HENRY Z. HORBACZEWSKI*....................... Director, Senior Vice President, General Counsel and
(United States) Clerk, Reed Elsevier Inc. (1986 to date); Director
275 Washington Street (1994 to date), Vice President, General Counsel and
Newton, MA 02458 Secretary, Reed Elsevier U.S. Holdings Inc. (1991 to
date); Director, Vice President and Secretary, REH
Mergersub Inc. (October 2000 to date)
MICHAEL JACOBS............................... Assistant Clerk, Reed Elsevier Inc. (1996 to date);
(United States) Vice President and General Counsel, Lexis-Nexis, a
9443 Springboro Pike division of Reed Elsevier Inc. (1997 to date);
Miamisburg, OH 45342 Deputy General Counsel, Lexis-Nexis, a division of
Reed Elsevier Inc. (1990 to 1997)
</TABLE>
I-1
<PAGE> 48
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
STEVEN F. KORTE.............................. Executive Vice President, Reed Elsevier Inc.
(United States) (September 2000 to date); President, Rigby, a
500 Coventry Lane, Suite 200 division of Reed Elsevier Inc. (1994 to date)
Crystal Lake, IL 60014
GAIL H. LITTLEJOHN........................... Vice President -- Government Relations, Reed Elsevier
(United States) Inc. (1998 to date); Senior Vice
1150 18th Street N.W. President -- Corporate Communications, Lexis-Nexis,
Washington D.C. 20036 a division of Reed Elsevier Inc. (1998 to 1999);
Vice President -Editorial Publishing, Lexis-Nexis, a
division of Reed Elsevier Inc. (1995 to 1998)
KEITH MCGARR................................. Chief Technology Officer, Reed Elsevier plc (July 2000
(United States) to date); Executive Vice President -- Technology, Reed
2 Park Avenue, 7th Floor Elsevier Inc. (September 2000 to date); Vice
New York, NY 10016 President, Federal Express Corporation (1983 to July
2000)
BRIAN NAIRN.................................. Executive Vice President, Reed Elsevier Inc. (1999 to
(British) date); President and Chief Operating Officer, Cahners
350 Hudson Street Business Information, a division of Reed Elsevier
New York, NY 10023 Inc. (1996 to date); President, Advanstar Publishing
(1991 to 1996)
WILLARD W. PARDUE............................ Executive Vice President, Reed Elsevier Inc.
(United States) (September 2000 to date); President and Chief
9443 Springboro Pike Executive Officer, US Corporate and Federal Markets,
Miamisburg, OH 45342 Lexis-Nexis, a division of Reed Elsevier Inc. (May
2000 to date); Chief Operating Officer, Nexis (1999
to May 2000); Vice President & Publisher,
Lexis-Nexis, a division of Reed Elsevier Inc. (1998
to 1999); Vice President -- Marketing, Lexis-Nexis,
a division of Reed Elsevier Inc. (1997 to 1998);
Director of Marketing, The Washington Post Company
(1993 to 1997)
ANDREW PROZES................................ Executive director, Reed International P.L.C. and Reed
(Canada) Elsevier plc (2000 to date); Vice Chair, Reed
2 Park Avenue, 7th Floor Elsevier Inc. (September 2000 to date); Global CEO
New York, NY 10016 of Reed Elsevier plc's Legal Information Group (July
2000 to date); Executive Vice President of West
Group (1997 to July 2000); President and Chief
Executive Officer of EBC Software (1996 to 1997);
Group President Southam Inc. (1994 to 1996)
JOHN J. REGAZZI.............................. Executive Vice President, Reed Elsevier Inc.
