UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
OVID TECHNOLOGIES, INC.
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
690466 10 7
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(CUSIP Number)
Mr Bruce C. Lenz
Wolters Kluwer U.S. Corporation
161 N. Clark St., 48th Floor
Chicago, IL 60601-3221
Telephone (312) 425-7000
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(Name, Address and Telephone Number of person
authorized to receive notices and communications)
October 5, 1998
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[ ]
(continued on following pages)
(page 1 of 9 pages)
<PAGE>
CUSIP No. 690466 10 7 SCHEDULE 13D Page 2 of 9 Pages
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1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
OTI Acquisition Corp.
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2 Check the Appropriate Box If a Member of a Group*
a. |X|
b. |_|
- --------------------------------------------------------------------------------
3 SEC Use Only
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4 Source of Funds*
AF
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
Delaware
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7 Sole Voting Power 0
Number of
Shares
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power 5,121,130
Each
Reporting
Person --------------------------------------------------------
With 9 Sole Dispositive Power 0
--------------------------------------------------------
10 Shared Dispositive Power 5,121,130
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,121,130
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12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
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13 Percent of Class Represented By Amount in Row (11)
70.8%
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14 Type of Reporting Person*
CO
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(1) The Reporting Person disclaims beneficial ownership of such shares and
this Statement shall not be construed as an admission that the Reporting
Person is the beneficial owner of any securities covered by this
Statement.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 690466 10 7 SCHEDULE 13D Page 3 of 9 Pages
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Wolters Kluwer U.S. Corporation
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |X|
b. |_|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
AF
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Delaware
- --------------------------------------------------------------------------------
7 Sole Voting Power 0
Number of
Shares
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power 5,121,130
Each
Reporting
Person --------------------------------------------------------
With 9 Sole Dispositive Power 0
--------------------------------------------------------
10 Shared Dispositive Power 5,121,130
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,121,130
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
70.8%
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14 Type of Reporting Person*
CO
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(1) The Reporting Person disclaims beneficial ownership of such shares and
this Statement shall not be construed as an admission that the Reporting
Person is the beneficial owner of any securities covered by this
Statement.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
CUSIP No. 690466 10 7 SCHEDULE 13D Page 4 of 9 Pages
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Wolters Kluwer nv
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2 Check the Appropriate Box If a Member of a Group*
a. |X|
b. |_|
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3 SEC Use Only
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4 Source of Funds*
BK; WC
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5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
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6 Citizenship or Place of Organization
The Netherlands
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7 Sole Voting Power 0
Number of
Shares
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power 5,121,130
Each
Reporting
Person --------------------------------------------------------
With 9 Sole Dispositive Power 0
--------------------------------------------------------
10 Shared Dispositive Power 5,121,130
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
5,121,130
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |X|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
70.8%
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14 Type of Reporting Person*
CO
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(1) The Reporting Person disclaims beneficial ownership of such shares and
this Statement shall not be construed as an admission that the Reporting
Person is the beneficial owner of any securities covered by this
Statement.
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 5 of 9 Pages
This Statement is filed filed by OTI Acquisition Corp, (the "Offeror"),
Wolters Kluwer U.S. Corporation (the "Parent") and Wolters Kluwer nv ("Wolters
Kluwer") with the Securities and Exchange Commission on October 5, 1998.
Item 1. Security and Issuer.
The name of the issuer is Ovid Technologies, Inc., a Delaware corporation
(the "Company"), which has its principal executive offices at 333 Seventh
Avenue, New York, New York, 10001.
The class of equity securities to which this statement relates is the
common stock, par value $.01 per share, of the Company. The information set
forth in the Introduction of the Offer to Purchase, a copy of which is attached
hereto as Exhibit A (the "Offer to Purchase"), is incorporated herein by
reference.
Item 2. Identity and Background.
(a)-(c) and (f) This Statement is filed by the Offeror, a Delaware
corporation, the Parent, a Delaware corporation, and Wolters Kluwer, a
corporation organized under the laws of the Netherlands. The information set
forth in the Introduction, Section 9 ("Certain Information Concerning Wolters
Kluwer, the Parent and the Offeror") and Schedule I ("Directors and Executive
Officers of Wolters Kluwer, the Parent and the Offeror") of the Offer to
Purchase is incorporated herein by reference. The address of the principal
office of the Parent is c/o Wolters Kluwer United States Inc. 161 North Clark
Street, 48th Floor, Chicago, IL 60601.
(e) and (f) During the last five years, none of Wolters Kluwer, the Parent
or the Offeror and, to the best knowledge of the Parent and the Offeror, none of
the persons listed in Schedule I of the Offer to Purchase has been (i) convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any
violations of such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The information set forth in Section 10 ("Source and Amount of Funds") of
the Offer to Purchase is incorporated herein by reference.
<PAGE>
Page 6 of 9 Pages
Item 4. Purpose of Transaction.
(a)-(g) and (j) The information set forth in the Introduction, Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company") and Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company") of the Offer to Purchase is incorporated herein by reference.
Pursuant to the Merger Agreement, the Bylaws of the Offeror at the
Effective Time shall be the Bylaws of the Surviving Corporation and the
officers and directors of the Offeror shall be the initial officers and
directors of the Surviving Corporation. The Merger Agreement also provides
that the Certificate of Incorporation of the Company at the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation,
however, at the Effective Time, the Board of Directors of the Surviving
Corporation may elect to reduce the number of authorized shares. It is also
expected that the Parent will cause the dividend policy of the Surviving
Corporation to be conformed to that of other indirect wholly-owned
subsidiaries of the Parent.
(h) and (i) The information set forth in Section 7 ("Certain Effects of
the Transaction") of the Offer to Purchase is incorporated herein by reference.
Except as described in the Offer to Purchase, the Merger Agreement, or the
Option Agreement, Wolters Kluwer does not have any plans or proposals which
would result in (i) the acquisition by any person of additional securities of
the Company, or the disposition of securities of the Company, (ii) an
extraordinary corporate transaction, (iii) a sale or transfer of a material
amount of assets of the Company or of any of its subsidiaries, (iv) any change
in the present board of directors or management of the Company, (v) any material
change in the capitalization or the dividend policy of the Company, (vi) any
other material change in the Company's corporate structure or business, (vii)
changes in the Company's charter, Bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of the Company by any
person, (viii) causing a class of securities of the Company to be delisted from
a national securities exchange or to cease to be authorized to be quoted on an
inter-dealer quotation system of a registered national securities association,
(ix) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act, or
(x) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning Wolters Kluwer, the Parent and the Offeror"), Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company") and Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company") of the Offer to Purchase is incorporated herein by reference. As a
result of the Offeror's conditional option to purchase the Shares beneficially
owned by the stockholders who are party to the Stock Option and Tender
Agreement, dated as of September 29, 1998 (the "Stockholders") with the Offeror,
each of Wolters Kluwer, the Parent and the Offeror may be deemed to beneficially
own, and have shared voting and disposition power with respect to, an aggregate
of 5,121,130 Shares (representing approximately 70.8% of the Shares outstanding
on September 29, 1998 options to purchase Shares beneficially owned by such
Stockholders or 63% of the Shares outstanding on September 29, 1998, on a fully
diluted basis.) However, each of Wolters Kluwer, the Parent and the Offeror have
disclaimed beneficial ownership to such shares, and this statement shall not be
construed as an admission that any of Wolters Kluwer, the Parent or the Offerer
are the beneficial owners of any securities covered by this statement.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
the Securities of the Issuer.
The information set forth in the Introduction, Section 9 ("Certain
Information Concerning Wolters Kluwer, the Parent and the Offeror"), Section 11
("Background of the Offer; Past Contacts, Transactions or Negotiations with the
Company") Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company") and Section 13 ("The Merger Agreement, the Option Agreement, and the
Guarantee") of the Offer to Purchase is incorporated herein by reference.
<PAGE>
Page 7 of 9 Pages
Item 7. Material to be Filed as Exhibits.
Exhibit A Form of Offer to Purchase dated October 5, 1998.
Exhibit B Agreement and Plan of Merger, dated as of September 29, 1998,
among the Parent, the Offeror and the Company.
Exhibit C Stock Option and Tender Agreement, dated as of September 29, 1998,
by and among the Offeror, the Parent and the Stockholders set
forth therein.
Exhibit D Letter, dated September 29, 1998, from Wolters Kluwer to the
Company.
Exhibit E Exclusivity Agreement, effective as of September 22, 1998, between
the Parent and the Company.
<PAGE>
Page 8 of 9 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 5, 1998 OTI ACQUISITION CORP.
By: /s/ Bruce C. Lenz
------------------------------
Name: Bruce C. Lenz
Title: President
WOLTERS KLUWER U.S. CORPORATION
By: /s/ Peter W. van Wel
------------------------------
Name: Peter W. van Wel
Title: President and CEO
WOLTERS KLUWER nv
By: /s/ Peter W. van Wel
------------------------------
Name: Peter W. van Wel
Title: Member, Executive Board
<PAGE>
Page 9 of 9 Pages
EXHIBIT INDEX
Exhibit No. Description
- ----------- ------------------------------------------------------------------
Exhibit A Form of Offer to Purchase dated October 5, 1998.
Exhibit B Agreement and Plan of Merger, dated as of September 29, 1998,
among the Parent, the Offeror and the Company.
Exhibit C Stock Option and Tender Agreement, dated as of September 29, 1998,
by and among the Offeror, the Parent and the Stockholders set
forth therein.
Exhibit D Letter, dated September 29, 1998, from Wolters Kluwer to the
Company.
Exhibit E Exclusivity Agreement, effective as of September 22, 1998, between
the Parent and the Company.
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
OVID TECHNOLOGIES, INC.
AT
$24.59 NET PER SHARE
BY
OTI ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
WOLTERS KLUWER U.S. CORPORATION
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, NOVEMBER 2, 1998, UNLESS THE OFFER IS EXTENDED.
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THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN THAT NUMBER OF SHARES
OF COMMON STOCK, PAR VALUE $.01 PER SHARE ("SHARES"), OF OVID
TECHNOLOGIES, INC. (THE "COMPANY"), WHICH, TOGETHER WITH THE
SHARES REQUIRED TO BE TENDERED PURSUANT TO THE OPTION AGREEMENT
(AS DEFINED HEREIN), REPRESENT AT LEAST THAT NUMBER OF SHARES WHICH
WOULD CONSTITUTE A MAJORITY OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS, (ii) RECEIPT BY THE OFFEROR (AS DEFINED HEREIN) OF
CERTAIN GOVERNMENTAL APPROVALS AND (iii) THE SATISFACTION OF
CERTAIN OTHER TERMS AND CONDITIONS. SEE SECTION 14 --
"CERTAIN CONDITIONS TO THE OFFEROR'S OBLIGATIONS",
WHICH SETS FORTH IN FULL THE CONDITIONS OF THE OFFER.
THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF MERGER,
DATED AS OF SEPTEMBER 29, 1998, BY AND AMONG WOLTERS KLUWER U.S. CORPORATION,
OTI ACQUISITION CORP. AND THE COMPANY. THE BOARD OF DIRECTORS OF THE COMPANY
HAS UNANIMOUSLY APPROVED THE OFFER, THE MERGER AND THE MERGER AGREEMENT,
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 PURSUANT TO THE OFFER.
IMPORTANT
Any stockholder desiring to tender Shares should either (i) complete and
sign the Letter of Transmittal or a facsimile thereof in accordance with the
instructions in the Letter of Transmittal and deliver the Letter of Transmittal
with the Shares and all other required documents to the Depositary, or follow
the procedure for book-entry transfer set forth in Section 3--"Procedure for
Tendering Shares" or (ii) request such stockholder's broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for the
stockholder. Stockholders having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such person
if they desire to tender their Shares.
Any stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedures for book-entry transfer on a timely basis, may tender such
Shares pursuant to the guaranteed delivery procedure set forth in Section
3--"Procedure for Tendering Shares".
Questions and requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal or any other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase.
The Dealer Manager for the Offer is:
CREDIT | FIRST
SUISSE | BOSTON
October 5, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
INTRODUCTION .............................................................. 1
1. Terms of the Offer ................................................... 2
2. Acceptance for Payment and Payment for Shares ........................ 4
3. Procedure for Tendering Shares ....................................... 5
4. Withdrawal Rights .................................................... 7
5. Certain United States Federal Income Tax Considerations .............. 7
6. Price Range of Shares; Dividends ..................................... 8
7. Certain Effects of the Transaction ................................... 9
8. Certain Information Concerning the Company ........................... 10
9. Certain Information Concerning Wolters Kluwer, the Parent
and the Offeror ...................................................... 13
10. Source and Amount of Funds ........................................... 16
11. Background of the Offer; Past Contacts, Transactions or
Negotiations with the Company ........................................ 16
12. Purpose of the Offer and the Merger; Plans for the Company ........... 17
13. The Merger Agreement, the Option Agreement and the Guarantee ......... 18
14. Certain Conditions to the Offeror's Obligations ...................... 29
15. Certain Legal Matters ................................................ 30
16. Fees and Expenses .................................................... 32
17. Miscellaneous ........................................................ 32
Schedule I -- Directors and Executive Officers of Wolters Kluwer,
the Parent and the Offeror ........................................... 34
i
<PAGE>
To the Holders of Common Stock,
par value $.01 per share, of Ovid Technologies, Inc.:
INTRODUCTION
OTI Acquisition Corp., a Delaware corporation (the "Offeror") and an
indirect wholly owned subsidiary of Wolters Kluwer U.S. Corporation, a Delaware
corporation (the "Parent"), hereby offers to purchase all outstanding shares of
Common Stock, par value $.01 per share (the "Common Stock" or the "Shares"), of
Ovid Technologies, Inc., a Delaware corporation (the "Company"), at a purchase
price of $24.59 per Share net to the seller in cash (such price, or such higher
price per Share as may be paid in the Offer (as defined below), referred to
herein as the "Offer Price"), without interest thereon, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, constitute the "Offer"). Tendering holders of record of Shares who
tender directly will not be obligated to pay brokerage fees or commissions or,
except as set forth in the Letter of Transmittal, transfer taxes on the purchase
of Shares by the Offeror pursuant to the Offer. Stockholders who hold their
Shares through a bank or broker should check with such institution as to whether
they charge any service fees. The Offeror will pay all charges and expenses of
Credit Suisse First Boston Corporation, which is acting as Dealer Manager for
the Offer (in such capacity, the "Dealer Manager"), Morgan Guaranty Trust
Company of New York (the "Depositary") and Georgeson & Company Inc. (the
"Information Agent") in connection with the Offer. See Section 16--"Fees and
Expenses".
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER,
THE MERGER (AS HEREINAFTER DEFINED) AND THE MERGER AGREEMENT (AS HEREINAFTER
DEFINED), 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 PURSUANT TO
THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE HAVING BEEN
VALIDLY TENDERED BY THE EXPIRATION DATE (AS DEFINED BELOW) AND NOT WITHDRAWN
THAT NUMBER OF SHARES WHICH, TOGETHER WITH THE SHARES REQUIRED TO BE TENDERED
PURSUANT TO THE OPTION AGREEMENT (AS DEFINED BELOW), REPRESENT AT LEAST THAT
NUMBER OF SHARES WHICH WOULD CONSTITUTE A MAJORITY OF THE SHARES OUTSTANDING ON
A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). THE OFFER IS ALSO CONDITIONED
UPON THE OFFEROR OBTAINING CERTAIN GOVERNMENTAL APPROVALS AND THE SATISFACTION
OF OTHER TERMS AND CONDITIONS. SEE SECTION 14--"CERTAIN CONDITIONS TO THE
OFFEROR'S OBLIGATIONS".
The Company has represented to the Offeror in the Merger Agreement that the
Board of Directors of the Company has received the opinion of Goldman, Sachs &
Co. ("Goldman Sachs") dated as of September 29, 1998, to the effect that, as of
the date of such opinion, the $24.59 in cash to be received by the holders of
Shares in the Offer and the Merger is fair from a financial point of view to
such holders. A copy of such opinion is contained in the Company's Statement on
Schedule 14D-9 which is being distributed to the Company's stockholders.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of September 29, 1998 (the "Merger Agreement"), by and among the Parent, the
Offeror and the Company. The Merger Agreement provides that, among other things,
as soon as practicable after the purchase of Shares pursuant to the Offer and
the satisfaction of the other conditions set forth in the Merger Agreement and
in accordance with the relevant provisions of the Delaware General Corporation
Law, as amended (the "Delaware GCL"), the Offeror will be merged with and into
the Company (the "Merger"). See Section 12--"Purpose of the Offer and the
Merger; Plans for the Company". Following consummation of the Merger, the
Company will continue as the surviving corporation (the "Surviving Corporation")
and will be an indirect wholly owned subsidiary of the Parent. At the effective
time of the Merger (the "Effective Time"), each share of the Common Stock that
is issued and outstanding (other than shares owned by the Company as treasury
stock, any Shares owned by the Parent, the Offeror, or any other wholly owned
subsidiary of the Parent, which shall be cancelled, and Shares held by
stockholders who have properly exercised appraisal rights under Delaware law, if
any) will be converted into the right to receive the Offer Price, without
interest thereon, upon surrender of the certificates formerly representing such
Shares. See Section 5--"Certain United States Federal Income Tax Considerations"
for a description of certain tax consequences of the Offer and the Merger. The
payment obligations of the Parent and the Offeror under the Merger Agreement
have been guaranteed by Wolters Kluwer nv, a corporation organized under the
laws of the Netherlands ("Wolters Kluwer") and the ultimate parent of the Parent
and
1
<PAGE>
the Offeror, pursuant to a Letter Agreement, dated September 29, 1998 between
Wolters Kluwer and the Company (the "Guarantee"). See Section 13--"The Merger
Agreement, the Option Agreement and the Guarantee".
The Merger Agreement provides that, promptly after the Offeror acquires at
least a majority of the outstanding Shares, the Parent will be entitled to
designate up to that number of directors of the Board of Directors of the
Company (the "Company Board") (rounded up to the next whole number) as will make
the percentage of the Company's directors designated by the Parent equal to the
aggregate voting power of the Shares held by the Parent and any of its
affiliates (assuming the exercise of all outstanding options to purchase Common
Stock). Notwithstanding the foregoing, until the Effective Time, the Company
will have on the Company Board at least two directors who were directors of the
Company on the date of the Merger Agreement; provided, that, subsequent to the
purchase of and payment for Shares pursuant to the Offer, Parent will always
have its designees represent at least a majority of the entire Company Board.