(United States) (September 2000 to date); President & Chief
655 Avenue of the Americas Executive Officer, Elsevier Science Inc. (December
New York, NY 10010 1999 to date); President & Chief Executive Officer,
Engineering Information (1989 to date)
PAUL RICHARDSON*............................. Group Treasurer, Reed Elsevier plc (1997 to date);
(British) Director and Senior Vice President -- Finance, Reed
2 Park Avenue, 7th Floor Elsevier Inc. (1998 to date) and Treasurer (April
New York, NY 10016 2000 to date); Director (1999 to date), Vice
President -- Finance and Treasurer, Reed Elsevier
U.S. Holdings Inc. (1995 to date); Director and
President, REH Mergersub Inc. (October 2000 to date)
</TABLE>
I-2
<PAGE> 49
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
MARK L. SEELEY............................... Assistant Clerk, Reed Elsevier Inc. (1997 to date);
(United States) Corporate Counsel, Reed Elsevier Inc. (1989 to 1995);
Elsevier Science/Cell Press General Counsel, Elsevier Science (1995 to date)
1100 Massachusetts Avenue
Cambridge, MA 02138
MARC TEREN................................... Executive Vice President, Reed Elsevier Inc. (March
(United States) 2000 to date); Chief Executive Officer, Cahners
350 Hudson Street Business Information, a division of Reed Elsevier
New York, NY 10023 Inc. (January 2000 to date); Chief Executive
Officer, Washington Post -- Newsweek Interactive
(1997 to January 2000); Vice President, Disney
Interactive Entertainment (1992 to 1997)
CHRISTOPHER D. THOMAS........................ Senior Vice President, Reed Elsevier Inc. (June 2000
(British) to date); Director -- Compensation & Benefits, Reed
25 Victoria Street Elsevier (UK) Ltd (1994 to date)
London SW1H 0EX
United Kingdom
RICHARD E. WHITE............................. Executive Vice President, Reed Elsevier Inc. (1999 to
(United States) date); President and Chief Executive Officer, Reed
383 Main Avenue Exhibition Companies, a division of Reed Elsevier
Norwalk, CT 06851 Inc. (1999 to date); GM, Subsidiary Brands, Nike,
Inc. (1997 to 1999); Chief Executive Officer,
Strategic Merchandising Association (1994 to 1997)
</TABLE>
I-3
<PAGE> 50
2. DIRECTORS AND EXECUTIVE OFFICERS OF REH MERGERSUB INC. The name,
citizenship, business address, current principal occupation or employment and
five-year employment history of each director and executive officer of REH
Mergersub Inc. and certain other information are set forth below. None of the
directors and officers of REH Mergersub Inc. listed below has, during the past
five years, (i) been convicted in a criminal proceeding or (ii) been a party to
any judicial or administrative proceeding that resulted in a judgment, decree or
final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws. Directors are identified by an
asterisk.
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
MARK ARMOUR*................................. Director and Chief Financial Officer, Reed
(British) International P.L.C. and Reed Elsevier plc (1996 to
25 Victoria Street date) (Deputy Chief Financial Officer, 1995 to
London SW1H 0EX 1996); Member of the Executive Board and Chief
United Kingdom Financial Officer, Elsevier NV (1999 to date);
Chair, Reed Elsevier Inc. (February 2000 to date);
Chair, REH Mergersub Inc. (October 2000 to date)
CHARLES P. FONTAINE*......................... Director, Vice President -- Tax and Assistant Clerk,
(United States) Reed Elsevier Inc. (1998 to date); Tax Director and
275 Washington Street Assistant Treasurer, Reed Elsevier Inc. (1994 to
Newton, MA 02458 1998); Assistant Treasurer and Assistant Secretary,
Reed Elsevier U.S. Holdings Inc. (1991 to date);
Director, Vice President and Treasurer, REH
Mergersub Inc. (October 2000 to date)
HENRY Z. HORBACZEWSKI*....................... Director, Senior Vice President, General Counsel and
(United States) Clerk, Reed Elsevier Inc. (1986 to date); Director
275 Washington Street (1994 to date), Vice President, General Counsel and
Newton, MA 02458 Secretary, Reed Elsevier U.S. Holdings Inc. (1991 to
date); Director, Vice President and Secretary, REH
Mergersub Inc. (October 2000 to date)
PAUL RICHARDSON*............................. Group Treasurer, Reed Elsevier plc (1997 to date);
(British) Director and Senior Vice President -- Finance, Reed
2 Park Avenue, 7th Floor Elsevier Inc. (1998 to date) and Treasurer (April
New York, NY 10016 2000 to date); Director (1999 to date), Vice
President -- Finance and Treasurer, Reed Elsevier
U.S. Holdings Inc. (1995 to date); Director and
President, REH Mergersub Inc. (October 2000 to date)
</TABLE>
I-4
<PAGE> 51
3. DIRECTORS AND EXECUTIVE OFFICERS OF REED ELSEVIER U.S. HOLDINGS
INC. The name, citizenship, business address, current principal occupation or
employment and five-year employment history of each director and executive
officer of Reed Elsevier U.S. Holdings Inc. and certain other information are
set forth below. None of the directors and officers of Reed Elsevier U.S.