The Parent and the Offeror have entered into a Stock Option and Tender
Agreement, dated as of September 29, 1998 (the "Option Agreement"), with the
stockholders identified therein (each a "Stockholder" and collectively, the
"Stockholders") beneficially owning an aggregate of 5,121,130 Shares
(representing approximately 63% of the Shares outstanding on September 29, 1998
on a fully diluted basis). Such Shares beneficially owned by the Stockholders
are hereinafter referred to as the "Stockholders' Shares". Pursuant to the
Option Agreement, the Stockholders have, among other things, (i) agreed to
tender into the Offer (and not withdraw except in certain limited circumstances)
all of the Stockholders' Shares then outstanding, unless the Offer is terminated
by Parent or the Offeror without any Shares being purchased thereunder and (ii)
granted to Parent or the Offeror, as the Parent shall designate (the
"Optionee"), a conditional option to purchase the Stockholders' Shares. In
addition, each Stockholder has agreed to appoint Parent under certain
circumstances as such Stockholders' proxy to vote such Stockholders' Shares on
all matters in connection with the consummation of the transactions contemplated
by the Merger Agreement and the Option Agreement.
The Company has advised the Offeror that as of September 29, 1998 there
were (i) 10,000,000 authorized Shares, of which 6,183,512 Shares were issued and
outstanding, (ii) outstanding stock options under the Company's 1990 and 1993
Stock Option Plans (collectively, the "Company Stock Option Plans") for not in
excess of 1,950,779 Shares and (iii) 1,000,000 shares of preferred stock
authorized, none of which were issued and outstanding. As of the date hereof,
neither the Offeror nor the Parent beneficially owns any Shares. If the Offeror
acquires at least 4,067,146 Shares in the Offer, the Minimum Condition will be
satisfied. Since the Stockholders own an aggregate of 4,070,630 outstanding
Shares and pursuant to the Option Agreement are required to tender (and not
withdraw except in certain limited circumstances) all of the Stockholders'
Shares then outstanding pursuant to the Offer, the Minimum Condition will be
satisfied. Accordingly, the Offeror would have sufficient voting power to
approve the Merger without the affirmative vote of any other stockholder. In the
event that the Offeror acquires 90% or more of the Shares, the Parent would be
able to effectuate the Merger by appropriate resolutions of the Boards of
Directors of the Offeror and the Company without any meeting or action by the
stockholders of the Company.
The Offeror has been advised by the Company that, to the best of the
Company's knowledge, all of the Company's directors and executive officers
currently intend to tender all Shares owned by them pursuant to the Offer.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Offeror will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore properly withdrawn in
accordance with Section 4--"Withdrawal Rights". The term "Expiration Date" means
12:00 Midnight, New York City time, on Monday, November 2, 1998, unless the
Offeror 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 the Offeror, shall expire.
If the Offeror shall decide, in its sole discretion, to increase the
consideration offered in the Offer to holders of Shares and if, at the time that
notice of such increase is first published, sent or given to holders of Shares
in the manner specified below, the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that such notice is first so published, sent or given,
then the Offer will be extended until the expiration of such period of ten
business days. For purposes of the Offer, a "business day" means
2
<PAGE>
any day other than a Saturday, Sunday or a federal holiday, and consists of the
time period from 12:01 a.m. through 12:00 Midnight, New York City time.
The Offer is conditioned upon satisfaction of the Minimum Condition and the
Offeror obtaining certain governmental approvals. The Merger Agreement and the
Offer may be terminated by the Offeror and the Parent if certain events occur.
The Offer is also subject to other terms and conditions. See Section
14--"Certain Conditions to the Offeror's Obligations". The Offeror expressly
reserves the right (but shall not be obligated), in accordance with applicable
rules and regulations of the United States Securities and Exchange Commission
(the "Commission"), and subject to the limitations set forth in the Merger
Agreement and described below, to waive any condition (other than the Minimum
Condition) to the Offer prior to the Expiration Date. If the Minimum Condition
or any of the other conditions set forth in Section 14--"Certain Conditions to
the Offeror's Obligations" have not been satisfied by 12:00 Midnight, New York
City time on Monday, November 2, 1998, (or any other time then set as the
Expiration Date), then the Offeror may, subject to the terms of the Merger
Agreement as described below, elect to (i) extend the Offer and, subject to
applicable withdrawal rights, retain all tendered Shares until the expiration of
the Offer, as extended, (ii) subject to complying with applicable rules and
regulations of the Commission, accept for payment all Shares so tendered and not
extend the Offer, or (iii) subject to the Merger Agreement, terminate the Offer
and not accept for payment any Shares and return all tendered Shares to
tendering stockholders. Notwithstanding the foregoing, prior to invoking the
conditions set forth in paragraph (a) or (b) of Section 14--"Certain Conditions
to the Offeror's Obligations" with regard to actions taken or statutes, rules,
regulations, judgments, orders or injunctions promulgated, entered or enforced
by any governmental entity of competent jurisdiction in the United States or
other country in which the Company directly or indirectly has material assets or
operations with respect to the Parent's ownership of the Shares, operation of
the Company's business or prohibiting the Offer or the Merger, the Parent shall
have used all reasonable efforts to cause any such actions to be taken or any
such judgment, order or injunction to be vacated or lifted.
Under the terms of the Merger Agreement, the Offeror shall not amend or
waive the Minimum Condition, decrease the Offer Price or decrease the number of
Shares sought, change the form of consideration to be paid pursuant to the
Offer, impose conditions to the Offer in addition to those set forth in
Section14--"Certain Conditions to the Offeror's Obligations", or amend any other
term or condition of the Offer in any manner adverse to the holders of the
Shares or extend the expiration date of the Offer without the prior written
consent of the Company (such consent to be authorized by the Company Board or a
duly authorized committee thereof). Notwithstanding the foregoing, the Offeror
shall, and Parent agrees to cause Offeror to, extend the Offer for a period of
ten (10) business days following the initial expiration date of the Offer, if
any conditions to the Offer have not been satisfied or waived at such date. In
addition, following such first extension of the Offer as provided in the
preceding sentence, (i) the Offeror shall, and Parent agrees to cause the
Offeror to, extend the Offer, at any time prior to the termination of the Merger
Agreement, for one or more periods of not more than ten (10) business days, if
at the expiration date of the Offer, as extended, all conditions to the Offer
have not been satisfied or waived, and (ii) the Offer Price may be increased and
the Offer may be extended to the extent required by law in connection with such
increase, in each case without the consent of the Company. In addition, the
Offeror may, without the consent of the Company, extend the Offer for a period
of not more than ten (10) business days beyond the latest expiration date that
would otherwise be permitted under clause (i) or (ii) of the immediately
preceding sentence if there shall not have been tendered and not withdrawn
pursuant to the Offer at least 90% of the outstanding Shares.
Subject to the applicable rules and regulations of the Commission and
subject to the limitations set forth in the Merger Agreement, the Offeror also
expressly reserves the right, at any time and from time to time, in its sole
discretion, (i) to extend the period of time during which the Offer is open and
thereby delay payment for any Shares regardless of whether such Shares were
theretofore accepted for payment, or to terminate the Offer and not to accept
for payment or pay for any Shares not theretofore accepted for payment or paid
for, upon the occurrence of any of the conditions set forth in Section
14--"Certain Conditions to the Offeror's Obligations", by giving written notice
of such delay or termination to the Depositary, and (ii) at any time or from
time to time, to amend the Offer in any respect. The Offeror's right to delay
payment for any Shares or not to pay for any Shares theretofore accepted for
payment is subject to the applicable rules and regulations of the Commission,
including Rulel4e-l(c) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), relating to the Offeror's obligation to pay for or return
tendered Shares promptly after the termination or withdrawal of the Offer. Under
no circumstances will interest be paid on the purchase price for tendered
Shares, whether or not the Offeror exercises its right to extend the Offer.
There can be no assurance that the Offeror will exercise its rights to extend
the Offer.
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Any extension of the period during which the Offer is open, any delay in
acceptance for payment or termination or any amendment of the Offer will be
followed, as promptly as practicable, by public announcement thereof, such
announcement in the case of an extension to be issued not later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date in accordance with the public announcement requirements of Rules
14d-4(c) and 14e-l(d) under the Exchange Act. Without limiting the obligation of
the Offeror under such rule or the manner in which the Offeror may choose to
make any public announcement, the Offeror currently intends to make
announcements by issuing a press release to the Dow Jones News Service and
making any appropriate filing with the Commission.
If, subject to the terms of the Merger Agreement, the Offeror 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, the Offeror will
disseminate additional tender offer materials and extend the Offer if and to the
extent required by Rules14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act or
otherwise. The minimum period during which a tender offer must remain open
following material changes in the terms of the offer or the information
concerning the offer, other than a change in price or a change in percentage of
securities sought, will depend upon the facts and circumstances, including the
relative materiality of the terms or information changed. With respect to a
change in price or a change in percentage of securities sought, a minimum ten
business day period is generally required to allow for adequate dissemination to
stockholders and investor response.
The Company has provided the Offeror with the Company's list of
stockholders and security position listings for the purpose of disseminating the
Offer to holders of Shares. This Offer to Purchase and the Letter of Transmittal
will be mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Offeror will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not theretofore withdrawn in
accordance with Section 4--"Withdrawal Rights" promptly after the later to occur
of (a) the Expiration Date and (b) subject to compliance with Rule14e-l(c) under
the Exchange Act, the satisfaction or waiver of the conditions set forth in
Section 14--"Certain Conditions to the Offeror's Obligations". The payment
obligations of the Parent and the Offeror under the Merger Agreement have been
guaranteed by Wolters Kluwer pursuant to the Guarantee. See Section 13--"The
Merger Agreement, the Option Agreement and the Guarantee". Subject to compliance
with Rule14e-l(c) under the Exchange Act, the Offeror expressly reserves the
right to delay payment for Shares in order to comply in whole or in part with
any applicable law. See Section 1--"Terms of the Offer" and Section15--"Certain
Legal Matters". In all cases, payment for Shares tendered and accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates for such Shares or timely confirmation (a
"Book-Entry Confirmation") of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company (the "Book-Entry Transfer
Facility"), pursuant to the procedures set forth in Section 3--"Procedure for
Tendering Shares", (ii) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with all required signature
guarantees or in the case of a book-entry transfer, an Agent's Message (as
defined below) and (iii) any other documents required by the Letter of
Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Offeror may enforce such agreement against the participant.
For purposes of the Offer, the Offeror will be deemed to have accepted for
payment, and thereby purchased, Shares validly tendered and not withdrawn as, if
and when the Offeror gives written notice to the Depositary of the Offeror's
acceptance of such Shares for payment. In all cases, payment for Shares
purchased pursuant to the Offer will be made by deposit of the purchase price
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payment from the Offeror and transmitting such payment to
tendering stockholders. If, for any reason whatsoever, acceptance for payment of
any Shares tendered pursuant to the Offer is delayed, or the Offeror is unable
to accept for payment Shares tendered pursuant to the Offer, then, without
prejudice to the Offeror's rights
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under Section 1--"Terms of the Offer", the Depositary may, nevertheless, on
behalf of the Offeror, retain tendered Shares, and such Shares may not be
withdrawn, except to the extent that the tendering stockholders are entitled to
withdrawal rights as described in Section 4--"Withdrawal Rights" below and as
otherwise required by Rule14e-l(c) under the Exchange Act. Under no
circumstances will interest be paid by the Offeror because of any delay in
making such payment.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased or untendered
Shares will be returned, without expense to the tendering stockholder (or, in
the case of Shares delivered by book-entry transfer to the Book-Entry Transfer
Facility, such Shares will be credited to an account maintained within the
Book-Entry Transfer Facility), as promptly as practicable after the expiration,
termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Offeror increases the price being
paid for Shares accepted for payment pursuant to the Offer, such increased
consideration will be paid to all stockholders whose Shares are purchased
pursuant to the Offer, whether or not such Shares were tendered prior to such
increase in consideration.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer, a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message, and any other required documents, must
be received by the Depositary at the address 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 set forth below. In addition,
either (i) certificates representing such Shares must be received by the
Depositary along with the Letter of Transmittal or such Shares must be tendered
pursuant to the procedure for book-entry transfer set forth below, and a
Book-Entry Confirmation must be received by the Depositary, in each case prior
to the Expiration Date, or (ii) the guaranteed delivery procedures set forth
below must be complied with. No alternative, conditional or contingent tenders
will be accepted. Delivery of documents to the Book-Entry Transfer Facility in
accordance with the Book-Entry Transfer Facility's procedures does not
constitute delivery to the Depositary.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the Book-Entry
Transfer Facility's system may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at the Book-Entry Transfer Facility in accordance with the Book-Entry
Transfer Facility procedures for transfer. Although delivery of Shares may be
effected through book-entry at the Book-Entry Transfer Facility prior to the
Expiration Date, (i) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees, or an Agent's Message in connection with a book-entry transfer and
any other required documents, must, in any case, be transmitted to and received
by the Depositary at the address set forth on the back cover of this Offer to
Purchase or (ii) the guaranteed delivery procedures described below must be
complied with.
Signature Guarantee. Signatures on the Letter of Transmittal must be
guaranteed by a member in good standing of the Securities Transfer Agents
Medallion Program, or by any other bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rulel7Ad-15 under the Exchange Act (each of the
foregoing being referred to as an "Eligible Institution" and collectively, as
"Eligible Institutions"), unless the Shares tendered thereby are tendered (i) by
a registered holder of Shares who has not completed either the box labeled
"Special Delivery Instructions" or the box labeled "Special Payment
Instructions" on the Letter of Transmittal or (ii) for the account of any
Eligible Institution. If the certificates evidencing Shares are registered in
the name of a person or persons other than the signer of the Letter of
Transmittal, or if payment is to be made, or delivered to, or certificates for
unpurchased Shares are to be issued or returned to, a person other than the
registered owner or owners, then the tendered certificates must be endorsed or
accompanied by duly executed stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates, with
the signatures on the certificates or stock powers guaranteed by an Eligible
Institution as provided in the Letter of Transmittal. See Instructions 1 and 5
to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or time will not permit all required documents to reach the Depositary
prior to the Expiration Date or the procedure for book-entry transfer cannot be
completed on a timely
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basis, such Shares may nevertheless be tendered if all of the following
guaranteed delivery procedures are duly complied with:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Offeror, is
received by the Depositary, as provided below, prior to the Expiration
Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation), together with a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), and any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, and any other documents required by the
Letter of Transmittal are received by the Depositary within three trading
days after the date of such Notice of Guaranteed Delivery. The term
"trading day" is any day on which the NASDAQ National Market is open for
business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (i) certificates for such Shares or the Book-Entry
Confirmation, (ii) a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof), with all required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and (iii) any other documents required by the Letter of Transmittal.
BACKUP FEDERAL INCOME TAX WITHHOLDING. TO PREVENT "BACKUP" WITHHOLDING WITH
RESPECT TO PAYMENT OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE
OFFER OR PURSUANT TO THE MERGER, EACH STOCKHOLDER MUST EITHER PROVIDE THE
DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER
("TIN") AND CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL
INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE
LETTER OF TRANSMITTAL OR ESTABLISH SOME OTHER EXEMPTION TO BACKUP WITHHOLDING.
FOREIGN HOLDERS MUST SUBMIT A COMPLETED FORM W-8 TO AVOID BACKUP WITHHOLDING.
THIS FORM MAY BE OBTAINED FROM THE DEPOSITARY. SEE INSTRUCTIONS 8 AND 9 SET
FORTH IN THE LETTER OF TRANSMITTAL AND SECTION 5--"CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS".
Examination of Validity. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment of
any tender of Shares will be determined by the Offeror, in its sole discretion,
and its determination will be final and binding on all parties. The Offeror
reserves the absolute right to reject any or all tenders of any Shares that are
determined by it not to be in proper form or the acceptance of or payment for
which may, in the opinion of the Offeror, be unlawful. The Offeror also reserves
the absolute right to waive any of the conditions of the Offer, subject to the
limitations set forth in the Merger Agreement, or any defect or irregularity in
the tender of any Shares. The Offeror's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
Instructions to the Letter of Transmittal) will be final and binding on all
parties. No tender of Shares will be deemed to have been validly made until all
defects and irregularities have been cured or waived. None of the Offeror, the
Parent, the Dealer Manager, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification.
Other Requirements. By executing the Letter of Transmittal as set forth
above (including through delivery of an Agent's Message), a tendering
stockholder irrevocably appoints designees of the Offeror as such stockholder's
attorneys-in-fact and proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's right with respect to the Shares tendered by such stockholder and
accepted for payment by the Offeror (and any and all other Shares or other
securities issued or issuable in respect of such Shares on or after September
29, 1998). All such powers of attorney and proxies shall be considered coupled
with an interest in the tendered Shares. This appointment is effective when, and
only to the extent that, the Offeror accepts for payment the Shares deposited
with the Depositary. Upon acceptance for payment, all prior powers of attorney
and proxies given by the stockholder with respect to such Shares or other
securities or rights will, without further action, be revoked and no subsequent
proxies may be given or written consent executed (and, if given or executed,
will not be deemed effective). The designees of the Offeror will, with respect
to the Shares and other securities or rights, be
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empowered to exercise all voting and other rights of such stockholder as they in
their sole judgment deem proper in respect of any annual or special meeting of
the Company's stockholders, or any adjournment or postponement thereof. The
Offeror reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Offeror's payment for such Shares, the
Offeror must be able to exercise full voting and other rights with respect to
such Shares and the other securities or rights issued or issuable in respect of
such Shares, including voting at any meeting of stockholders (whether annual or
special or whether or not adjourned) in respect of such Shares.
A tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the terms and
conditions of the Offer, as well as the tendering stockholder's representation
and warranty that (i) such stockholder has the full power and authority to
tender, sell, assign and transfer the tendered Shares (and any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after September 29, 1998), and (ii) when the same are accepted for payment by
the Offeror, the Offeror will acquire good and unencumbered title thereto, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claims. The Offeror's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the tendering
stockholder and the Offeror upon the terms and subject to the conditions of the
Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4--"Withdrawal Rights",
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration Date
and, unless theretofore accepted for payment pursuant to the Offer, may also be
withdrawn at any time after December 3, 1998. If purchase of or payment for
Shares is delayed for any reason or if the Offeror is unable to purchase or pay
for Shares for any reason, then, without prejudice to the Offeror's rights under
the Offer, tendered Shares may be retained by the Depositary on behalf of the
Offeror and may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as set forth in this Section
4--"Withdrawal Rights", subject to Rule14e-1(c) under the Exchange Act, which
provides that no person who makes a tender offer shall fail to pay the
consideration offered or return the securities deposited by or on behalf of
security holders promptly after the termination or withdrawal of the Offer.
For a withdrawal of Shares tendered pursuant to the Offer to be effective,
a written, telegraphic, telex or facsimile transmission notice of withdrawal
must be timely received by the Depositary at the address set forth on the back
cover of this Offer to Purchase and must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from the name of the person who
tendered the Shares. If certificates for Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the release
of such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been tendered pursuant to
the procedures for book-entry transfer set forth in Section 3--"Procedure for
Tendering Shares", any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares and must otherwise comply with such Book-Entry Transfer
Facility's procedures. All questions as to the form and validity (including time
of receipt) of notices of withdrawal will be determined by the Offeror, in its
sole discretion, and its determination will be final and binding on all parties.
None of the Offeror, the Parent, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be retendered at any subsequent time prior to the
Expiration Date by following any of the procedures described in Section
3--"Procedure for Tendering Shares".
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS.
The following is a summary of certain United States federal income tax
considerations of the Offer and the Merger to holders whose Shares are purchased
pursuant to the Offer or whose Shares are converted to cash in the Merger
(including pursuant to the exercise of appraisal rights). The discussion is for
general information only and does not purport to consider all aspects of United
States federal income taxation that may be relevant to holders of Shares. The
discussion is based on current provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), existing, proposed and temporary regulations
promulgated thereunder and administrative and judicial interpretations thereof,
all of which are subject to change. The discussion applies only to holders of
Shares in whose
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hands Shares are capital assets within the meaning of Section 1221 of the Code,
and may not apply to Shares received pursuant to the exercise of employee stock
options or otherwise as compensation, or to certain types of holders of Shares
(such as insurance companies, tax-exempt organizations and broker- dealers) who
may be subject to special rules under the United States federal income tax laws.
This discussion does not discuss the United States federal income tax
consequences to a holder of Shares who, for United States federal income tax
purposes, is a non-resident alien individual, a foreign corporation, a foreign
partnership or a foreign estate or trust, nor does it consider the effect of any
foreign, state or local tax laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH HOLDER OF SHARES SHOULD
CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE
RULES DISCUSSED BELOW TO SUCH HOLDER AND THE PARTICULAR TAX EFFECTS TO SUCH
HOLDER OF THE OFFER AND THE MERGER, INCLUDING THE APPLICATION AND EFFECT OF
STATE, LOCAL AND OTHER INCOME TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes. In general,
for United States federal income tax purposes, a holder of Shares will recognize
gain or loss equal to the difference between (i) the holder's adjusted tax basis
in the Shares sold pursuant to the Offer or converted to cash in the Merger and
(ii) the amount of cash received therefor. Gain or loss must be determined
separately for each block of Shares (i.e., Shares acquired at the same cost in a
single transaction) sold pursuant to the Offer or converted to cash in the
Merger. Assuming that Shares are held as a capital asset, such gain or loss will
be a capital gain or loss. Any such capital gain will be a long-term capital
gain taxable to a non-corporate holder at a maximum rate of 20% if the holder's
Shares have been held for more than one year on the date of sale (in the case of
the Offer) or the Effective Time of the Merger (in the case of the Merger); and
a short-term capital gain taxable to a non-corporate holder at a maximum rate of
up to 39.6% if the Shares have been held for one year or less on the date of
sale (or the Effective Time of the Merger).
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%, unless a holder of Shares (i) is a
corporation or comes within certain exempt categories and, when required,
demonstrates this fact or (ii) provides a correct TIN to the payor, certifies as
to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A holder who does not
provide a correct TIN may be subject to penalties imposed by the Internal
Revenue Service. Any amount paid as backup withholding does not constitute an
additional tax and will be creditable against the holder's United States federal
income tax liability. Each holder of Shares should consult with his or her own
tax advisor as to his or her qualification for exemption from backup withholding
and the procedure for obtaining such exemption. Holders tendering their Shares
in the Offer may prevent backup withholding by completing the Substitute Form
W-9 included in the Letter of Transmittal. See Section 3--"Procedure for
Tendering Shares." Similarly, holders who convert their Shares into cash in the
Merger may prevent backup withholding by completing a Substitute Form W-9 and
submitting it to the paying agent for the Merger.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are traded in the over-the-counter market, with daily quotations
reported on the NASDAQ quotation system. The Company has never declared or paid
a cash dividend on its Common Stock, other than S Corporation distributions to
Mark Nelson, relating to earnings prior to the Company's initial public
offering. The following table sets forth for the periods indicated the high and
low sale prices per Share as reported by published financial sources:
HIGH LOW
---- ---
Year Ended December 31, 1996:
First Quarter .................................. $ 9.000 $ 7.000
Second Quarter ................................. 11.500 5.750
Third Quarter .................................. 11.125 8.250
Fourth Quarter ................................. 10.750 7.750
Year Ended December 31, 1997:
First Quarter .................................. $10.000 $ 7.250
Second Quarter ................................. 10.813 6.750
Third Quarter .................................. 10.625 8.000
Fourth Quarter ................................. 11.500 7.000
Year Ended December 31, 1998:
First Quarter .................................. $18.750 $10.000
Second Quarter ................................. 26.625 15.875
Third Quarter .................................. 26.500 16.625
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On September 29, 1998, the last full trading day prior to the announcement
of the Offer, the last reported sales price per Share as reported on the NASDAQ
National Market was $20.00.
7. CERTAIN EFFECTS OF THE TRANSACTION.
The purchase of the Shares by the Offeror pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and will reduce the
number of holders of Shares, which will adversely affect the liquidity and
market value of the remaining Shares held by stockholders other than the
Offeror.
Market for Shares. The purchase of Shares pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and will reduce the
number of holders of Shares. This could adversely affect the liquidity and
market value of the remaining Shares held by the public. Depending upon the
aggregate market value and per Share price of any Shares not purchased pursuant
to the Offer, the Shares may no longer meet the standards for continued
inclusion on the NASDAQ National Market which requires that an issuer have at
least 750,000 publicly held shares with a market value of five million dollars
held by at least 400 stockholders holding round lots and have net tangible
assets of at least four million dollars. If these standards are not met, the
Shares might nevertheless continue to be included on the NASDAQ Stock Market
with quotations published in the NASDAQ "additional list" or in one of the
"local lists." However, if the number of holders of shares of common stock falls
below 400, or if the number of publicly held shares of common stock falls below
750,000, or if there are not at least two market makers for such shares, NASD
rules provide that the common stock would no longer be "qualified" for NASDAQ
Stock Market reporting, and the NASDAQ Stock Market would cease to provide any
quotations. Shares held directly or indirectly by an officer or director of the
Company, or by any beneficial owner of more than 10% of the Shares, ordinarily
will not be considered as being publicly held for this purpose. If, as a result
of the purchase of Shares pursuant to the Offer or otherwise, the Common Stock
no longer meets the requirements for continued inclusion in any other tier of
the NASDAQ Stock Market, and the Common Stock is no longer included in any tier
of the NASDAQ Stock Market, the market for such Shares could be adversely
affected.
In the event the Common Stock no longer meets the requirements for
inclusion in any tier of the NASDAQ Stock Market, quotations might still be
available from other sources. The extent of the public market for such Shares
and availability of such quotations would, however, depend upon the number of
holders of such Shares remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act, as described below, and other factors.
The Company intends to delist from the NASDAQ National Market as soon as
practicable following the consummation of the Offer and in any event following
the consummation of the Merger.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application by the
Company to the Commission if there are fewer than 300 record holders of Shares.
It is the intention of the Offeror to seek to cause an application for such
termination to be made as soon after consummation of the Offer as the
requirements for termination of registration of the Shares are met. If such
registration were terminated, the Company would no longer legally be required to
disclose publicly in proxy materials distributed to stockholders the information
which it now must provide under the Exchange Act or to make public disclosure of
financial and other information in annual, quarterly and other reports required
to be filed with the Commission under the Exchange Act, and the officers,
directors and 10% stockholders of the Company would no longer be subject to the
"short-swing" insider trading reporting and profit recovery provisions of the
Exchange Act. Furthermore, if such registration were terminated, persons holding
"restricted securities" of the Company may be deprived of their ability to
dispose of such securities under Rule144 promulgated under the Securities Act of
1933, as amended (the "Securities Act").
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers. If registration of Shares under the Exchange Act were terminated,
the Shares would no longer be "margin securities".
9
<PAGE>
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth herein, the information concerning the
Company contained in this Offer to Purchase, including financial information,
has been furnished by the Company or has been taken from or based upon publicly
available documents and records on file with the Commission and other public
sources. Although neither the Offeror nor the Parent has any knowledge that
would indicate that statements contained herein based upon such information or
documents are untrue, neither the Offeror, the Parent nor the Dealer Manager
assumes any responsibility for the accuracy or completeness of the information
concerning the Company, furnished by the Company, or contained in such documents
and records or for any failure by the Company to disclose events which may have
occurred or may affect the significance or accuracy of any such information but
which are unknown to the Offeror or the Parent.
The Company is a Delaware corporation with its principal executive offices
located at 333 Seventh Avenue, New York, New York 10001. The Company provides
electronic information retrieval services to major medical and research centers
throughout the world. The Company is based in New York and has several
international offices.
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the Company's
directors and officers, their remuneration, stock options granted to them, the
principal holders of the Company's securities and any material interests of such
persons in transactions with the Company. Such reports, proxy statements and
other information may be inspected at the public reference facilities maintained
by the Commission at Room1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the Commission located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street (Suite400), Chicago, Illinois 60661. Copies of such material may
also be obtained by mail, at prescribed rates, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a World Wide Web site on the internet at http://www.sec.gov that
contains reports and other information regarding registrants that file
electronically with the Commission. Such material should also be available for
inspection at the offices of NASDAQ, 1735 K Street, N.W., Washington D.C. 20006.
Set forth below is certain summary consolidated financial data with respect
to the Company excerpted from the Company's annual report on Form 10-K for the
year ended December 31, 1997 and its quarterly report on Form 10-Q for the
quarter ended June 30, 1998. More comprehensive financial information is
included in the reports and other documents filed by the Company with the
Commission, and the following summary is qualified in its entirety by reference
to the reports and other documents and all the financial information (including
any related notes) contained in the Company's annual report on Form 10-K for the
year ended December 31, 1997 and its quarterly report on Form 10-Q for the
quarter ended June 30, 1998. Such reports and other documents should be
available for inspection and copies thereof should be obtainable in the manner
set forth below.
10
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------- -------------------------
1997(3) 1996 1998 1997
-------- ------- ------- -------
UNAUDITED UNAUDITED
<S> <C> <C> <C> <C>
Revenues:
Database subscriptions and software ....................... $24,109 $30,823 $16,924 $16,651
Maintenance and other ..................................... 3,141 2,782 1,747 1,601
------- ------- ------- -------
Total revenues ........................................... 27,250 33,605 18,671 18,252
------- ------- ------- -------
Cost of revenues:
Database subscriptions and software ....................... 14,470 10,779 7,536 6,003
Maintenance and other ..................................... 273 165 147 109
------- ------- ------- -------
Total cost of revenues ................................... 14,743 10,944 7,683 6,112
------- ------- ------- -------
Gross profit ............................................. 12,507 22,661 10,988 12,140
Operating expenses:
Sales and marketing ....................................... 7,699 7,355 3,631 3,943
Product development ....................................... 7,062 5,612 3,946 3,127
General and administrative ................................ 6,579 5,352 2,473 2,781
------- ------- ------- -------
Total operating expenses ................................. 21,340 18,319 10,050 9,851
------- ------- ------- -------
Income (loss) from operations ............................ (8,833) 4,342 938 2,289
Interest and other income, net ............................. 401 253 287 142
------- ------- ------- -------
Income (loss) before income taxes ........................ (8,432) 4,595 1,225 2,431
Provision (benefit) for income taxes ....................... (675) 1,839 (1,172) 973
------- ------- ------- -------
Net income (loss) ........................................ ($7,757) $2,756 $2,397 $1,458
======= ======= ======= =======
Basic earnings (loss) per share ............................ ($1.29) $.48 $.39 $.24
======= ======= ======= =======
Diluted earnings (loss) per share .......................... ($1.29) $.39 $.32 $.20
======= ======= ======= =======
PRO FORMA DATA (UNAUDITED): (SEE NOTES 1 AND 3)
Pro forma total revenues .................................. $37,423 $31,111 $21,839 $18,002
Pro forma gross profit .................................... 20,470 21,187 13,277 12,194
Pro forma income (loss) from operations ................... (870) 2,868 3,227 2,343
------- ------- ------- -------
Pro forma net income (loss) ............................... (522) 1,873 2,108 1,497
------- ------- ------- -------
Pro forma net income (loss) per common share
Basic ................................................... ($.09) $.32 $.34 $.25
======= ======= ======= =======
Diluted ................................................. ($.09) $.26 $.28 $.21
======= ======= ======= =======
Weighted average number of shares of common
Stock outstanding
Basic ................................................... 6,017,427 5,773,861 6,123,427 5,954,052
========= ========= ========= =========
Diluted ................................................. 6,017,427 7,139,900 7,594,231 7,247,343
========= ========= ========= =========
Total comprehensive income (see note 2) .................... $2,332 $980
========= =========
</TABLE>
11
<PAGE>
FOOTNOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
NOTE 1. REVENUE RECOGNITION:
Effective July 1, 1997, the Company elected early adoption of the
provisions of Statement of Position ("SOP") 97-2, Software Revenue Recognition,
which was issued on October 27, 1997 by the Accounting Standards Executive
Committee of the AICPA ("AcSEC"). SOP 97-2, which supersedes SOP 91-1,
significantly changes the Company's recognition of license fees for third-party
databases and proprietary software. Prior to the adoption of SOP 97-2, the
Company recognized these revenues upon shipment. The Company's costs of
fulfilling its obligations under the terms of the database subscriptions, which
are insignificant, were accrued at the time of delivery. Under the provisions of
SOP 97-2, license fees for third-party databases and the Company's proprietary
software are recognized on a straight-line basis over the term of the contract,
generally one year. Royalty costs associated with the license fees for
third-party databases and fulfillment costs are also recognized over the same
period.
Under its transitional provisions, SOP 97-2 specifically prohibits
retroactive application and requires prospective adoption only on transactions
entered into on or after the effective date. The effect of this accounting
change was to increase the loss before income taxes, net loss and net loss per
common share (both basic and fully diluted) by $6,125, $6,373 and $1.06,
respectively, in the year ended December 31, 1997.
Pro forma total revenues, pro forma gross profit, pro forma income (loss)
from operations, pro forma net income (loss) and pro forma net income (loss) per
common share (both basic and fully diluted) for the years ended December 31,
1997 and 1996 and the six months ended June 30, 1998 and 1997, assuming the
Company had always followed the provisions of SOP 97-2, are presented on the
Consolidated Statements of Operations.
NOTE 2. NEW ACCOUNTING PRONOUNCEMENTS:
In 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 130 ("SFAS 130"), Reporting Comprehensive
Income, which prescribes standards for reporting comprehensive income and its
components. Comprehensive income consists of net income or loss for the current
period and other comprehensive income (income, expenses, gains and losses that
currently bypass the income statement and are reported directly in a separate
component of equity). SFAS 130 is effective for financial statements issued for
periods beginning after December 15, 1997, and accordingly has been adopted by
the Company as presented on the Consolidated Statements of Operations herein.
Also in June 1997, the FASB issued Statement No. 131 "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS 131"), which requires
publicly-held companies to report financial and descriptive information about
its operating segments in financial statements issued to shareholders for
interim and annual periods. The statement also requires additional disclosures
with respect to products and services, geographical areas of operations and
major customers. SFAS 131 is effective for financial statements issued for
periods beginning after December 15, 1997 and for the interim periods beginning
in the second year of application, and requires restatement of earlier periods
presented. The Company is reviewing the effects of the disclosure requirements
of this new standard.
In addition, AcSEC issued SOP 98-1, Accounting for the Cost of Computer
Software Developed or Obtained for Internal Use, to address diversity in
practice regarding whether and under what conditions the costs of internal-use
software should be capitalized. SOP 98-1 is effective for financial statements
for years beginning after December 15, 1998. The Company is reviewing the
effects of the disclosure requirements of this new standard.
12
<PAGE>
9. CERTAIN INFORMATION CONCERNING WOLTERS KLUWER, THE PARENT AND THE OFFEROR.
The Offeror is a Delaware corporation which was formed as an acquisition
vehicle in connection with the Offer, the Merger and the other transactions
contemplated by the Merger Agreement and will be merged with and into the
Company pursuant to the Merger. The Offeror is a wholly owned subsidiary of OTI
Acquisition Parent Corp., a Delaware corporation ("OTI Parent"), which is a
wholly owned subsidiary of Lippincott Williams & Wilkins, Inc., which is a
wholly owned subsidiary of WK America, Inc., a Delaware corporation ("WK
America"), which is a wholly owned subsidiary of the Parent. Wolters Kluwer
International Holding B.V. ("Wolters Kluwer International"), a corporation
organized under the laws of the Netherlands and a wholly owned subsidiary of
Wolters Kluwer, owns 100% of the outstanding shares of capital stock of the
Parent. Wolters Kluwer International, WK America, the Parent and OTI Parent are
holding companies formed by Wolters Kluwer solely for the purpose of holding
shares of capital stock of indirect subsidiaries of Wolters Kluwer.
The payment obligations of the Parent and the Offeror under the Merger
Agreement have been guaranteed by Wolters Kluwer pursuant to the Guarantee.
Wolters Kluwer is a multidomestic publishing company active in 25
countries. Core activities are legal and tax publishing, business publishing,
medical/scientific publishing, educational publishing/professional training and
trade publishing for selected markets. Wolters Kluwer has sales of approximately
$2.5 billion. Wolters Kluwer's U.S. holdings include Aspen Publishers, CCH
Incorporated, Facts and Comparisons, Legal Information Services, Lippincott
Williams & Wilkins, Inc., Plenum Publishing and Blessing/White. The principal
executive offices of Wolters Kluwer are located at Stadhouderskade1, 1000AV,
Amsterdam, the Netherlands. The principal executive office of the Parent and the
Offeror is c/o Wolters Kluwer United States Inc., 161 North Clark Street, 48th
Floor, Chicago, Illinois 60601.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of Wolters Kluwer, the Parent and the Offeror are set forth
in Schedule I hereto.