Holdings Inc. listed below has, during the past five years, (i) been convicted
in a criminal proceeding or (ii) been a party to any judicial or administrative
proceeding that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws, or a finding of any violation of federal or state
securities laws. Directors are identified by an asterisk.
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
CHARLES P. FONTAINE............... Director, Vice President -- Tax and Assistant Clerk, Reed
(United States) Elsevier Inc. (1998 to date); Tax Director and Assistant
275 Washington Street Treasurer, Reed Elsevier Inc. (1994 to 1998); Assistant
Newton, MA 02458 Treasurer and Assistant Secretary, Reed Elsevier U.S.
Holdings Inc. (1991 to date); Director, Vice President and
Treasurer, REH Mergersub Inc. (October 2000 to date)
HENRY Z. HORBACZEWSKI*............ Director, Senior Vice President, General Counsel and Clerk,
(United States) Reed Elsevier Inc. (1986 to date); Director (1994 to date),
275 Washington Street Vice President, General Counsel and Secretary, Reed
Newton, MA 02458 Elsevier U.S. Holdings Inc. (1991 to date); Director, Vice
President and Secretary, REH Mergersub Inc. (October 2000
to date)
VERA J. LANG...................... Treasurer, Reed Elsevier Inc. (1995 to February 2000);
(United States) Assistant Treasurer, Reed Elsevier U.S. Holdings Inc. (1995
121 Chanlon Road to date); Chief Financial Officer, Reed Elsevier New
New Providence, NJ 07974 Providence (February 2000 to date);
PAUL RICHARDSON*.................. Group Treasurer, Reed Elsevier plc (1997 to date); Director
(British) and Senior Vice President -- Finance, Reed Elsevier Inc.
2 Park Avenue, 7th Floor (1998 to date) and Treasurer (April 2000 to date);
New York, NY 10016 Director (1999 to date), Vice President -- Finance and
Treasurer, Reed Elsevier U.S. Holdings Inc. (1995 to
date); Director and President, REH Mergersub Inc. (October
2000 to date)
</TABLE>
I-5
<PAGE> 52
4. DIRECTORS AND EXECUTIVE OFFICERS OF REED ELSEVIER OVERSEAS BV. The
name, citizenship, business address, current principal occupation or employment
and five-year employment history of each director and executive officer of Reed
Elsevier Overseas BV and certain other information are set forth below. None of
the directors and officers of Reed Elsevier Overseas BV listed below has, during
the past five years, (i) been convicted in a criminal proceeding or (ii) been a
party to any judicial or administrative proceeding that resulted in a judgment,
decree or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws. Directors are
identified by an asterisk.
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
MARK ARMOUR*................................. Director and Chief Financial Officer, Reed
International P.L.C. and Reed Elsevier plc (1996 to
(British) date) (Deputy Chief Financial Officer, 1995 to
25 Victoria Street 1996); Member of the Executive Board and Chief
London SW1H 0EX Financial Officer, Elsevier NV (1999 to date);
United Kingdom Chair, Reed Elsevier Inc. (February 2000 to date);
Chair, REH Mergersub Inc. (October 2000 to date);
Member of the Management Board of Reed Elsevier
Holdings BV and Reed Elsevier Overseas BV
ERIK EKKER*.................................. Company Secretary, Elsevier NV; Legal Director --
Continental Europe, Reed Elsevier plc (1993 to
(The Netherlands) date); Member of the Management Board of Reed
Van de Sande Bakhuyzenstraat 4 Elsevier Holdings BV and Reed Elsevier Overseas BV
1061 AG, Amsterdam
The Netherlands
DERK HAANK*.................................. Director, Reed Elsevier plc and Reed International
P.L.C. (1999 to date); Member of the Executive
(The Netherlands) Board, Elsevier NV (2000 to date); Chief Executive
Sara Burgerhartstraat 25 Officer, Elsevier Science (1998 to date); Chief
1055 NV Amsterdam Executive Officer, Elsevier Business Information
The Netherlands (1991 to 1998); Member of the Management Board of
Reed Elsevier Holdings BV and Reed Elsevier
Overseas BV
</TABLE>
I-6
<PAGE> 53
5. DIRECTORS AND EXECUTIVE OFFICERS OF REED ELSEVIER HOLDINGS BV. The
name, citizenship, business address, current principal occupation or employment
and five-year employment history of each director and executive officer of Reed
Elsevier Holdings BV and certain other information are set forth below. None of
the directors and officers of Reed Elsevier Holdings BV listed below has, during
the past five years, (i) been convicted in a criminal proceeding or (ii) been a
party to any judicial or administrative proceeding that resulted in a judgment,
decree or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws. Directors are
identified by an asterisk.