Set forth below is certain consolidated financial information regarding
Wolters Kluwer and its subsidiaries. The financial information set forth below
was prepared in accordance with generally accepted accounting principles used in
the Netherlands ("Dutch GAAP"), which differ in certain respects from United
States generally accepted accounting principles ("US GAAP"). The principal
differences include:
o Acquired publishing rights are capitalized. In general, publishing
rights are considered to have an indefinite economic life, and
therefore no systematic amortization is applied. Write-offs are taken
in the case of permanent impairment. Under US GAAP, acquired
publishing rights are amortized over their estimated life, not to
exceed 40 years.
o Pension costs are based on actuarially computed contributions to
foundations. Under US GAAP, pension costs are actuarially computed in
accordance with the provisions of Financial Accounting Standard No.87,
Employers Accounting for Pensions, and include current service costs,
interest costs and amortization of prior service costs.
o Post-retirement and post-employment benefits are recorded when
contributions are made to the plan or at the time of retirement or
termination for unfunded plans. US GAAP generally requires accrual of
such costs over the period that the employee provides services to the
company.
13
<PAGE>
The consolidated financial statements of Wolters Kluwer are published in
Dutch guilders ("guilders" or "Dfl"). The dollar amounts in the table below have
been translated from guilders at the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the Federal
Reserve Bank in New York City (the "Noon Buying Rate") on June 30, 1998, which
was Df12.0332 per $1.00. Such rate may differ from the actual rates used in the
preparation of the consolidated financial statements of Wolters Kluwer as of and
for the year ended December 31, 1997 and the six month period ended June 30,
1998 which are expressed in guilders. The dollar amounts appearing herein may
differ from the actual dollar amounts that were translated into guilders in the
preparation of such financial statements. The following table sets forth, for
the periods and dates indicated, the average, high, low and period-end Noon
Buying Rates for guilders expressed in guilders per $1.00.
YEARLY EXCHANGE RATES
(AMOUNTS IN DFL)
YEAR AVERAGE(1) HIGH LOW PERIOD-END
---- ---------- ---- --- ----------
1994 ................................... 1.807 1.975 1.672 1.7360
1995 ................................... 1.597 1.749 1.519 1.6035
1996 ................................... 1.688 1.756 1.607 1.7271
1997 ................................... 1.958 2.117 1.730 2.0278
1998 (through September 29, 1998) ...... 2.015 2.089 1.886 1.8903
- ----------
(1) The average of the Noon Buying Rates on the last business day of each month
during the relevant period.
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
SIX MONTHS ENDED
JUNE 30,
1998(1)(2) 1997(1)(2) 1996 1995
------------------------- ----------------------- --------- -----------
(CURRENCY IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Amounts in accordance with
Dutch GAAP
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues ............................. US$ 1,380 Dfl 2,806 US$2,562 Dfl 5,209 Dfl 4,315 Dfl 2,944
Operating income ..................... 315 641 599 1,217 927 609
Net income ........................... 141 287 285 579 479 452
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital ...................... US$ (243) Dfl (495) US$ (364) Dfl (740) Dfl (484) Dfl (21)
Total assets ......................... 4,820 9,801 4,088 8,311 6,746 2,074
Liabilities .......................... 3,739 7,603 3,195 6,497 5,553 1,341
Stockholder's equity ................. 1,081 2,198 892 1,814 1,193 733
FULLY DILUTED PER SHARE DATA
Net income ........................... US$ 2.05 Dfl 4.16 US$ 4.15 Dfl 8.43 Dfl 7.03 Dfl 6.70
</TABLE>
- ----------
(1) Exchange rate based on the Noon Buying Rate on June 30, 1998:
Dfl2.0332=US$1.
(2) Operating income for the six months ended June 30, 1998 and the year ended
December 31, 1997 reflect operating income before the amortization of
goodwill.
Except as provided in the Merger Agreement and the Option Agreement and as
otherwise described in this Offer to Purchase, none of Wolters Kluwer, the
Parent or the Offeror, or, to the best knowledge of the Parent and the Offeror,
any of the persons listed on ScheduleI hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, none of
Wolters Kluwer, the Parent or the Offeror, or to the best knowledge of the
Parent and the Offerer, any of the persons listed on ScheduleI hereto, has had,
since January 1, 1995, any business relationships or transactions with the
Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the Commission applicable to this Offer to
Purchase. Except as set forth in this Offer to Purchase, since January 1, 1995,
there have been no contacts, negotiations or transactions
14
<PAGE>
between Wolters Kluwer, the Parent or the Offeror or any of their respective
subsidiaries, or to the best knowledge of the Parent and the Offeror, any of the
persons listed on ScheduleI hereto, and the Company or its affiliates,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, election of directors or a sale or other transfer of
a material amount of assets. Except as set forth in this Offer to Purchase,
neither the Parent nor the Offeror, nor, to the best knowledge of the Parent and
the Offeror, any of the persons listed on ScheduleI hereto, beneficially owns
any Shares or has effected any transactions in the Shares during the past 60
days.
10. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Offeror and the Parent to
consummate the Offer and the Merger is estimated to be approximately $192
million, which amount excludes related fees and expenses. The Offeror intends to
obtain the required funds from capital contributions and/or loans from Wolters
Kluwer. Wolters Kluwer will provide the required funds through its available
cash balances and existing bank credit lines.
It is presently anticipated that funds borrowed will be repaid from
internally generated funds of the Parent or the Company. The Parent may,
however, employ alternative methods for refinancing such borrowings, including,
without limitation, debt financing, depending on prevailing interest rates and
financial and other economic conditions.
11. BACKGROUND OF THE OFFER; PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH
THE COMPANY.
On May 11, 1998, the Parent entered into a confidentiality agreement with
the Company (the "Confidentiality Agreement") pursuant to which certain
evaluation material concerning the Company would be made available to the Parent
and its affiliates and representatives on a confidential basis.
On June 12, 1998, senior management of the Parent attended a presentation
hosted by members of the Company's management team and its financial advisor.
On July 8, 1998, the Parent sent a letter to the Company indicating its
initial interest in the possibility of purchasing a minority equity position in
the Company as a strategic investment.
On July 10, 1998, the Company, the Parent and their respective financial
advisors met to discuss the possible minority investment in the Company.
On July 22, 1998, the Parent submitted a non-binding proposal to acquire a
minority position in the Company. Parent's proposal consisted of (i) the
acquisition of 2,250,000 newly issued Shares of the Company at $25.00 per Share,
provided that (x) the Company would agree to use at least 90% of the proceeds
from the sale of such Shares to fund a self tender at a price of no more than
$25.00 per Share (designed to cause the Parent's stake in the Company to equal
25% of the Shares (on a fully diluted basis)), and (y) the Stockholders would
guarantee this result by agreeing to tender sufficient Shares to make up any
shortfall in tenders by the public; (ii) the receipt of an option for a number
of years to acquire the remaining shares and options owned by each of Mark L.
Nelson, Deborah Hull, Carleen Nelson and Martin Kahn and (iii) the imposition of
certain restrictions on the Company's ability to undertake certain actions
without the consent of the Parent.
On July 24, 1998, members of the Parent's senior management team met with
the Company's senior management team to review business opportunities that would
be available to the Company based on the Parent making a minority investment in
the Company.
During the period beginning in late July and continuing through the second
week in August, the Company and Parent exchanged a series of term sheets
containing various alternative proposals for a minority investment in the
Company by the Parent. Representatives of the Company and the Parent met on
August 12, 1998, and held several telephone conversations regarding a possible
transaction with the Parent. The Company notified the Parent on August 20, 1998
that it no longer desired to pursue a transaction similar to the ones proposed
by the Parent. In addition to the proposal for a minority investment, Parent had
proposed to the Company on August 20, 1998 the possibility of a "going private"
transaction. On August 25, 1998, the Company submitted a proposal outlining the
terms of a possible "going private" transaction, and over the next two weeks the
Company and the Parent exchanged term sheets with respect to a "going private"
transaction.
On September 15 and 16, 1998, Company management met with members of the
Executive Board of Wolters Kluwer and senior management of the Parent regarding
certain matters related to a proposed transaction.
On September 16, 1998, the Executive Board of Wolters Kluwer authorized an
offer, contingent upon receipt of approval by the Supervisory Board of Wolters
Kluwer, to acquire 100% of the equity of the Company. Parent submitted such an
offer to the Company on the afternoon of September 16, 1998 (the "Proposal")
conditioned upon,
15
<PAGE>
among other things, the Company's agreement to negotiate with the Parent on an
exclusive basis. See Section 13--"The Merger Agreement, the Option Agreement and
the Guarantee".
On September 22, 1998, the Parent and the Company entered into an
exclusivity agreement (the "Exclusivity Agreement").
From September 23, 1998 through the evening of September 28, 1998, the
Company's legal counsel and legal counsel for the Parent held negotiations
concerning the Merger Agreement and the Stock Option Agreement. In connection
with the Parent's proposal to acquire all of the Shares, the Parent required
that Mr. Nelson agree to personally indemnify the Parent and its affiliates
against breaches of representations and agreements made in the Merger Agreement
by the Company in favor of the Parent. After negotiation, Mr. Nelson agreed to
provide the indemnification described under Section 13--"The Merger Agreement,
the Option Agreement and the Guarantee. In addition, following negotiations, the
Parent agreed to the Stockholder's request that the grant of the Option under
the Option Agreement be subject to a "fiduciary out" provision for a possible
Superior Proposal (as defined in Section 13--"The Merger Agreement, the Option
Agreement and the Guarantee") tied to the "fiduciary out" provision in the
Merger Agreement. As consideration for this provision, the Stockholders agreed
to pay to Parent any incremental amount above the Offer Price payable to them in
respect of a transaction arising out of a Superior Proposal.
On September 28, 1998, the Supervisory Board of Wolters Kluwer reviewed the
possible acquisition of the Company with members of the Executive Board of
Wolters Kluwer and authorized management of the Parent to acquire the Company on
the terms set forth in the Merger Agreement, the Option Agreement and the
Guarantee.
The Company Board met with the Company's legal and financial advisors
during the morning on September 29, 1998 and determined to accept the Proposal.
On September 29, 1998, the Merger Agreement, the Option Agreement and the
Guarantee were finalized and executed. On the afternoon of September 29, 1998, a
public announcement was made in the United States and on the morning of
September 30, 1998 a public announcement was made in the Netherlands.
On October 5, 1998, the Parent and the Offeror commenced the Offer.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY.
The purpose of the Offer, the Merger, the Merger Agreement and the Option
Agreement is to enable the Parent to acquire control of, and the entire equity
interest in, the Company. The Offer, the Merger Agreement and the Option
Agreement are intended to increase the likelihood that the Merger will be
effected as promptly as practicable.
Under the Delaware GCL and the Certificate of Incorporation of the Company,
any merger (other than a merger effectuated pursuant to the short-form merger
provisions of the Delaware GCL) must be approved by the Company Board and the
affirmative vote of the holders of that number of Shares which would constitute
a majority of the Shares outstanding on a fully diluted basis. The Company Board
has unanimously approved the Offer, the Merger and the Merger Agreement and the
transactions contemplated thereby. The Company has agreed (if required by
applicable law to consummate the Merger) to take all action necessary to convene
a meeting of its stockholders as promptly as practicable after the consummation
of the Offer for the purpose of obtaining stockholder approval of the Merger.
The Parent has agreed that, subject to applicable law, all Shares owned by the
Offeror or any other subsidiary of the Parent will be voted in favor of the
Merger. The stockholders meeting shall be held as soon as practicable following
the purchase of Shares pursuant to the Offer. If the Offeror owns that number of
Shares which would constitute a majority of the Shares outstanding on a fully
diluted basis, approval of the Merger can be obtained without the affirmative
vote of any other stockholder of the Company. In the event that the Offeror
acquires 90% or more of the Shares, the Parent would be able to effectuate the
Merger by appropriate resolutions of the Boards of Directors of the Offeror and
of the Company without any meeting or action by the stockholders of the Company.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company have
certain rights under the Delaware GCL to dissent and demand appraisal of, and
payment in cash of the fair value of, their Shares. Such rights, if the
statutory procedures are complied with, could lead to a judicial determination
of the fair value (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their Shares. Any such judicial determination of the fair
value of Shares could be based upon considerations other than or in addition to
the price paid in the Offer and the market value of the Shares, including asset
values and the investment value of the Shares. The value so determined could be
more or less than the purchase price per Share pursuant to the Offer or the
consideration per Share to be paid in the Merger.
16
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In the event that appraisal rights are available, an objecting stockholder
shall cease to have any rights as a stockholder with respect to the Shares
except the right to receive payment of the fair value thereof. The stockholder's
rights may be restored only upon the withdrawal, with the consent of the
Company, of the demand for payment, no filing of a petition for appraisal within
the time required, a determination of the court that the stockholder is not
entitled to an appraisal, or the abandonment or rescission of the transaction to
which the stockholder objected.
The foregoing summary of the rights of objecting stockholders does not
purport to be a complete statement of the procedures to be followed by
stockholders desiring to exercise their dissenters' appraisal rights. The
preservation and exercise of dissenters' rights are conditioned on strict
adherence to the applicable provisions of the Delaware GCL.
Rule 13e-3. The Commission has adopted Rule13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger or another business
combination following the purchase of Shares pursuant to the Offer or otherwise
in which the Offeror seeks to acquire the remaining Shares not held by it. The
Offeror believes, however, that Rule13e-3 will not be applicable to the Merger
if the Merger is consummated within one year after the termination of the Offer
at the same per Share price as paid in the Offer. If applicable, Rule13e-3
requires, among other things, that certain financial information concerning the
Company and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the Commission and disclosed to stockholders prior to
consummation of the transaction.
Plans for the Company. Wolters Kluwer believes that the acquisition of the
Company will provide Wolters Kluwer with an opportunity to substantially
accelerate its electronic publishing strategies in the medical and scientific
marketplace. The Company will remain a standalone company, maintaining existing
management, within the Wolters Kluwer International Healthcare Division and will
continue to partner with other information providers in medical/scientific
markets.
13. THE MERGER AGREEMENT, THE OPTION AGREEMENT AND THE GUARANTEE.
The following is a summary of the material provisions of the Merger
Agreement, the Option Agreement and the Guarantee, copies of which are filed as
exhibits to the Schedule 14D-1 and Schedule13D. These summaries do not purport
to be complete and are qualified in their entirety by reference to the
respective texts of the Merger Agreement, the Option Agreement and the
Guarantee. Capitalized terms not otherwise defined below shall have the meanings
set forth in the Merger Agreement.
The Merger Agreement
The Offer. The Merger Agreement provides for the commencement of the Offer
not later than the fifth business day from the public announcement of the
execution of the Merger Agreement. The obligations of the Offeror to accept for
payment and to pay for any Shares validly tendered on or prior to the expiration
of the Offer and not withdrawn are subject only to the Minimum Condition and the
other conditions set forth in Section 14--"Certain Conditions to the Offeror's
Obligations". The Merger Agreement provides that the Offeror cannot amend or
waive the Minimum Condition or decrease the Offer Price or the number of Shares
sought, change the form of consideration to be paid pursuant to the Offer,
impose conditions to the Offer in addition to those set forth in Section
14--"Certain Conditions to the Offeror's Obligations," amend any other term or
condition of the Offer in any manner adverse to the holders of Shares or extend
the expiration date of the Offer without the prior written consent of the
Company. Notwithstanding the foregoing, the Offeror shall, and Parent agrees to
cause the Offeror to, extend the Offer for a period of ten (10) business days
following the initial expiration date of the Offer, if any conditions to the
Offer have not been satisfied or waived at such date. In addition, following
such first extension of the Offer as provided in the preceding sentence, (i) the
Offeror shall, and Parent agrees to cause the Offeror to, extend the Offer, at
any time prior to the termination of the Merger Agreement, for one or more
periods of not more than ten (10) business days, if at the expiration date of
the Offer, as extended, all conditions to the Offer have not been satisfied or
waived, and (ii) the Offer Price may be increased and the Offer may be extended
to the extent required by law in connection with such increase, in each case
without the consent of the Company. In addition, the Offeror may, without the
consent of the Company, extend the Offer for a period of not more than ten (10)
business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of the immediately preceding sentence unless
at least 90% of the outstanding Shares shall have been tendered and not
withdrawn pursuant to the Offer.
Company Actions. Pursuant to the Merger Agreement, the Company has agreed
that, as promptly as practicable following the commencement of the Offer, it
will file with the Commission and mail to its stockholders, a
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Solicitation/Recommendation Statement on Schedule 14D-9 containing the
recommendation of the Board of Directors that the Company's stockholders accept
the Offer and approve the Merger, subject to the fiduciary duties of the
Company's directors under applicable law and to the provisions of the Merger
Agreement.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the Delaware
GCL, the Offeror shall be merged with and into the Company at the Effective
Time. Following the Merger, the separate corporate existence of the Offeror
shall cease and the Company shall continue as the Surviving Corporation and
shall succeed to and assume all the rights and obligations of the Offeror in
accordance with the Delaware GCL. At the Effective Time, the Certificate of
Incorporation of the Company shall be the Certificate of Incorporation of the
Surviving Corporation and the By-Laws of Offeror shall be the By-Laws of the
Surviving Corporation. The directors and officers of the Offeror shall become
the directors and officers of the Surviving Corporation.
Conversion of Securities. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any Shares, each holder of a
Share that is issued and outstanding (other than Shares owned by the Company as
treasury stock, and any Shares owned by the Parent, the Offeror, or any other
wholly owned subsidiary of the Parent, which shall be cancelled and Shares held
by stockholders who have properly exercised appraisal rights under Delaware law,
if any) shall acquire the right to receive the Offer Price without interest from
the Surviving Corporation as consideration for the conversion of each Share,
without any further action by such holder. Each share of stock of the Offeror
issued and outstanding immediately prior to the Effective Time shall, at the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of stock of the Offeror, be converted into and become
one fully paid and nonassessable share of Common Stock, par value $.01 per
share, of the Surviving Corporation.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to the Parent and the Offeror,
including, but not limited to, representations and warranties as to organization
and qualification, subsidiaries, capital structure, authority to enter into the
Merger Agreement and to consummate the transactions contemplated thereby,
required consents and approvals, filings made by the Company with the Commission
under the Securities Act or the Exchange Act (including financial statements
included in the documents filed by the Company under those acts), absence of
material adverse change, absence of litigation, employee benefit plans and labor
matters, environmental laws and regulations, intellectual property and
technology, compliance with applicable laws, tax matters, liability insurance,
the inapplicability of certain state takeover statutes, engagement of brokers
and finders and accuracy of information supplied.
The Offeror and the Parent have also made customary representations and
warranties to the Company, including, but not limited to, representations and
warranties as to organization, authority to enter into the Merger Agreement and
to consummate the transactions contemplated thereby, required consents and
approvals, financing, accuracy of information supplied and engagement of brokers
and finders.
Covenants Relating to the Conduct of Business. During the period from the
date of the Merger Agreement until the Effective Time, the Company has agreed
that it will, in all material respects, carry on its business according to its
ordinary and usual course of business consistent with past practice and seek to
preserve intact its current business organization, keep available the services
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it, to the end
that its goodwill and ongoing business shall not be materially impaired. The
Company has agreed that, except as otherwise expressly contemplated by the
Merger Agreement, during such period, the Company will not, and will not permit
any corporation which the Company directly or indirectly owns a majority of
the outstanding voting securities (a "Subsidiary"), without the prior written
consent of the Parent:
(i) except for the issuance of Shares upon the exercise of Options
outstanding on the date of the Merger Agreement and in accordance with their
present terms, issue, sell, grant, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, sale, disposition or pledge or other
encumbrance of (A) any additional shares of capital stock of any class
(including the Shares), or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of capital
stock, or any rights, warrants, options, calls, commitments or any other
agreements of any character to purchase or acquire any shares of capital stock
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock or (B) any other
securities in respect of, in lieu of, or in substitution for, Shares outstanding
on the date of the Merger Agreement;
(ii) redeem, purchase or otherwise acquire, or propose to redeem, purchase
or otherwise acquire, any of its outstanding Shares;
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(iii) split, combine, subdivide or reclassify any Shares or declare, set
aside for payment or pay any dividend, or make any other actual, constructive or
deemed distribution in respect of any Shares or otherwise make any payments to
stockholders in their capacity as such, other than dividends by a direct or
indirect wholly owned Subsidiary of the Company;
(iv) adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its direct or indirect Subsidiaries (other than the Merger);
(v) adopt any amendments to its Certificate of Incorporation or By-laws or
alter through merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any direct or indirect
Subsidiary of the Company;
(vi) make any acquisition, by means of merger, consolidation or otherwise,
or disposition, of assets or securities (other than the Merger), in each case
other than in the ordinary course of business consistent with past practice;
(vii) sell, lease, license, mortgage or otherwise encumber or subject to
any lien or otherwise dispose of any of its properties or assets, except sales
in the ordinary course of business consistent with past practice and liens
existing as of the date of the Merger Agreement;
(viii) (A) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, or issue or sell any debt securities or warrants
or other rights to acquire any debt securities of the Company or any of its
Subsidiaries, or (B) make any loans or advances, other than in the ordinary
course of business consistent with past practice, or any capital contributions
to, or investments in, any other person, other than the Company or any direct or
indirect wholly owned Subsidiary of the Company;
(ix) make or agree to make any new capital expenditure or expenditures
which, individually, is in excess of $100,000 or, in the aggregate, are in
excess of $600,000;
(x) make any material tax election or settle or compromise any material
income tax liability;
(xi) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) included in the most recent report required to be filed by the Company
with the SEC pursuant to the federal securities laws and the SEC rules and
regulations or incurred in the ordinary course of business consistent with past
practice, or waive any benefits of, or agree to modify in any respect, any
confidentiality, standstill or similar agreements to which the Company, or any
of its Subsidiaries is a party;
(xii) except in the ordinary course of business, modify, amend or terminate
any contract or agreement to which the Company or any of its Subsidiaries is a
party, or waive, release or assign any rights or claims;
(xiii) except as required to comply with applicable law, (A) adopt, enter
into, terminate or amend any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or former
employee, officer or director of the Company or any of its Subsidiaries
(collectively, "Benefit Plans"), other than arrangements or understandings
adopted, entered into, terminated or amended in the ordinary course of business
consistent with past practice, (B) increase in any manner the compensation or
fringe benefits of, or pay any bonus to, any director, officer or employee
(except for normal increases or bonuses in the ordinary course of business
consistent with past practice), (C) pay any benefit not provided for under any
Benefit Plan, other than in the ordinary course of business consistent with past
practice, (D) except as permitted in clause (B) above, or for options included
in the representation set forth in Section 3.2 of the Merger Agreement, grant
any awards under any bonus, incentive, performance or other compensation plan or
arrangement or Benefit Plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock, or the removal of existing restrictions in any Benefit Plans
or agreement or awards made thereunder) or (E) other than in the ordinary course
of business consistent with past practice, take any action to fund or in any
other way secure the payment of compensation or benefits under any employee
plan, agreement, contract or arrangement or Benefit Plan;
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(xiv) (A) take, or agree or commit to take, any action that would make any
representation or warranty of the Company hereunder inaccurate at the Effective
Time (except for representations and warranties which speak as of a particular
date, which need be accurate only as of such date), (B) omit, or agree or commit
to omit, to take any action necessary to prevent any such representation or
warranty from being inaccurate in any material respect at the Effective Time
(except for representations and warranties which speak as of a particular date,
which need be accurate only as of such date), provided however that the Company
shall be permitted to take or omit to take such action which can be cured, and
in fact is cured, at or prior to the Effective Time or (C) take, or agree or
commit to take, any action that would result in, or is reasonably likely to
result in, any of the conditions of the Merger set forth in Article VI of the
Merger Agreement not being satisfied except that, with respect to the condition
set forth in Section 6.1(a) of the Merger Agreement, such action shall be
permitted if it is consistent with the fiduciary duties of the Company Board to
the Company's stockholders under applicable law; or
(xv) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or arrangement
to do any of the foregoing.
No Solicitation. The Company has agreed in the Merger Agreement that, from
and after the date of the Merger Agreement and prior to the Effective Time, the
Company (a) will not, nor shall it authorize or permit its officers, directors,
employees, representatives and agents to, initiate, solicit or encourage,
directly or indirectly, any proposal or offer for a merger, asset acquisition or
other business combination involving the Company or any proposal or offer to
acquire a significant equity interest in, or a significant portion of any assets
of the Company other than transactions contemplated by the Merger Agreement (an
"Alternative Proposal") or engage in any negotiations or enter into any
agreement or provide any confidential information or data to any person in
connection with or relating to any Alternative Proposal; (b) will immediately
cease any existing discussions or negotiations, if any, with any parties
conducted prior to the execution of the Merger Agreement with respect to any
Alternative Proposal; and (c) will notify Parent as soon as practicable if any
such inquiries or proposals are received by, any such information is requested
from, or any such negotiations and/or discussions are sought to be initiated or
continued with, the Company. Notwithstanding the foregoing, the Company Board on
behalf of the Company shall not be required to act, or refrain from acting with
respect to unsolicited Alternative Proposals, in any manner which, in the
opinion of the Company Board after consultation with its counsel, could
reasonably be deemed inconsistent with its fiduciary duties to the Company's
stockholders under applicable law, including without limitation disclosing to
its stockholders a position required by Rule 14e-2(a) under the Exchange Act.
Stock Options. As of the Effective Time, each outstanding stock option (an
"Option" and, collectively, the "Options") granted under the Company Stock
Option Plans whether or not then vested or exercisable, shall be converted into
the right to receive from the Company an amount of cash equal to the product of
(i) the number of Shares subject to the Option and (ii) the excess, if any, of
the Merger Consideration over the exercise price per Share of such option (the
"Option Consideration"). Prior to the Effective Time, the Company shall take all
steps necessary to give written notice to each holder of an Option that (i) all
Options shall be canceled effective as of the Effective Time and (ii) upon the
execution and delivery to the Company by such holder of an instrument
acknowledging cancellation of all Options held by such holder effective as of
the Effective Time ("Cancellation Instrument"), the Company shall pay such
holder, promptly following the Effective Time, the Option Consideration for all
Options held by such holder. The Company Board or any committee thereof
responsible for the administration of the Company Stock Option Plans shall take
any and all action necessary to effectuate the matters described in Section
2.1(d) of the Merger Agreement on or before the Effective Time. Section 3.2 of
the Merger Agreement sets forth the number of Shares reserved for issuance upon
exercise of outstanding Options. Any amounts payable pursuant to Section 2.1(d)
of the Merger Agreement shall be subject to any required withholding of taxes
and shall be paid without interest. Parent agrees to provide the Company with
sufficient funds to permit the Company to satisfy its obligations under Section
2.1(d) of the Merger Agreement.
Indemnification. From and after the consummation of the Offer, the Parent
shall and shall cause the Company (or, if after the Effective Time the Surviving
Corporation) to indemnify, defend and hold harmless all past and present
officers and directors of the Company and its subsidiaries to the full extent
permitted by applicable law or the Company's Certificate of Incorporation and
By-Laws or indemnification agreements in effect on the date of the Merger
Agreement including provisions relating to the advancement of expenses incurred
in the defense of any action or suit for acts or omissions occurring at or prior
to the Effective Time to the extent that any such claim is based on, or arises
out of, the fact that such person is or was a director of the Company or any of
its subsidiaries. The Parent will
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cause the Surviving Corporation to provide, for an aggregate period of not less
than six years from the Effective Time, the Company's current directors and
officers liability insurance and indemnification policy that provides coverage
for events occurring at or prior to the Effective Time that is no less favorable
than the Company's existing policy. The Merger Agreement also provides that
Parent shall make proper provision so that the successors and assigns of Parent
and the Offerer will assume the indemnification obligations described above.
Employees. The Merger Agreement provides that, (a) following the Effective
Time, the Surviving Corporation will provide pension, health and welfare
benefits (other than stock option, stock purchase or similar plans) to employees
of the Company and its Subsidiaries who continue their employment after the
Effective Time (each, a "Continuing Employee") on terms which are generally no
less favorable to such Continuing Employee than the benefits being provided to
such Continuing Employee immediately prior to the Effective Time and (b) if at
any time the Parent shall make a determination that any Continuing Employee is
eligible to participate in any of the Parent's benefit plans after the Effective
Time, then, for purposes of eligibility and vesting with respect to any such
plans, Parent will cause the Surviving Corporation to recognize the service of
the Continuing Employees through the Effective Time as if such service had been
performed with the Parent.
Board Representation. The Merger Agreement provides that promptly after
such time as the Offeror acquires Shares pursuant to the Offer which represent
at least a majority of the outstanding Shares (on a fully diluted basis), the
Parent shall be entitled to designate at its option up to that number of
directors, rounded to the next whole number, of the Company Board, subject to
compliance with Section 14(f) of the Exchange Act, as will make the percentage
of the Company's directors designated by the Parent equal to the aggregate
voting power of the Shares owned by the Offeror, the Parent or any of their
affiliates (assuming the exercise of all options to purchase Common Stock);
provided, however, until the Effective Time, such Board of Directors shall have
at least two directors who are directors on the date of the Merger Agreement
(the "Company Designees"), provided, that subsequent to the purchase of and
payment for Shares pursuant to the Offer, the Parent shall always have its
designees represent at least a majority of the entire Company Board. From and
after the time that the Parent's designees constitute a majority of the Company
Board, any actions relating to the amendment or termination of the Merger
Agreement by the Company or any extension of time requiring the approval of the
Company or waiver of any condition or rights of the Company thereunder or any
action that would adversely affect the rights of the stockholders of the Company
or the holders of Options must be approved by a majority of the Company
Designees then in office; provided, that if the number of Company Designees
shall be reduced below two for any reason whatsoever, any remaining Company
Designee shall be entitled to designate a person to fill such vacancy who shall
be deemed to be a Company Designee for purposes of the Merger Agreement or, if
no Company Designee then remains, the other directors shall designate two
persons to fill such vacancies who shall not be stockholders, affiliates or
associates of Offeror or Parent and such persons shall be deemed to be Company
Designees for purposes of the Merger Agreement. Subject to applicable law, the
Company has agreed to take all action requested by the Parent which is
reasonably necessary to effect any such election, including mailing to its
stockholders the information required by Section 14(f) of the Exchange Act and
Rule14f-1 promulgated thereunder.
Conditions Precedent. The respective obligations of each party to effect
the Merger are subject to the fulfillment at or prior to the Effective Time of
the following conditions: (i) if required by applicable law, the stockholders of
the Company shall have approved the Merger; provided, however, that the Parent
and the Offeror shall vote all of their shares of Company Common Stock entitled
to vote thereon in favor of the Merger, (ii) no statute, rule, regulation,
executive order, decree, ruling or injunction or other order issued by any court
of competent jurisdiction or other governmental or regulatory entity preventing
the consummation of the Merger shall be in effect; provided, however, that each
of the parties shall have used its reasonable efforts to have any such decree,
ruling, injunction or order vacated, and (iii) all material governmental
consents, orders and approvals legally required for the consummation of the
Merger shall have been obtained and any waiting period (and any extension
thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act") and under antitrust laws of applicable jurisdictions
outside the United States applicable to the Merger shall have expired or been
terminated.
Termination. The Merger Agreement provides that it may be terminated at any
time prior to the Effective Time:
(a) By the mutual consent of the Parent, the Offeror and the Company.
(b) By either the Company or the Parent:
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(i) if Shares shall not have been purchased pursuant to the Offer on
or prior to three (3) months from the execution of the Merger Agreement;
provided, however, that the passage of the period referred to in the
foregoing clause shall be tolled during (A) the period during which any
party shall be subject to a non-final order, decree, ruling or action
restraining, enjoining or otherwise prohibiting the purchase of Shares
pursuant to the Offer or the consummation of the Merger, but not later than
six (6) months from the execution of the Merger Agreement, or (B) any
additional waiting period under the HSR Act resulting from a second
request; provided, further, however, that the right to terminate the Merger
Agreement under Section 7.1(b) (i) thereunder shall not be available to any
party whose failure to fulfill any obligation under the Merger Agreement
has been the cause of, or resulted in, the failure of Parent or the
Offeror, as the case may be, to purchase Shares pursuant to the Offer on or
prior to such date; or
(ii) if any governmental entity of competent jurisdiction in the
United States or other country in which the Company directly or indirectly
has material assets or operations shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their respective reasonable efforts to
lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by the Merger Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable.
(c) By the Company Board:
(i) if, prior to the purchase of Shares pursuant to the Offer, (A) the
Company Board shall have entered into or shall have publicly announced its
intention to enter into an agreement or an agreement in principle with
respect to any Alternative Proposal that the Company Board determines, in
good faith after consultation with its financial advisors, is a bona fide
proposal to acquire, directly or indirectly, all of the Shares then
outstanding or all of substantially all the assets of the Company, and
otherwise on terms which the Company Board determines in good faith (after
consultation with the Company's financial advisor) to be more favorable to
the Company and its stockholders than the Offer and the Merger (a "Superior
Proposal"); (B) the Company Board shall have withdrawn, or modified or
changed in a manner adverse to the Parent or the Offeror its approval or
recommendation of the Offer, the Merger Agreement or the Merger or shall
have recommended a Superior Proposal or shall have executed, or shall have
announced its intention to enter into, an agreement in principle or
definitive agreement relating to a Superior Proposal with a person or
entity other than the Parent, the Offeror or their affiliates (or the
Company Board resolves to do any of the foregoing); (C) any person or group
(as defined in Section 13(d) (3) of the Exchange Act) (other than the
Parent, the Offeror or any affiliate thereof or Mark L. Nelson) shall have
become, after the date of the Merger Agreement, the beneficial owner (as
defined in Rule 13d-3 promulgated under the Exchange Act) of a majority of
the outstanding Shares, or (D) any representation or warranty made by the
Parent or the Offeror in the Merger Agreement shall not have been true and
correct in all material respects when made, or Parent or the Offeror shall
have failed to observe or perform in any material respect any of its
material obligations under the Merger Agreement, provided that prior to
exercising such right of termination, the Company shall give prompt written
notice to Parent of such misrepresentation or breach of warranty or failure
to observe or perform; provided, further, that the Company shall not have
such right of termination if the condition resulting in such
misrepresentation or breach of warranty or failure to observe or perform is
cured (i) in the event such notice is delivered on or prior to the fourth
business day prior to the then-scheduled expiration date of the Offer, not
later than the earlier of (A) such expiration date and (B) ten business
days following delivery of such notice and (ii) in the event such notice is
delivered on or after the third business day prior to such expiration date,
not later than three business days following such delivery (it being agreed
that in such event the Offer shall be extended as necessary at least until
the end of such cure period); or
(ii) if the Parent or the Offeror shall have terminated the Offer, or
the Offer shall have expired, without Parent or the Offeror, as the case
may be, purchasing any Shares pursuant thereto; provided that the Company
may not terminate the Merger Agreement pursuant to Section 7.1(c)(ii) of
the Merger Agreement if the Company is in material breach of the Merger
Agreement; or
(iii) if the Parent, the Offeror or any of their affiliates shall have
failed to commence the Offer on or prior to five business days following
the date of the initial public announcement of the Offer or shall have
failed to pay for the Shares in accordance with the terms of the Offer;
provided, that the Company may not
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terminate the Merger Agreement pursuant to Section 7.1(c)(iii) of the
Merger Agreement if the Company is in material breach of the Merger
Agreement.
(d) By the Parent or the Offeror:
(i) if, due to an occurrence that, if occurring after the commencement
of the Offer, would result in a failure to satisfy any of the conditions
set forth in Annex A to the Merger Agreement (see Section 14--"Certain
Conditions to the Offeror's Obligations." Parent, the Offeror, or any of
their affiliates shall have failed to commence the Offer on or prior to
five business days following the date of the initial public announcement of
the Offer; provided that the Parent may not terminate the Merger Agreement
pursuant to Section 7.1(d)(i) of the Merger Agreement if the Parent or the
Offeror is in material breach of the Merger Agreement; or
(ii) prior to the purchase of Shares pursuant to the Offer, if (A) the
Company shall have received any Alternative Proposal which the Company
Board has determined to designate as a Superior Proposal; (B) the Company
Board shall have withdrawn, or modified or changed in a manner adverse to
Parent or the Offeror its approval or recommendation of the Offer, the
Merger Agreement or the Merger or shall have recommended an Alternative
Proposal or shall have executed, or shall have announced its intention to
enter into, an agreement in principle or definitive agreement relating to
an Alternative Proposal with a person or entity other than Parent, the
Offeror or their affiliates (or the Company Board resolves to do any of the
foregoing); (C) any person or group (as defined in Section 13(d) (3) of the
Exchange Act) (other than Parent, the Offeror or any affiliate thereof or
Mark L. Nelson) shall have become, after the date of the Merger Agreement,
the beneficial owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of the outstanding Shares, or (D) any
representation or warranty made by the Company in the Merger Agreement
shall not have been true and correct in all material respects when made and
shall have resulted in, or is reasonably likely to result in, an adverse
change in the assets, liabilities, financial condition, or results of
operations of the Company or any of its subsidiaries which is material to
the Company and its Subsidiaries taken as a whole, other than any change or
effect arising out of general economic conditions (a "Company Material
Adverse Effect"), or the Company shall have failed to observe or perform in
any material respect any of its material obligations under the Merger
Agreement; provided that prior to exercising such right of termination,
Parent and the Offeror shall give prompt written notice to the Company of
such misrepresentation or breach of warranty or failure to observe or
perform; provided, further, that Parent and the Offeror shall not have such
right of termination if the condition resulting in such misrepresentation
or breach of warranty or failure to observe or perform is cured (i) in the
event such notice is delivered on or prior to the fourth business day prior
to the then-scheduled expiration date of the Offer, not later than the
earlier of (A) such expiration date and (B) ten business days following
delivery of such notice and (ii) in the event such notice is delivered on
or after the third business day prior to such expiration date, not later
than three business days following such delivery (it being agreed that in
such event the Offer shall be extended as necessary at least until the end
of such cure period).