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
MARK ARMOUR*................................. Director and Chief Financial Officer, Reed
International P.L.C. and Reed Elsevier plc (1996 to
(British) date) (Deputy Chief Financial Officer, 1995 to
25 Victoria Street 1996); Member of the Executive Board and Chief
London SW1H 0EX Financial Officer, Elsevier NV (1999 to date);
United Kingdom Chair, Reed Elsevier Inc. (February 2000 to date);
Chair, REH Mergersub Inc. (October 2000 to date);
Member of the Management Board of Reed Elsevier
Holdings BV and Reed Elsevier Overseas BV
ERIK EKKER*.................................. Company Secretary, Elsevier NV; Legal Director --
Continental Europe, Reed Elsevier plc (1993 to
(The Netherlands) date); Member of the Management Board of Reed
Van de Sande Bakhuyzenstraat 4 Elsevier Holdings BV and Reed Elsevier Overseas BV
1061 AG, Amsterdam
The Netherlands
DERK HAANK*.................................. Director, Reed Elsevier plc and Reed International
P.L.C. (1999 to date); Member of the Executive
(The Netherlands) Board, Elsevier NV (2000 to date); Chief Executive
Sara Burgerhartstraat 25 Officer, Elsevier Science (1998 to date); Chief
1055 NV Amsterdam Executive Officer, Elsevier Business Information
The Netherlands (1991 to 1998); Member of the Management Board of
Reed Elsevier Holdings BV and Reed Elsevier
Overseas BV
</TABLE>
I-7
<PAGE> 54
6. DIRECTORS AND EXECUTIVE OFFICERS OF REED ELSEVIER PLC. The name,
citizenship, business address, current principal occupation or employment and
five-year employment history of each director and executive officer of Reed
Elsevier plc and certain other information are set forth below. None of the
directors and officers of Reed Elsevier plc listed below has, during the past
five years, (i) been convicted in a criminal proceeding or (ii) been a party to
any judicial or administrative proceeding that resulted in a judgment, decree or
final order enjoining the person from future violations of, or prohibiting
activities subject to, federal or state securities laws, or a finding of any
violation of federal or state securities laws. Directors are identified by an
asterisk.
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
MARK ARMOUR*................................. Director and Chief Financial Officer, Reed
International P.L.C. and Reed Elsevier plc (1996 to
(British) date) (Deputy Chief Financial Officer, 1995 to
25 Victoria Street 1996); Member of the Executive Board and Chief
London SW1H 0EX Financial Officer, Elsevier NV (1999 to date);
United Kingdom Chair, Reed Elsevier Inc. (February 2000 to date);
Chair, REH Mergersub Inc. (October 2000 to date)
JOHN BROCK*.................................. Non-executive director of Reed Elsevier plc and Reed
International P.L.C., and member of the Supervisory
(United States) Board of Elsevier NV (1996 to date); Chief Operating
Cadbury Schweppes Officer, Cadbury Schweppes plc (March 2000 to date);
25 Berkeley Square Managing Director and Chief Executive
London W1X 6HT Officer -- Global Beverages Stream, Cadbury
United Kingdom Schweppes plc (1996 to March 2000); Chief Executive
Officer, Dr Pepper 7 Up (DPSU) (1995 to 1996)
CRISPIN DAVIS*............................... Director and Chief Executive Officer, Reed
International P.L.C. and Reed Elsevier plc (1999 to
(British) date); Chief Executive Officer and Member of the
25 Victoria Street Executive Board, Elsevier NV (1999 to date); Chief
London SW1H 0EX Executive Officer, Aegis Group plc (1994 to 1999)
United Kingdom
DERK HAANK*.................................. Director, Reed Elsevier plc and Reed International