Effect of Termination; Termination Fee. The Merger Agreement provides that
if the Company Board terminates the Merger Agreement pursuant to the provisions
described in (c) (i) (A), (B) or (C) above or if Parent or the Offeror
terminates the Merger Agreement pursuant to the provisions described in clauses
(d)(ii) (A), (B) or (C) under "Termination" above, then immediately following
such termination, the Company shall pay to the Parent $7,000,000 plus Parent's
and Offeror's reasonable out-of-pocket fees and expenses, not to exceed
$500,000, incurred in connection with the due diligence investigation, the
Offer, the Merger, the Merger Agreement and the consummation (or proposed
consummation) of the transactions contemplated thereby. Nothing contained in
such provision will relieve any party from liability for fraud or for willful
breach of the Merger Agreement.
Except as set forth above, whether or not the Merger is consummated, all
costs and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby shall be paid by the party incurring such
expenses.
Option Agreement
General. As a condition of the willingness of the Parent and the Offeror to
enter into the Merger Agreement, the Parent and the Offeror required that each
of the Stockholders set forth therein enter into the Option Agreement.
Agreement to Tender. Pursuant to the Option Agreement, the Stockholders
severally (and not jointly) have agreed to tender and sell to the Parent and/or
the Offeror pursuant to the Offer, a total of 4,070,630 outstanding shares
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owned by the Stockholders (plus any additional Shares acquired by them upon
exercise prior to the consummation of the Offer of options held by them). Each
Stockholder severally (and not jointly) has agreed to deliver to the Depositary,
promptly, but not later than five (5) days following the date of this Offer to
Purchase, the Letter of Transmittal together with the certificates for the
Stockholder's Shares, if available, or a "Notice of Guaranteed Delivery," if the
Stockholder's Shares are not available. Each of the Stockholders has also
severally (and not jointly) agreed not to withdraw (except in certain limited
circumstances) any Shares legally and/or beneficially tendered into the Offer
unless the Offer is terminated by the Parent or the Offeror without any Shares
being purchased thereunder. See "Tender of Shares by Stockholders in Connection
with Tender Offer Superior Proposal" below.
Option to Purchase. Each Stockholder has also severally granted to the
Parent or the Offeror, as the Parent shall designate (for purposes of the
"Option Agreement" section only, the "Optionee") a conditional irrevocable
option (the "Stock Option") to purchase all of the Stockholder's Shares legally
and/or beneficially owned by such Stockholder at a purchase price equal to
$24.59 per Share. Except as described below, the Stock Option may be exercised
by Optionee, in whole and for all of such Stockholder's Shares but not in part
or for less than all of such Stockholder's Shares, and only simultaneously as to
all Stockholders (i) if the Offer was terminated by the Parent or the Offeror
for the reasons set forth in (f) or (g) of the Conditions to the Offer (as set
forth in Annex A to the Merger Agreement) or (ii) if the Offer has expired
without the purchase of Shares thereunder and at the time of such expiration (x)
the Minimum Condition has not been satisfied or (y) circumstances had occurred
giving rise to a right of termination by the Parent or the Offeror for the
reasons set forth in (f) or (g) of said Conditions of the Offer, in each case
without any violation of the Offer or the Merger Agreement by the Parent or the
Offeror. Notice of exercise may be given at any time during the period (the
"Exercise Period") commencing after the Stock Option becomes exercisable (under
the circumstances provided in Section 2.2 of the Option Agreement) and ending on
the date three months following the date on which any Superior Proposal expires
or is withdrawn or terminated without the purchase of any Shares. In addition,
the Optionee may also exercise the Stock Option if the Company terminates the
Merger Agreement pursuant to Section7.1 (c) (i) (a) or (b) of the Merger
Agreement, whereupon the Exercise Period shall commence on the date such
termination rights are exercised and end on the date which is three months
following the date on which any Superior Proposal expires or is withdrawn or
terminated without the purchase of any Shares.
Conditions to Delivery of the Shares. The Option Agreement provides that
the obligation of the Stockholders to deliver, and the Optionee to pay for, the
Shares upon exercise of the Stock Option is subject to (i) all waiting periods
under the HSR Act, applicable to the exercise of the Stock Option and delivery
of the Shares, having expired or been terminated, and (ii) there being no
permanent injunction or other order by any court of competent jurisdiction
restricting, preventing or prohibiting the exercise of the Stock Option or the
delivery of the Stockholder's Shares in respect of such exercise.
Tender of Shares by Stockholders in Connection with Tender Offer Superior
Proposal.
(a) Notwithstanding anything to the contrary in the Option Agreement, and
notwithstanding that the Stock Option has become exercisable pursuant to Section
2.2 of the Option Agreement, if at any time during the Exercise Period a tender
offer pursuant to any Superior Proposal (the "Superior Offer") is commenced,
then, subject to the terms and conditions of Section 2.6 to the Merger
Agreement, on the last day of the offer period of the Superior Offer such
Stockholders shall tender their Shares in the Superior Offer. Concurrent
therewith, if Optionee's tender offer is continuing at such time, the
Stockholders' Shares shall be released from Optionee's tender offer. Subject to
the provisions of Section (d) below, Optionee's right to exercise the Stock
Option shall be suspended for so long as the Superior Offer shall not have
expired or been terminated or withdrawn and, subject to the terms of this
Section, such right shall terminate simultaneously with the consummation of the
Superior Offer and receipt by the Stockholders of the consideration therefor.
Notwithstanding the foregoing, Optionee may elect, by written notice to the
Stockholders at any time prior to the tender of such Shares into the Superior
Offer by the Stockholders, to require the Stockholders, on a pro rata basis, to
retain Shares in an amount, as determined by Optionee, up to 25% of the then
outstanding shares of Common Stock on a fully diluted basis (the "Minority
Percentage"), whereupon the Stockholders shall not tender such amount of Shares
in the Superior Offer and Optionee's right to exercise the Stock Option as to
such Shares shall continue without limitation.
(b) In the event that the Superior Offer is consummated, as to Shares
tendered by the Stockholders in accordance with Section (a) above, each
Stockholder is required to deliver to the Optionee that portion of the
consideration received by such Stockholder which is equal to the Incremental
Value (as defined below) multiplied by the number of Shares tendered by such
Stockholder in connection with such Superior Proposal. The Incremental Value is
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determined as follows: If the consideration payable pursuant to the Superior
Offer is all cash, the Incremental Value shall equal the amount by which the
offer price in such Superior Proposal exceeds the Offer Price. If the
consideration payable consists of cash and securities or only securities, the
Incremental Value shall equal the amount by which (x) the sum of the cash, if
any, plus the value of the securities received in the Superior Proposal (the
amount of such cash and the value of such securities being determined on a per
share basis) exceeds (y) the Offer Price. The value of any publicly-traded
securities issued to the Stockholders upon consummation of the Superior Proposal
shall be determined by reference to the closing price of such securities on the
date of consummation of the Superior Proposal. The value of any securities which
have not previously been publicly traded ("Newly Registered Securities") shall
be determined by reference to the average closing price of such securities over
the twenty (20) trading days following consummation of the Superior Proposal.
Each Stockholder shall deliver to the Optionee the Incremental Value for each
Share held by such Stockholder immediately upon receipt if the consideration is
cash or cash and publicly-traded securities or, if the consideration includes
Newly Registered Securities, upon the later of receipt of the consideration or
the date on which the value of the securities is determined. The Incremental
Value shall be payable to Optionee in cash and securities in the same proportion
as the cash and securities payable to the Stockholders.
(c) If Optionee has required the Stockholders to retain the Minority
Percentage, the Optionee will exercise the Stock Option with respect to the
Minority Percentage promptly upon the consummation of the Superior Offer.
(d) In the event that the Superior Offer expires or is terminated or
withdrawn without purchase of the Shares tendered by the Stockholders, or if the
Stockholders breach their obligation to tender their Shares in the Superior
Offer or withdraw the tender of such Shares in such Superior Offer, Optionee's
right to exercise the Stock Option with respect to such Shares shall,
simultaneously with such expiration, termination, withdrawal or breach, be
restored.
Voting of Shares in Connection with Merger Superior Proposal.
(a) Notwithstanding the provisions of Section 5.1(a) and Section 7 of the
Option Agreement, in the event that the Superior Proposal is structured as a
merger which is not preceded by a tender offer, the Stockholders shall be
permitted to vote such Stockholders' Shares in favor of such merger; provided,
however, that Optionee may elect, by written notice to the Stockholders, to
require the Stockholders to abstain from voting in favor of the merger with
respect to the Minority Percentage. Subject to the provisions of Section (c)
below, Optionee's right to exercise the Stock Option shall be suspended so long
as the Superior Proposal described in this Section shall not have expired or
been terminated or withdrawn and, subject to the terms of this Section, such
right shall terminate simultaneously with the consummation of the Superior
Proposal described in this Section and receipt by the Stockholders of the
consideration therefor.
(b) In the event that a Superior Offer described in this Section is
consummated, each Stockholder shall pay to Optionee, at the time determined in
accordance with Section (b) under "Tender of Shares by Stockholders in
connection with Tender Offer Superior Proposal" above, the Incremental Value (as
determined in accordance with Section (b) under "Tender of Shares by
Stockholders in connection with Tender Offer Superior Proposal" above) received
by such Stockholder for each of such Stockholder's Shares.
(c) In the event that the Superior Offer described in this Section expires
or is terminated or withdrawn without purchase of the Shares, or if the
Stockholders fail to vote their Shares (other than the Minority Percentage if so
directed by Optionee) in favor of such Superior Offer, Optionee's right to
exercise the Stock Option with respect to such Shares, and the restrictions on
voting set forth in Section 5.1(a) and Section 7 of the Option Agreement, shall,
simultaneously with such expiration, termination, withdrawal or breach, be
restored.
Tender Offer Upon Exercise of Stock Option. Pursuant to the Option
Agreement, the Parent and the Offeror have agreed that, in the event that
(pursuant to the Stock Option) Optionee purchases an amount of the Stockholders'
Shares greater than the Minority Percentage, then as promptly as practicable
(and in any event within five (5) business days thereafter), the Offeror will,
and Parent will cause the Offeror to, make a tender offer to the stockholders of
the Company for the remaining shares of Common Stock (the consummation of which
shall be subject only to the conditions that no court, arbitrator or
governmental body, agency or official shall have issued any order, decree or
ruling and there shall not be any statute, rule or regulation, enjoining or
prohibiting the consummation of such tender offer) pursuant to which the
stockholders of the Company (other than the Company, any direct or indirect
subsidiary of the Company or Parent or the Offeror) will be entitled to receive
an amount of cash consideration per share of Common Stock equal to the Offer
Price, and will take such actions as may be necessary or appropriate to
effectuate, and purchase shares of Common Stock pursuant to, such tender offer
at the earliest practicable time.
Termination. The Option Agreement will terminate and be of no further force
and effect if, as a result of a failure to satisfy any conditions to a closing
for the purchase of the Stockholder Shares pursuant to the exercise of the
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Stock Option (the "Stock Option Closing"), the Stock Option Closing shall not
have occurred within one (1) year following delivery of the Exercise Notice;
provided, however, that Optionee shall have the right, by delivery of written
notice to the Stockholders, to extend this Agreement for thirty (30) days if
Optionee reasonably believes that any conditions to the Stock Option Closing
which remain unsatisfied may be satisfied during such thirty (30) day period.
Representation and Warranties. The Option Agreement contains customary
representations and warranties by each Stockholder severally (and not jointly)
to Parent and the Offeror, including those relating to (i) authority to enter
into the Option Agreement and sell Shares legally and/or beneficially owned by
such Stockholder, (ii) no options, warrants or other rights to purchase or
acquire such Stockholder's Shares, (iii) good and marketable title to such
Stockholder's Shares, free and clear of all liens, claims, encumbrances and
security interests, (iv) legality, validity and binding effect of the Option
Agreement, and (v) no violation of agreements, judgments, laws, rules and
regulations. The Option Agreement also contains customary representations and
warranties by the Parent and the Offeror, including those relating to authority
to enter into the Option Agreement, the sufficiency of funds of the Parent,
legality, validity and binding effect of the Option Agreement and no violation
of agreements, judgments, laws, rules and regulations.
No Disposition of Stockholders' Shares and No Acquisition of Shares. Each
Stockholder has severally (and not jointly) agreed that, except as contemplated
by the Option Agreement, such Stockholder will not offer or agree to, sell,
transfer, tender, assign, hypothecate or otherwise dispose of, or create any
security interest, lien, claim, pledge, option, right of first refusal,
agreement, limitation on such Stockholder's voting rights or other encumbrance
with respect to, such Stockholder's Shares. Each such Stockholder has also
agreed severally (and not jointly) that it will not, and will not offer or agree
to, acquire any additional Shares or options, warrants or other rights to
acquire Shares, without the prior written consent of the Parent or the Offeror.
Each Stockholder agrees that such Stockholder shall not grant any proxy or power
of attorney with respect to the voting of Shares (each a "Voting Proxy") to any
person except to vote in favor of any of the transactions contemplated by the
Option Agreement or the Merger Agreement. No Voting Proxy shall be given or
written consent executed by such Stockholder after the date of the Option
Agreement with respect to such Stockholder's Shares (and if given or executed,
will not be effective) so long as the Option Agreement remains in effect;
provided, however, that such Stockholder may hereafter grant Voting Proxies in
furtherance of such Stockholder's obligations under the Voting Agreement section
of the Option Agreement.
Covenants of the Parent and the Offeror. Each of the Parent and the Offeror
has agreed that it will not sell, offer to sell or otherwise dispose of the
Shares in violation of the Securities Act. Each of the Parent and the Offeror
has also agreed that it will perform in all material respects all of its
respective obligations under the Merger Agreement.
No Solicitation. Each Stockholder has agreed that it will immediately cease
any existing discussions or negotiations, if any, with any parties with respect
to any acquisition or exchange of all or any material portion of the assets of,
or any equity interest in, the Company or any of its subsidiaries or any
business combination with the Company or any of its subsidiaries. Each
Stockholder has also agreed that from and after the date of the Option
Agreement, no Stockholder will directly or indirectly solicit or initiate any
takeover proposal from any person, or engage in discussions or negotiations
relating thereto except to the extent permitted in the Merger Agreement. Each
Stockholder will promptly notify the Parent of its receipt of any Alternative
Proposal. Notwithstanding anything to the contrary contained in the Option
Agreement, the parties have agreed that provisions set forth above will not
limit or restrict in any manner whatsoever any Stockholder's action or conduct
as a director or representative of the Company.
Voting Agreement. During the time the Option Agreement is in effect, each
Stockholder has severally (and not jointly) agreed to vote all of the Shares
legally and/or beneficially owned by such Stockholder (i) in favor of the
Merger, the Merger Agreement and the transactions contemplated by the Merger
Agreement, (ii) against any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation of the Company under the Merger Agreement, and (iii) against any
action or agreement that would materially impede, interfere with or attempt to
discourage the Offer or the Merger. Each Stockholder also has severally (and not
jointly) agreed that, if the Merger Agreement terminates solely by reason of the
Company's exercise of its termination rights pursuant to Section 7.1(c)(1)(a) or
(b) of the Merger Agreement and for so long as the Exercise Period has not
ended, such Stockholder (i) will attend or otherwise participate in all
stockholder meetings, or actions by written consent, (ii) shall not, without the
prior written consent of the Parent or the Offeror, vote any of such Shares in
favor of any actions requiring stockholder approval which are described in the
covenant section of the
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Merger Agreement, and (iii) will vote such Stockholder's Shares and use its
reasonable efforts as a stockholder to prevent the Company from taking certain
actions prohibited in the Merger Agreement.
The Stockholders have agreed that if during the Exercise Period any
Stockholder breaches the voting agreements described above, such Stockholder
shall be deemed to have granted Parent proxies to vote his or her Shares except
that Parent shall not have the right to vote to reduce the Offer Price or the
Merger Consideration or to amend or modify the Merger Agreement or reduce the
rights or benefits of the Company or any stockholders of the Company under the
Offer or the Merger Agreement or reduce the obligations of Parent or Offeror
thereunder. The Option Agreement provides that such proxies terminate if (i) the
Offer expires or terminates without any Shares being purchased thereunder in
violation of the Offer or the Merger Agreement or (ii) the Parent or the Offeror
is in violation of the Option Agreement.
Transfer of Options. The Option Agreement also provides that each of the
Stockholders holding options to purchase Shares pursuant to the Company Stock
Option Plans (for purposes of this section a "Company Option") have agreed
severally (and not jointly) that so long as the Option Agreement remains in
effect, such Stockholder (for purposes of this section an "Optionholder") will
not transfer any Company Options held by such Optionholder; provided, however,
that at the Effective Time (as defined in the Merger Agreement) each
Optionholder has agreed to accept an amount in respect of such Company Options
equal to the product of (A) the excess, if any, of the Offer Price over the per
share exercise price of each such Company Option and (B) the number of Shares
subject thereto (such payment to be net of applicable withholding taxes) and
each such Company Option will thereafter be cancelled.
Indemnification Notwithstanding the provisions of Section 8.2 of the Merger
Agreement regarding the non-survival of the Company's representations and
warranties contained in the Merger Agreement, Mark L. Nelson (the "Indemnitor")
has agreed as follows:
(a) To indemnify, defend and hold harmless the Parent and the Offeror
(each, an "Indemnified Party") and their affiliates (including any officer,
director, stockholder, partner, member, employee, agent or representative of any
thereof) (each a "Parent Affiliate") to the extent provided in Section 9.5 of
the Option Agreement from and against all assessments, losses, damages,
liabilities, costs and expenses, including without limitation interest,
penalties and reasonable fees and expenses of legal counsel chosen by the
Parent, the Offeror or any Parent Affiliate (collectively, "Damages"), imposed
upon or incurred by the Parent, the Offeror or any Parent Affiliate arising out
of or in connection with or resulting from any breach of any representation or
warranty of the Company, or nonfulfillment, at any time prior to the
consummation of the Offer, of any covenant or agreement by the Company, in each
case contained in or made pursuant to the Merger Agreement or any Schedule
thereto, or any certificate furnished or to be furnished to the Parent or the
Offeror thereunder.
(b) The Indemnitor shall reimburse an Indemnified Party promptly after
delivery of an Indemnification Notice certifying that the Indemnified Party has
incurred Damages after compliance with the terms of the indemnification
provisions of the Option Agreement, provided, however, that the Indemnitor shall
have the right to contest any such Damages in good faith.
(c) The Indemnified Party will have the right (upon further notice to the
Indemnitor) to undertake the defense, compromise or settlement of any demands,
claims, actions or causes of action (collectively, the "Claims") for the account
of the Indemnitor, subject to the right of the Indemnitor to participate in the
defense of such claim pursuant to the terms of the indemnification provisions at
any time prior to settlement, compromise or final determination thereof.
(d) Notwithstanding anything in the Option Agreement to the contrary,
Indemnitor shall have no indemnification obligations thereunder unless the
Parent and the Offeror have consummated the Offer or have purchased the Shares
pursuant to the Stock Option.
The indemnity is subject to certain limitations as follows:
(a) Notwithstanding anything to the contrary provided elsewhere in the
Merger Agreement, the obligations of the Indemnitor under the Option Agreement
to indemnify any Indemnified Party with respect to any Claim pursuant to Section
9.2 of the Option Agreement shall be of no force and forever barred unless the
Indemnified Party has given the Indemnitor notice of such claim prior to such
date which is eighteen (18) months after the consummation of the Offer or the
Stock Option Closing, as the case may be. In any event, the parties shall fully
cooperate with each other and their respective counsel in accordance with
Section 9.3 of the Option Agreement in connection with any such litigation,
defense, settlement or other attempted resolution.
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(b) Indemnitor shall not be required to indemnify any Indemnified Party
until such time as the Damages in the aggregate equal or exceed five million
dollars ($5,000,000.00). Thereafter, Indemnitor's indemnification obligations
thereunder shall apply to 100% of the next $5,000,000 of Damages, and 50% of the
next $20,000,000 of Damages. No indemnification shall be required by Indemnitor
for any Damages in the aggregate in excess of $30,000,000 (i.e., Indemnitor's
maximum liability for Damages under the indemnification provisions of the Option
Agreement shall not exceed $15,000,000).
The Option Agreement also provides that until such time as the amount of
Damages incurred by the Indemnified Party exceeds $5,000,000, all fees and
expenses of counsel selected by Indemnitor incurred in participating in the
defense of such Claim shall be borne solely by Indemnitor. From and after such
time as the amount of Damages incurred by the Indemnified Party exceeds
$5,000,000, subject to paragraph (e) of Section 9.3 of the Option Agreement, the
reasonable fees and expenses of counsel to Indemnitor thereafter incurred,
together with the reasonable fees and expenses of counsel to Indemnitor incurred
by Indemnitor prior to such time as the Damages of the Indemnified Party exceed
$5,000,000, shall be considered additional Damages for purposes of Section 9 of
the Option Agreement.
The Guarantee.
Wolters Kluwer and the Company executed a Guarantee on September 29, 1998
whereby Wolters Kluwer unconditionally guaranteed all of the payment obligations
of the Parent and the Offeror under the Merger Agreement.
14. CERTAIN CONDITIONS TO THE OFFEROR'S OBLIGATIONS.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Offeror's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of the Merger Agreement),
the Offeror shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-l(c) under the
Exchange Act (relating to the Offeror's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and may
delay the acceptance for payment of or, subject to the restriction referred to
above, the payment for, any tendered Shares, and may terminate the Offer if (i)
any applicable waiting period under the HSR Act or the antitrust laws of
applicable jurisdictions outside the United States has not expired or
terminated, (ii) the Minimum Condition has not been satisfied, or (iii) at any
time on or after the date hereof, and before the expiration of the Offer any of
the following conditions exist:
(a) there shall be any statute, rule, regulation, judgment, order or
injunction promulgated, entered, enforced, enacted, issued or applicable to the
Offer or the Merger by any governmental entity of competent jurisdiction in the
United States or other country in which the Company directly or indirectly has
material assets or operations which (1) prohibits the consummation of the Offer
or the Merger, (2) as a result of the Offer or the Merger, restrains or
prohibits, or imposes any material limitations on, the Parent's or the Offeror's
ownership or operation of all or a material portion of the businesses or assets
of the Company and its Subsidiaries, taken as a whole, or of the Parent and its
Subsidiaries, taken as a whole, or compels the Parent or any of its Subsidiaries
or affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or of
the Parent and its Subsidiaries, taken as a whole, or requires the Company, the
Parent or the Offeror to pay damages that are material in relation to the
Company and its Subsidiaries, taken as a whole, (3) challenges, prohibits, or
makes illegal the acceptance for payment, payment for or purchase of Shares
pursuant to, or consummation of, the Offer or the Merger, (4) imposes material
limitations on the ability of the Offeror or the Parent effectively to exercise
full rights of ownership of the Shares accepted for payment pursuant to the
Offer, including, without limitation, the right to vote the Shares purchased by
it on all matters properly presented to the Company's stockholders, or (5)
requires divestiture by the Parent or any of its Subsidiaries or affiliates of
any Shares; provided that the Parent shall have used all reasonable efforts to
cause any such judgment, order or injunction to be vacated or lifted;
(b) there shall be instituted or pending any action, suit, or proceeding by
any governmental entity of competent jurisdiction in the United States, or any
other country in which the Company directly or indirectly has material assets or
operations, that is reasonably likely, directly or indirectly, to result in any
of the consequences referred to in clauses (1) through (5) of paragraph (a)
above; provided, that the Parent shall have used all reasonable efforts to cause
any such action, suit or proceeding to be withdrawn or dismissed;
(c) there has been since the date of the Merger Agreement any event,
occurrence or development or state of circumstances or facts which has had or
would reasonably be expected to have a Company Material Adverse Effect;
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(d) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and accurate as of the date of consummation
of the Offer as though made on or as of such date or the Company shall have
breached or failed in any material respect to perform or comply with any
material obligation, agreement or covenant required by the Merger Agreement to
be performed or complied with by it except, (i) those representations and
warranties that address matters only as of a particular date or only with
respect to a specified period of time which need only be true and accurate as of
such date or with respect to such period or (ii) where the failure of such
representations and warranties to be true and accurate, or the breach,
non-performance or non-compliance with such obligations, agreements or
covenants, do not have, individually or in the aggregate, or would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect;
(e) the Merger Agreement shall have been terminated in accordance with its
terms;
(f) the Company shall have entered into a definitive agreement or agreement
in principle with any person with respect to an Alternative Proposal; or
(g) the Company Board shall have withdrawn, or modified or changed in a
manner adverse to the Parent or the Offeror (including by amendment of the
Schedule 14D-9) its recommendation of the Offer, the Merger Agreement, or the
Merger, or recommended an Alternative Proposal, or shall have resolved to do any
of the foregoing; which in the sole judgment of the Parent or the Offeror, in
any such case, and regardless of the circumstances giving rise to such
condition, makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment or payments.
The foregoing conditions are for the sole benefit of the Offeror and the
Parent and may be waived by the Parent or the Offeror, in whole or in part at
any time and from time to time in the sole discretion of the Parent or the
Offeror.
15. CERTAIN LEGAL MATTERS.
Except as set forth in this Section, the Offeror is not aware of any
approval or other action by any governmental or administrative agency which
would be required for the acquisition or ownership of Shares by the Offeror as
contemplated herein. Should any such approval or other action be required, it
will be sought, but the Offeror has no current intention to delay the purchase
of Shares tendered pursuant to the Offer pending the outcome of any such matter,
subject, however, to the Offeror's right to decline to purchase Shares if any of
the conditions specified in Section 14 "--Certain Conditions to the Offeror's
Obligations" shall have occurred. There can be no assurance that any such
approval or other action, if needed, would be obtained or would be obtained
without substantial conditions, or that adverse consequences might not result to
the Company's business or that certain parts of the Company's business might not
have to be disposed of if any such approvals were not obtained or other action
taken.
U.S. Antitrust. Under the provisions of the HSR Act applicable to the
Offer, the acquisition of Shares under the Offer may be consummated following
the expiration of a 15-day waiting period following the filing by Wolters Kluwer
of a Premerger Notification and Report Form with respect to the Offer, unless
the Parent receives a request for additional information or documentary material
from the Antitrust Division or the FTC or unless early termination of the
waiting period is granted. Wolters Kluwer, the ultimate parent entity of the
Parent and the Offeror expects to make such a filing on October 6, 1998 and,
accordingly, the initial waiting period will expire on October 21, 1998. If,
within the initial 15-day waiting period, either the Antitrust Division or the
FTC requests additional information or documentary material concerning the
Offer, the waiting period will be extended through the tenth day after the date
of substantial compliance by Wolters Kluwer. Complying with a request for
additional information or documentary material can take a significant amount of
time.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Offeror's proposed acquisition of
the Company. At any time before or after the Offeror's acquisition of Shares
pursuant to the Offer, the Antitrust Division or the FTC could take such action
under the antitrust laws as either deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger, or seeking the divestiture of Shares
acquired by the Offeror, or the divestiture of substantial assets of the Company
or its Subsidiaries or the Parent or its Subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer or to the consummation of the
Merger on antitrust grounds will not be made, or, if such a challenge is made,
of the result thereof.
If any applicable waiting period under the HSR Act has not expired or been
terminated prior to the Expiration Date, the Offeror will not be obligated to
proceed with the Offer or the purchase of any Shares not theretofore purchased
pursuant to the Offer. See Section 14 "--Certain Conditions to the Offeror's
Obligations."
29
<PAGE>
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders of the Company have
certain rights under the Delaware GCL to dissent and demand appraisal of, and
payment in cash of the fair value of, their Shares. Such rights, if the
statutory procedures are complied with, could lead to a judicial determination
of the fair value (excluding any element of value arising from the
accomplishment or expectation of the Merger) required to be paid in cash to such
dissenting holders for their Shares. Any such judicial determination of the fair
value of Shares could be based upon considerations other than or in addition to
the price paid in the Offer and the market value of the Shares, including asset
values and the investment value of the Shares. The value so determined could be
more or less than the purchase price per Share pursuant to the Offer or the
consideration per Share to be paid in the Merger.
Delaware State Takeover Laws. Under the Delaware GCL, if the Offeror
acquires less than 90% of each class of the outstanding Shares, the Merger would
require, among other things, the affirmative vote of the holders of at least a
majority of all the outstanding Shares. If the Offeror acquires, pursuant to the
Offer or otherwise, including pursuant to the Option Agreement, voting power
with respect to at least a majority of the outstanding Shares (which would be
the case if the Minimum Condition is satisfied), it will have the voting power
to effect the merger without the vote of any other stockholder, which it intends
to do. The Delaware GCL also provides that if a parent company owns at least 90%
of each class of stock of a subsidiary, the parent company can effect a merger
with the subsidiary without the authorization of the other stockholders of the
subsidiary. Accordingly, if the Offeror acquires 90% or more of the outstanding
Shares pursuant to the Offer and the Option Agreement, or otherwise, the Offeror
could, and intends to, consummate the Merger without the approval of any other
stockholders of the Company.
In addition, several decisions by Delaware courts have held that, in
certain instances, a controlling stockholder of a corporation involved in a
merger has a fiduciary duty to the other stockholders that requires the merger
to be fair to such other stockholders. In determining whether a merger is fair
to minority stockholders, the Delaware courts have considered, among other
things, the type and amount of consideration to be received by the stockholders
and whether there were fair dealings among the parties. The Delaware Supreme
Court has indicated in recent decisions that in most cases the remedy available
in a merger that is found not to be "fair" to minority stockholders is the right
to appraisal described above or a damages remedy based on essentially the same
principles.
Delaware GCL ss. 203 prohibits business combination transactions involving
a Delaware corporation and an "interested stockholder" (defined generally as any
person that directly or indirectly beneficially owns 15% or more of the
outstanding voting stock of the subject corporation) for three years following
the date such person became an "interested stockholder," unless certain
exceptions apply, including that prior to such date the Company Board approved
either the business combination or the transaction which resulted in such person
being an interested stockholder. As set forth below, the Company Board has taken
actions to make Delaware GCL ss. 203 inapplicable to the Parent and the Offeror
in connection with the Offer, the Merger and the Option Agreement.
In the Merger Agreement, the Company represented that the Company Board has
unanimously approved the Merger Agreement and the Option Agreement and the
transactions contemplated thereby, including the Offer and the Merger, for
purposes of Delaware GCL ss. 203, such approval occurring prior to the time the
Offeror became a "interested stockholder" as defined in Delaware GCL ss. 203, so
that the provisions thereof are not applicable to such transactions.
Other State Takeover Laws. A number of other states have adopted laws and
regulations applicable to attempts to acquire securities of corporations which
are incorporated, or have substantial assets, stockholders, principal executive
offices or principal places of business, or whose business operations otherwise
have substantial economic effects in such states. In Edgar v. MITE Corp., in
1982, the Supreme Court of the Unites States (the "U.S. Supreme Court")
invalidated on constitutional grounds the Illinois Business Takeover statute,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987, in CTS Corp. v.
Dynamics Corp. of America, the U.S. Supreme Court held that the State of Indiana
may, as a matter of corporate law and, in particular, with respect to those
aspects of corporate governance, constitutionally disqualify a potential
acquirer from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders. The state law before the U.S. Supreme
Court was by its terms applicable only to corporations that had a substantial
number of stockholders in the state and were incorporated there.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. The Offeror does not know whether any of these laws will, by
their
30
<PAGE>
terms, apply to the Offer or the Merger and has not complied with any such laws.
Should any person seek to apply any state takeover law, the Offeror will take
such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, the Offeror might be
required to file certain information with, or receive approvals from, the
relevant state authorities. In addition, if enjoined, the Offeror might be
unable to accept for payment any Shares tendered pursuant to the Offer, or be
delayed in continuing or consummating the Offer and the Merger. In such case,
the Offeror may not be obligated to accept for payment any Shares tendered. See
Section 14 "--Certain Conditions to the Offeror's Obligations."
16. FEES AND EXPENSES.
Neither the Offeror nor the Parent, nor any officer, director, stockholder,
agent or other representative of the Offeror or the Parent, will pay any fees or
commissions to any broker, dealer or other person (other than the Dealer Manager
and the Information Agent) for soliciting tenders of Shares pursuant to the
Offer. Brokers, dealers, commercial banks and trust companies and other nominees
will, upon request, be reimbursed by the Offeror for customary mailing and
handling expenses incurred by them in forwarding materials to their customers.
Credit Suisse First Boston Corporation ("Credit Suisse First Boston" or
"CSFB") is acting as the Dealer Manager in connection with the Offer and as
financial advisor to Wolters Kluwer in connection with the Parent's proposed
acquisition of the Company, for which services CSFB will receive customary
compensation. Wolters Kluwer also has agreed to reimburse CSFB for its
out-of-pocket expenses, including the fees and expenses of legal counsel and
other advisors, incurred in connection with its engagement, and to indemnify
CSFB and certain related persons against certain liabilities and expenses in
connection with its engagement, including certain liabilities under the federal
securities laws. In the ordinary course of business, CSFB and its affiliates may
actively trade the debt and equity securities of Wolters Kluwer and the equity
securities of the Company for their own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
The Offeror has retained Georgeson & Company Inc., as Information Agent,
and Morgan Guaranty Trust Company of New York, as Depositary, in connection with
the Offer. The Information Agent and the Depositary will receive reasonable and
customary compensation for their services hereunder and reimbursement for their
reasonable out-of-pocket expenses. The Information Agent and the Depositary will
also be indemnified by the Offeror against certain liabilities in connection
with the Offer. The Information Agent may contact holders of Shares by mail,
telex, telegraph and personal interviews and may request brokers, dealers and
other nominee stockholders to forward materials relating to the Offer to
beneficial owners of Shares.
17. MISCELLANEOUS.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares residing in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Offeror by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE OFFEROR OTHER THAN AS CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF ANY SUCH INFORMATION OR
REPRESENTATION IS GIVEN OR MADE, IT SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
The Offeror and the Parent have filed with the Commission (i) a Schedule
14D-l, pursuant to Section 14(d)(1) of the Exchange Act and Rule14d-3
promulgated thereunder, furnishing certain information with respect to the Offer
and (ii) a Schedule13D, pursuant to Section13(d)(1) of the Exchange Act. Such
Schedule 14D-l and Schedule13D, and any amendments thereto, including exhibits,
may be examined and copies may be obtained at the same places and in the same
manner as set forth with respect to the Company in Section 8--"Certain
Information Concerning the Company" (except that they will not be available at
the regional offices of the Commission).
OTI ACQUISITION CORP.
October 5, 1998
31
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF
WOLTERS KLUWER, THE PARENT AND THE OFFEROR
1. Members of the Supervisory Board and Executive Board and Executive
Officers of Wolters Kluwer. The following table sets forth the name, business
address and present principal occupation or employment and material occupations,
positions, offices or employments for the past five years of each member of the
Supervisory Board and Executive Board and each Executive Officer of Wolters
Kluwer. Each such person is a citizen of the Netherlands.