P.L.C. (1999 to date); Member of the Executive Board,
(The Netherlands) Elsevier NV (2000 to date); Chief Executive Officer,
Sara Burgerhartstraat 25 Elsevier Science (1998 to date); Chief Executive
1055 NV Amsterdam Officer, Elsevier Business Information (1991 to
The Netherlands 1998); Member of the Management Board of Reed
Elsevier Holdings BV and Reed Elsevier Overseas BV
ROELOF NELISSEN*............................. Member of the Supervisory Board, Elsevier NV (1990 to
date); Non-executive director, Reed Elsevier plc and
(The Netherlands) Reed International P.L.C. (1999 to date) (having
Hoog Hoefloo 36 previously been a non-executive director of Reed
1251 ED LAREN N-H Elsevier plc from 1993 to 1998); Non-executive
The Netherlands director NVLS (1973 to date); Non-executive director
KBB NV (1993 to date); Non-executive director Ahold
NV (1985 to date); formerly Chief Executive Officer
of ABN AMRO Bank NV
</TABLE>
I-8
<PAGE> 55
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
STEVEN PERRICK*.............................. Member of the Supervisory Board, Elsevier NV (1998 to
date); Non-executive director, Reed Elsevier plc
(The Netherlands) (1998 to date); Non-executive director, Reed
Apollolaan 151 International P.L.C. (1999 to date); Lawyer,
1077 AR Amsterdam Freshfields Bruckhaus Deringer (1999 to date);
The Netherlands Lawyer, DBBW (1996 to 1999); Lawyer, Loeff Claeys
Verbeke (1996 to 1997); Professor at Erasmus
University, Rotterdam
ANDREW PROZES*............................... Executive director, Reed International P.L.C. and Reed
Elsevier plc (2000 to date); Vice Chair, Reed
(Canada) Elsevier Inc. (September 2000 to date); Global CEO
2 Park Avenue, 7th Floor of Reed Elsevier plc's Legal Information Group (July
New York, NY 10016 2000 to date); Executive Vice President of West
Group (1997 to July 2000); President and Chief
Executive Officer of EBC Software (1996 to 1997);
Group President Southam Inc. (1994 to 1996)
MARK RADCLIFFE............................... Company Secretary & Director of Corporate Services,
Reed Elsevier plc (1995 to date); Company Secretary,
(British) Reed International P.L.C. (1995 to date)
25 Victoria Street
London SW1H 0EX
United Kingdom
PAUL RICHARDSON.............................. Group Treasurer, Reed Elsevier plc (1997 to date);
Director and Senior Vice President -- Finance, Reed
(British) Elsevier Inc. (1998 to date) and Treasurer (April
2 Park Avenue, 7th Floor 2000 to date); Director (1999 to date), Vice
New York, NY 10016 President -- Finance and Treasurer, Reed Elsevier
U.S. Holdings Inc. (1995 to date); Director and
President, REH Mergersub Inc. (October 2000 to date)
ROLF STOMBERG*............................... Non-executive director, Reed International P.L.C. and
Reed Elsevier plc and a member of the Supervisory
(German) Board, Elsevier NV (1999 to date); Chairman of the
25 Ely Place Board, John Mowlem & Co. plc; Managing Director BP
London EC1N 6TD Co. plc (1995 to 1997)
United Kingdom
MORRIS TABAKSBLAT*........................... Chairman of Reed Elsevier plc and Reed International
P.L.C., and Chairman of the Supervisory Board of
(The Netherlands) Elsevier NV (1999 to date); Chairman of the
Van de Sande Bakhuyzenstraat 4 Supervisory Board, Aegon Verzekeringen N.V.; Member
1061 AG, Amsterdam of the Supervisory Board, TNT Post Group; Chairman
The Netherlands and Chief Executive Officer, Unilever NV (1994 to
1999); Chairman, European Round Table of
Industrialists (ERT)
DAVID WEBSTER*............................... Non-executive director, Reed International P.L.C.
(1992 to date) and Reed Elsevier plc (1993 to date);
(British) Member of the Supervisory Board, Elsevier NV (1999
6 Millington Road to date); Chairman, Safeway plc
Hayes, Middlesex U834AY
United Kingdom
</TABLE>
I-9
<PAGE> 56
7. DIRECTORS AND EXECUTIVE OFFICERS OF ELSEVIER NV. Elsevier NV has a
two-tier board structure comprising a Supervisory Board of eight members, all of
whom are non-executives and an Executive Board of three members. The name,
citizenship, business address, current principal occupation or employment and
five-year employment history of each director (of both the Supervisory Board and
the Executive Committee) and executive officer of Elsevier NV and certain other
information are set forth below. None of the directors and officers of Elsevier
NV listed below has, during the past five years, (i) been convicted in a
criminal proceeding or (ii) been a party to any judicial or administrative
proceeding that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws, or a finding of any violation of federal or state
securities laws. Directors of the Supervisory Board are identified by an
asterisk. The three current members of the Executive Board are Crispin Davis
(Chief Executive Officer), Mark Armour (Chief Financial Officer) and Derk Haank.
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
MARK ARMOUR.................................. Director and Chief Financial Officer, Reed
International P.L.C. and Reed Elsevier plc (1996 to
(British) date) (Deputy Chief Financial Officer, 1995 to
25 Victoria Street 1996); Member of the Executive Board and Chief
London SW1H 0EX Financial Officer, Elsevier NV (1999 to date);
United Kingdom Chair, Reed Elsevier Inc. (February 2000 to date);
Chair, REH Mergersub Inc. (October 2000 to date)
MRS G J DE BOER-KRUYT*....................... Member of the Supervisory Board, Elsevier NV (April
2000 to date); Non-executive director, Sara Lee/
(The Netherlands) DE; Non-executive director H.B.G.; Non-executive
Hoofdgracht 65 director InternatioMuller
1411 LB Naarden
The Netherlands
JOHN BROCK*.................................. Non-executive director of Reed Elsevier plc and Reed
International P.L.C., and member of the
(United States) Supervisory Board of Elsevier NV (1996 to date);
Cadbury Schweppes Chief Operating Officer, Cadbury Schweppes plc
25 Berkeley Square (March 2000 to date); Managing Director and Chief
London W1X 6HT Executive Officer -- Global Beverages Stream,
United Kingdom Cadbury Schweppes plc (1996 to March 2000); Chief
Executive Officer, Dr Pepper 7 Up (DPSU) (1995 to
1996)
CRISPIN DAVIS................................ Director and Chief Executive Officer, Reed
International P.L.C. and Reed Elsevier plc (1999 to
(British) date); Chief Executive Officer and Member of the
25 Victoria Street Executive Board, Elsevier NV (1999 to date); Chief
London SW1H 0EX Executive Officer, Aegis Group plc (1994 to 1999)
United Kingdom
ERIK EKKER................................... Company Secretary, Elsevier NV; Legal Director --
Continental Europe, Reed Elsevier plc (1993 to
(The Netherlands) date); Member of the Management Board of Reed
Van de Sande Bakhuyzenstraat 4 Elsevier Holdings BV and Reed Elsevier Overseas BV
1061 AG, Amsterdam
The Netherlands
OTTO TER HAAR*............................... Member of the Supervisory Board, Elsevier N.V. (1990
to date)
(The Netherlands)
11 Hishfield
Kilnaleck, Co. Caven
Ireland
</TABLE>
I-10
<PAGE> 57
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
DERK HAANK................................... Director, Reed Elsevier plc and Reed International
P.L.C. (1999 to date); Member of the Executive
(The Netherlands) Board, Elsevier NV (2000 to date); Chief Executive
Sara Burgerhartstraat 25 Officer, Elsevier Science (1998 to date); Chief
1055 NV Amsterdam Executive Officer, Elsevier Business Information
The Netherlands (1991 to 1998); Member of the Management Board of
Reed Elsevier Holdings BV and Reed Elsevier
Overseas BV
ROELOF NELISSEN*............................. Member of the Supervisory Board, Elsevier NV (1990
to date); Non-executive director, Reed Elsevier plc
(The Netherlands) and Reed International P.L.C. (1999 to date)
Hoog Hoefloo 36 (having previously been a non-executive director
1251 ED LAREN N-H of Reed Elsevier plc from 1993 to 1998);
The Netherlands Non-executive director NVLS (1973 to date);
Non-executive director KBB NV (1993 to date);
Non-executive director Ahold NV (1985 to date);
formerly Chief Executive Officer of ABN AMRO Bank
NV
STEVEN PERRICK*.............................. Member of the Supervisory Board, Elsevier NV (1998
to date); Non-executive director, Reed Elsevier plc
(The Netherlands) (1998 to date); Non-executive director, Reed
Apollolaan 151 International P.L.C. (1999 to date); Lawyer,
1077 AR Amsterdam Freshfields Bruckhaus Deringer (1999 to date);
The Netherlands Lawyer, DBBW (1996 to 1999); Lawyer, Loeff Claeys
Verbeke (1996 to 1997); Professor at Erasmus
University, Rotterdam
ROLF STOMBERG*............................... Non-executive director, Reed International P.L.C.
and Reed Elsevier plc and a member (1999 to date);
(German) Member of the Supervisory Board, Elsevier NV (1999
25 Ely Place to date); Chairman of the Board, John Mowlem & Co.
London EC1N 6TD plc; Managing Director BP Co. plc (1995 to 1997)
United Kingdom
MORRIS TABAKSBLAT*........................... Chairman of Reed Elsevier plc and Reed International
P.L.C., and Chairman of the Supervisory Board of
(The Netherlands) Elsevier NV (1999 to date); Chairman of the
Van de Sande Bakhuyzenstraat 4 Supervisory Board, Aegon Verzekeringen N.V.;
1061 AG, Amsterdam Member of the Supervisory Board, TNT Post Group;
The Netherlands Chairman and Chief Executive Officer, Unilever NV
(1994 to 1999); Chairman, European Round Table of
Industrialists (ERT)
DAVID WEBSTER*............................... Non-executive director, Reed International P.L.C.
(1992 to date) and Reed Elsevier plc (1993 to date);
(British) Member of the Supervisory Board, Elsevier NV (1999
6 Millington Road to date); Chairman, Safeway plc
Hayes, Middlesex U834AY
United Kingdom
</TABLE>
I-11
<PAGE> 58
8. DIRECTORS AND EXECUTIVE OFFICERS OF REED INTERNATIONAL P.L.C. The name,
citizenship, business address, current principal occupation or employment and
five-year employment history of each director and executive officer of Reed
International P.L.C. and certain other information are set forth below. None of
the directors and officers of Reed International P.L.C. listed below has, during
the past five years, (i) been convicted in a criminal proceeding or (ii) been a
party to any judicial or administrative proceeding that resulted in a judgment,
decree or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws. Directors are
identified by an asterisk.
<TABLE>
<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
MARK ARMOUR*................................. Director and Chief Financial Officer, Reed
International P.L.C. and Reed Elsevier plc (1996 to
(British) date) (Deputy Chief Financial Officer, 1995 to
25 Victoria Street 1996); Member of the Executive Board and Chief
London SW1H 0EX Financial Officer, Elsevier NV (1999 to date);
United Kingdom Chair, Reed Elsevier Inc. (February 2000 to date);
Chair, REH Mergersub Inc. (October 2000 to date)
JOHN BROCK*.................................. Non-executive director of Reed Elsevier plc and Reed
International P.L.C., and member of the
(United States) Supervisory Board of Elsevier NV (1996 to date);
Cadbury Schweppes Chief Operating Officer, Cadbury Schweppes plc
25 Berkeley Square (March 2000 to date); Managing Director and Chief
London W1X 6HT Executive Officer -- Global Beverages Stream,
United Kingdom Cadbury Schweppes plc (1996 to March 2000); Chief
Executive Officer, Dr Pepper 7 Up (DPSU) (1995 to
1996)
CRISPIN DAVIS*............................... Director and Chief Executive Officer, Reed
International P.L.C. and Reed Elsevier plc (1999 to
(British) date); Chief Executive Officer and Member of the
25 Victoria Street Executive Board, Elsevier NV (1999 to date); Chief
London SW1H 0EX Executive Officer, Aegis Group plc (1994 to 1999)
United Kingdom
DERK HAANK*.................................. Director, Reed Elsevier plc, Reed International
P.L.C.; Member of the Executive Board, Elsevier NV;
(The Netherlands) Chief Executive Officer, Elsevier Science (1998 to
Sara Burgerhartstraat 25 date); Chief Executive Officer, Elsevier Business
1055 NV Amsterdam Information (1991 to 1998); Member of the
The Netherlands Management Board of Reed Elsevier Holdings BV and
Reed Elsevier Overseas BV
ROELOF NELISSEN*............................. Member of the Supervisory Board, Elsevier NV (1990
to date); Non-executive director, Reed Elsevier plc
(The Netherlands) and Reed International P.L.C. (1999 to date)
Hoog Hoefloo 36 (having previously been a non-executive director
1251 ED LAREN N-H of Reed Elsevier plc from 1993 to 1998);
The Netherlands Non-executive director NVLS (1973 to date);
Non-executive director KBB NV (1993 to date);
Non-executive director Ahold NV (1985 to date);
formerly Chief Executive Officer of ABN AMRO Bank
NV
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<PAGE> 59
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<CAPTION>
CURRENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME (CITIZENSHIP) AND BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
--------------------------------------- ------------------------------------------
<S> <C>
STEVEN PERRICK*.............................. Member of the Supervisory Board, Elsevier NV (1998
to date); Non-executive director, Reed Elsevier plc
(The Netherlands) (1998 to date); Non-executive director, Reed
Apollolaan 151 International P.L.C. (1999 to date); Lawyer,
1077 AR Amsterdam Freshfields Bruckhaus Deringer (1999 to date);
The Netherlands Lawyer, DBBW (1996 to 1999); Lawyer, Loeff Claeys
Verbeke (1996 to 1997); Professor at Erasmus
University, Rotterdam
ANDREW PROZES*............................... Executive director, Reed International P.L.C. and
Reed Elsevier plc (2000 to date); Vice Chair, Reed
(Canada) Elsevier Inc. (September 2000 to date); Global CEO
2 Park Avenue, 7th Floor of Reed Elsevier plc's Legal Information Group
New York, NY 10016 (July 2000 to date); Executive Vice President of
West Group (1997 to July 2000); President and
Chief Executive Officer of EBC Software (1996 to
1997); Group President Southam Inc. (1994 to 1996)
MARK RADCLIFFE............................... Company Secretary & Director of Corporate Services,
Reed Elsevier plc (1995 to date); Company Secretary,
(British) Reed International P.L.C. (1995 to date)
25 Victoria Street
London SW1H 0EX
United Kingdom
ROLF STOMBERG*............................... Non-executive director, Reed International P.L.C.
and Reed Elsevier plc and a member of the
(German) Supervisory Board, Elsevier NV (1999 to date);
25 Ely Place Chairman of the Board, John Mowlem & Co. plc;
London EC1N 6TD Managing Director BP Co. plc (1995 to 1997)
United Kingdom
MORRIS TABAKSBLAT*........................... Chairman of Reed Elsevier plc and Reed International
P.L.C., and Chairman of the Supervisory Board of
(The Netherlands) Elsevier NV (1999 to date); Chairman of the
Van de Sande Bakhuyzenstraat 4 Supervisory Board, Aegon Verzekeringen N.V.;
1061 AG, Amsterdam Member of the Supervisory Board, TNT Post Group;
The Netherlands Chairman and Chief Executive Officer, Unilever NV
(1994 to 1999); Chairman, European Round Table of
Industrialists (ERT)
DAVID WEBSTER*............................... Non-executive director, Reed International P.L.C.
(1992 to date) and Reed Elsevier plc (1993 to date);
(British) Member of the Supervisory Board, Elsevier NV (1999
6 Millington Road to date); Chairman, Safeway plc
Hayes, Middlesex U834AY
United Kingdom
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I-13
<PAGE> 60
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly executed, will be accepted. The Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each stockholder of the Company or such stockholder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of the addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
CITIBANK, N.A.
<TABLE>
<S> <C> <C>
BY MAIL: BY COURIER: BY HAND:
P.O. Box 685 915 Broadway, 5th Floor Corporate Trust Window
Old Chelsea Station New York, NY 10010 111 Wall Street, 5th Floor
New York, NY 10113 New York, NY 10043
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS
ONLY)
(212) 505-2248
CONFIRM FACSIMILE BY TELEPHONE:
(800) 270-0808
(For Confirmation Only)
</TABLE>
Questions or requests for assistance may be directed to the Information Agent or
the Dealer Manager, at the addresses and telephone numbers set forth below.
Additional copies of this Offer to Purchase, the Letter of Transmittal, the
Notice of Guaranteed Delivery and related materials may be obtained from the
Information Agent as set forth below and will be furnished promptly at
Purchaser's expense. Stockholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[MacKenzie Partners, Inc. Logo]
156 FIFTH AVENUE
NEW YORK, NY 10010
(212) 929-5500
OR
CALL TOLL FREE: (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-4834