SUPERVISORY BOARD
<TABLE>
<CAPTION>
INDIVIDUAL PRINCIPAL OCCUPATION OR
NAME AND BUSINESS ADDRESS OFFICE EMPLOYMENT (PRESENT/PAST)
- ------------------------- ------------------------------ ----------------------------------------
<S> <C> <C>
H. de Ruiter............. Chairman, Member since 1994 Chairman of Supervisory Board of
Prins Frederiklaan 16 Koninklijke Ahold NV, Beers NV,
2243 HW WASSENAAR Koninklijke Hoogovens NV and
Koninklijke Pakhoed NV
Vice-chairman of Supervisory Board
of AEGON NV and Member of
Supervisory Board of Heineken NV
and NV Koninklijke
Nederlandse Petroleum Maatschappij
B.H. ter Kuile............. Member since 1986 Emeritus Prof. European Law,
Neuhuyskade 4 Erasmus University of Rotterdam
Member and secretary of Supervisory
Board of NV Verenigd Streekvervoer
Nederland
Deputy-Justice Court of Justice of
The Hague
J.M.M. Maeijer............. Member since 1982 Emeritus Prof. Commercial Law
Pauluslaan 17 University of Nijmegen
6564 AP HEILIG Member of Supervisory Board of
LANDSTICHTING Vendex International NV
Deputy-Justice Court of Justice
of Den Bosch
J.V.H. Pennings............. Deputy Chairman, Member since Chairman of Supervisory Board of
Casinoweg 170 1995 Koninklijke Grolsch NV and
5915 ER VENLO Koninklijke IBC
Member of Supervisory Board of
De Nederlandsche Bank NV and
Tulip Computers
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
INDIVIDUAL PRINCIPAL OCCUPATION OR
NAME AND BUSINESS ADDRESS OFFICE EMPLOYMENT (PRESENT/PAST)
- ------------------------- ------------------------------ ----------------------------------------
<S> <C> <C>
A.H.C.M. Walravens............. Member since 1978 Professor and consultant
Oude Delft 130 Chairman of Supervisory Board of
2611 CG DELFT Tauw Beheer and NV Verenigd
Streekvervoer Nederland
Member of Supervisory Board of
Achmea Holding, Bull Benelux and
CSM
Member Monitoring Committee
Deloitte & Touche
N.J. Westdijk............. Member since 1993 Chairman Executive Board of Royal
Nieuwe Gracht 161 Pakhoed NV
3512 LL UTRECHT Member of Supervisory Board of De
Nationale Investeringsbank NV and
Fortis AMEV NV
</TABLE>
EXECUTIVE BOARD
The names of the members of the Executive Board of Wolters Kluwer, whose
present principal occupations are serving as such members and whose present
business address is, unless otherwise indicated, c/o Wolters Kluwer,
Stadhouderskade 1, 1000 AV Amsterdam, the Netherlands.
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS OFFICE
- ------------------------- -------------------------------------------------------------------------------
<S> <C>
C.J. Brakel ................ Chairman since 1995; Member since 1981.
C.H. van Kempen ............ Member since 1993; Chief Executive Officer of Wolters Kluwer Italy, an
indirect wholly owned subsidiary of Wolters Kluwer, from 1990 through 1993.
Robert Pieterse ............ Member since 1987.
Peter ...................... W. van Wel Member since 1993; President and Chief
Executive Officer of the Parent, from 1990 through
1993, and from 1996 to the present.
</TABLE>
EXECUTIVE OFFICERS
The names of the Executive Officers of Wolters Kluwer, whose present
principal occupations are serving as such officers, are:
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS OFFICE
- ------------------------- --------------------------------------------------------------------------------
<S> <C>
Hans E.M. van Dinter ....... Chief Financial Officer for more than the past five years.
A.S.F. Kuipers ............. Director of Business Development since January 1995; prior to 1995,
Managing Director of BBI Publishers.
Marcel L. Mock ............. Head of the Legal Department and Secretary
to the Executive Board since June1997 and
November1997, respectively. Prior to 1997,
European Legal Officer and Statutory Director of
Hunter Douglas Europe B.V.
M.H. Sanders ............... Director of Personnel & Organization for more than five years.
</TABLE>
33
<PAGE>
2. Directors and Executive Officers of the Parent. The following table sets
forth the name, business address and present principal occupation or employment
and material occupations, positions, offices or employments for the past five
years of each Director and Executive Officer of the Parent. Unless otherwise
indicated, each such person is a citizen of the Netherlands, each occupation set
forth opposite an individual's name refers to employment with Wolters Kluwer and
the business address of each such person is c/o Wolters Kluwer, Stadhouderskade
1, 1000 AV Amsterdam, the Netherlands.
<TABLE>
<CAPTION>
INDIVIDUAL PRINCIPAL OCCUPATION OR
NAME AND BUSINESS ADDRESS OFFICE EMPLOYMENT (PRESENT/PAST)
- ------------------------- ------------------------------ -------------------------------------------------------
<S> <C> <C>
Peter W. van Wel .............. Chairman of the Board from 1994 Member of the Executive Board of Wolters
to the present, President and Chief Kluwer since 1993;President and Chief
Executive Officer from 1990 to 1993 Executive Officer of the Parent from 1990 to 1993 and 1996 to
and from 1996 to the present the present.
C.J. Brakel ................... Director Chairman of the Executive Board of
Wolters Kluwer since 1995; member since
1981.
C.H. van Kempen .............. Director Member of the Executive Board of Wolters
Kluwer since 1993. Chief Executive
Officer of Wolters Kluwer Italy, an
indirect wholly owned subsidiary of
Wolters Kluwer, from 1990 through 1993.
R. Pieterse .................. Director Member of the Executive Board since 1987.
Mary Martin Rogers Director Chief Executive Officer of the Wolters
c/o Lippincott Williams & Kluwer International Healthcare Division
Wilkins, Inc. since 1998; Chief Executive Officer of
227 East Washington Lippincott-Raven Publishers, Inc. from
Square 1995 to 1998. Prior to 1995, Chief
Philadelphia, PA 19106 Executive Officer of Raven Press, Ltd.
(U.S. Citizen) for more than five years.
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
INDIVIDUAL PRINCIPAL OCCUPATION OR
NAME AND BUSINESS ADDRESS OFFICE EMPLOYMENT (PRESENT/PAST)
- ------------------------- ------------------------------ -------------------------------------------------------
<S> <C> <C>
Hugh J. Yarrington ............ Director Chief Executive Officer of CCH
c/o CCH Incorporated Incorporated since 1996. Head of the
2700 Lake Cook Road Knowledge Organization of CCH
Riverwoods, IL 60015 Incorporated since 1993.
(U.S. Citizen)
John Marozsan ................. Director Chief Operating Officer of CCH
c/o CCH Incorporated Incorporated since 1996. Prior to 1996,
2700 Lake Cook Road President of Aspen Publishers, Inc. for
Riverwoods, IL 60015 more than five years.
(U.S. Citizen)
Bruce C. Lenz ................. Executive Vice President and Executive Vice President and Chief
c/o Wolters Kluwer Chief Financial Officer Financial Officer of the Parent for more
United States Inc. than five years.
161 N. Clark Street
48th Floor
Chicago, IL 60601-3221
(U.S. Citizen)
</TABLE>
35
<PAGE>
3. Directors and Executive Officers of the Offeror. The following table
sets forth the name, business address and present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of each Director and Executive Officer of the Offeror. Unless
otherwise indicated, each such person is a citizen of the United States, and
each occupation set forth opposite an individual's name refers to employment
with the Parent.
<TABLE>
<CAPTION>
INDIVIDUAL PRINCIPAL OCCUPATION OR
NAME AND BUSINESS ADDRESS OFFICE EMPLOYMENT (PRESENT/PAST)
- ------------------------- ------------------------------ -------------------------------------------------------
<S> <C> <C>
Peter W. van Wel .............. Director Member of the Executive Board of Wolters
c/o Wolters Kluwer Kluwer since 1993; President and Chief
Stadhouderskade 1, Executive Officer of the Parent from
1000 AV Amsterdam, 1990 to 1993 and from 1996 to the
the Netherlands present.
(citizen of the Netherlands)
Mary Martin Rogers ............ Director Chief Executive Officer of the Wolters
c/o Lippincott Williams Kluwer International Healthcare Division
& Wilkins Inc. since 1998; Chief Executive Officer of
227 East Washington Lippincott- Raven Publishers, Inc. from
Square 1995 to 1998. Prior to 1995, Chief
Philadelphia, PA 19106 Executive Officer of Raven Press, Ltd.
for more than five years.
Bruce C. Lenz ................. Director and President Executive Vice President and Chief
c/o Wolters Kluwer Financial Officer of the Parent for more
United States Inc. than five years.
161 N. Clark Street
48th Floor
Chicago, IL 60601-3221
Dale C. Gordon ................ Secretary and Treasurer General Counsel of Parent since April
c/o Wolters Kluwer 1998; Vice President and General Counsel
United States Inc. of Golden Books Publishing Company,
161 N. Clark Street Inc., a subsidiary of Western Publishing
48th Floor Company from 1993 to 1997.
Chicago, IL 60601-3221
</TABLE>
36
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates evidencing
Shares and any other required documents should be sent or delivered by each
stockholder or its broker, dealer, commercial bank or other nominee to the
Depositary as follows:
The Depositary for the Offer is:
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Mail: By Hand:
<S> <C>
Morgan Guaranty Trust Company Securities Transfer & Reporting Services (STARS)
Corporate Reorganization 55 Broadway
P.O. Box 8216 3rd Floor
Boston, MA 02266-8216 New York, NY 10006
By Overnight Courier: After October 31, 1998:
Morgan Guaranty Trust Company Securities Transfer & Reporting Services (STARS)
c/o State Street Corporate Reorganization 100 William Street, Galleria
70 Campanelli Drive New York, NY 10038
Braintree, MA 02184
By Facsimile Transmission:
(781) 794-6333
Confirm by Telephone:
(781) 794-6388
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth below. Additional copies of this Offer to Purchase, the Letter
of Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent or the Dealer Manager and will be furnished promptly at the
Offeror's expense. A stockholder may also contact its broker, dealer, commercial
bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC. [LOGO]
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT (212) 440-9800
ALL OTHERS CALL TOLL FREE (800) 223-2064
The Dealer Manager for the Offer is:
CREDIT SUISSE FIRST BOSTON CORPORATION
ELEVEN MADISON AVENUE
NEW YORK, NY 10010-3629
CALL TOLL FREE (800) 881-8320
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WOLTERS KLUWER U.S. CORPORATION,
OTI ACQUISITION CORP.,
AND
OVID TECHNOLOGIES, INC.
September 29, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE OFFER AND MERGER...........................................................1
1.1 The Offer.............................................................1
1.2 Company Actions.......................................................3
1.3 Directors.............................................................4
1.4 The Merger............................................................5
1.5 Effective Time........................................................6
1.6 Closing...............................................................6
1.7 Certificate of Incorporation of the Surviving Corporation.............6
1.8 By-Laws of the Surviving Corporation..................................6
1.9 Directors and Officers of the Surviving Corporation...................6
1.10 Stockholders' Meeting.................................................6
1.11 Merger Without Meeting of Stockholders................................7
ARTICLE II
CONVERSION OF SECURITIES.......................................................7
2.1 Conversion of Capital Stock...........................................7
2.2 Dissenting Shares.....................................................8
2.3 Exchange of Certificates..............................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................10
3.1 Corporate Organization and Qualification.............................10
3.2 Capitalization.......................................................11
3.3 Authority Relative to This Agreement.................................11
3.4 Consents and Approvals; No Violation.................................12
3.5 SEC Reports; Financial Statements....................................12
3.6 Absence of Certain Changes or Events.................................13
3.7 Litigation...........................................................13
3.8 Taxes................................................................13
3.9 Employee Benefit Plans; Labor Matters................................14
3.10 Environmental Laws and Regulations...................................15
3.11 Intellectual Property; Technology....................................16
3.12 Real Property........................................................19
3.13 Compliance with Applicable Laws......................................19
3.14 Insurance............................................................19
3.15 Approvals; Antitakeover Provisions...................................19
i
<PAGE>
3.16 Voting Requirements..................................................20
3.17 Brokers and Finders..................................................20
3.18 Opinion of Financial Advisors........................................20
3.19 Information Supplied.................................................20
3.20 Confidentiality Agreements...........................................20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER........................21
4.1 Corporate Organization and Qualification.............................21
4.2 Authority Relative to This Agreement.................................21
4.3 Consents and Approvals; No Violation.................................21
4.4 Interim Operations of Purchaser......................................22
4.5 Sufficient Funds.....................................................22
4.6 Share Ownership......................................................22
4.7 Information in Proxy Statement and Schedule 14D-9....................22
4.8 Brokers and Finders..................................................22
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS...........................................23
5.1 Interim Operations of the Company....................................23
5.2 Alternative Proposals................................................25
5.3 Certain Filings......................................................26
5.4 Satisfaction of Conditions; Receipt of Necessary Approvals...........26
5.5 Access to Information................................................27
5.6 Publicity............................................................27
5.7 Directors' and Officers' Insurance and Indemnification...............27
5.8 Employees; Continuation of Benefits..................................28
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER......................................29
6.1 Conditions to Each Party's Obligation to Effect Merger...............29
ARTICLE VII
TERMINATION...................................................................30
7.1 Termination..........................................................30
7.2 Effect of Termination................................................32
ii
<PAGE>
ARTICLE VIII
MISCELLANEOUS AND GENERAL.....................................................33
8.1 Payment of Expenses and Other Payments...............................33
8.2 Survival of Representations and Warranties; Survival of
Confidentiality Agreement..........................................33
8.3 Modification or Amendment............................................33
8.4 Waiver of Conditions.................................................33
8.5 Counterparts.........................................................33
8.6 Governing Law........................................................33
8.7 Notices..............................................................33
8.8 Entire Agreement; Assignment.........................................34
8.9 Parties in Interest..................................................35
8.10 Certain Definitions..................................................35
8.11 Obligation of Parent.................................................35
8.12 Joint and Several Liability..........................................36
8.13 Validity.............................................................36
8.14 Interpretations......................................................36
8.15 Captions.............................................................36
8.16 Specifc Performance .................................................36
8.17 Schedules............................................................36
ANNEX A; CONDITIONS TO THE OFFER A-1
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of September 29,
1998, by and among Wolters Kluwer U.S. Corporation, a Delaware corporation
("Parent"), OTI Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Purchaser"), and Ovid Technologies, Inc., a Delaware
corporation (the "Company").
RECITALS
WHEREAS, the respective Boards of Directors of Parent, Purchaser and the
Company have, subject to the conditions of this Agreement, determined that the
Merger (as defined below) is in the best interests of their respective
stockholders and approved this Agreement and the transactions contemplated
hereby; and
WHEREAS, Parent, Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, and in
consideration of the execution and delivery by Parent, Purchaser and the
Stockholders named therein of a stock option and tender agreement (the "Stock
Option and Tender Agreement"), Parent, Purchaser and the Company hereby agree as
follows:
ARTICLE I
THE OFFER AND MERGER
1.1 The Offer.
(a) As promptly as practicable (but in no event later than five
business days after the public announcement of the execution hereof), Purchaser
shall commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) an offer (the "Offer") to purchase
for cash all shares of the issued and outstanding Common Stock, par value $.01
per share (referred to herein as either the "Shares" or "Company Common Stock"),
of the Company, at a price per Share, based upon the representations set forth
in Section 3.2 hereof, of $24.59 net to the seller in cash (such price per
Share, or such higher price per Share as may be paid in the Offer, being
referred to herein as the "Offer Price"), subject to there being validly
tendered and not withdrawn prior to the expiration of the Offer, that number of
Shares which, together with the Shares beneficially owned by Parent or
Purchaser, represent at least a majority of the Shares outstanding on a fully
diluted basis (the "Minimum Condition") and to the other conditions set forth in
Annex A hereto. Purchaser shall, on the terms and subject to the prior
satisfaction or waiver (except that the Minimum Condition may not be waived) of
the conditions of the Offer, accept for payment and pay for Shares tendered as
<PAGE>
soon as it is legally permitted to do so under applicable law. The obligations
of Purchaser to commence the Offer and to accept for payment and to pay for any
Shares validly tendered on or prior to the expiration of the Offer and not
withdrawn shall be subject only to the Minimum Condition and the other
conditions set forth in Annex A hereto. The Offer shall be made by means of an
offer to purchase (the "Offer to Purchase") containing the terms set forth in
this Agreement, the Minimum Condition and the other conditions set forth in
Annex A hereto. Purchaser expressly reserves the right to amend any of the terms
and conditions of the Offer; provided that Purchaser shall not amend or waive
the Minimum Condition, decrease the Offer Price or decrease the number of Shares
sought, change the form of consideration to be paid pursuant to the Offer,
impose conditions to the Offer in addition to those set forth in Annex A hereto,
or amend any other term or condition of the Offer in any manner adverse to the
holders of the Shares or extend the expiration date of the Offer without the
prior written consent of the Company (such consent to be authorized by the Board
of Directors of the Company or a duly authorized committee thereof).
Notwithstanding the foregoing, Purchaser shall, and Parent agrees to cause
Purchaser to, extend the Offer for a period of ten (10) business days following
the initial expiration date of the Offer, if any conditions to the Offer have
not been satisfied or waived at such date. In addition, following such first
extension of the Offer as provided in the preceding sentence, (i) Purchaser
shall, and Parent agrees to cause Purchaser to, extend the Offer, at any time
prior to the termination of this Agreement, for one or more periods of not more
than ten business days, if at the expiration date of the Offer, as extended, all
conditions to the Offer have not been satisfied or waived, and (ii) the Offer
Price may be increased and the Offer may be extended to the extent required by
law in connection with such increase, in each case without the consent of the
Company. In addition, Purchaser may, without the consent of the Company, extend
the Offer for a period of not more than ten (10) business days beyond the latest
expiration date that would otherwise be permitted under clause (i) or (ii) of
the immediately preceding sentence if there shall not have been tendered and not
withdrawn pursuant to the Offer at least 90% of the outstanding Shares.
(b) As soon as practicable on the date the Offer is commenced, Parent
and Purchaser shall file with the United States Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule l4D-l with respect
to the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-l will include, as
exhibits, the Offer to Purchase and a form of letter of transmittal and summary
advertisement (collectively, together with any amendments and supplements
thereto, the "Offer Documents"). Parent and Purchaser represent that the Offer
Documents will comply in all material respects with the provisions of applicable
federal securities laws and, on the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or Purchaser with
respect to information supplied by the Company in writing for inclusion in the
Offer Documents. Each of Parent and Purchaser further agrees to take all steps
necessary to cause the Offer Documents to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Each of Parent and Purchaser, on the one
hand, and the
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Company, on the other hand, agrees promptly to correct any information provided
by it for use in the Offer Documents if and to the extent that it shall have
become false and misleading in any material respect and each of Parent and
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-l and the Offer Documents
before they are filed with the SEC. In addition, Parent and Purchaser agree to
provide the Company and its counsel in writing with any comments or other
communications that Parent, Purchaser or their counsel may receive from time to
time from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments or other communications, and shall provide
the Company and its counsel a reasonable opportunity to comment on the proposed
response of Parent and Purchaser to such comments.
1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company, at a meeting duly called
and held, has (i) unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (collectively, the
"Transactions"), (ii) unanimously determined that as of the date hereof the
Transactions are fair to and in the best interests of the Company's stockholders
and (iii) unanimously resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares thereunder to Purchaser and approve and
adopt this Agreement and the Merger; provided, however, that such recommendation
may be withdrawn, modified or amended if, in the opinion of the Board of
Directors of the Company, after consultation with its legal counsel, such
recommendation would be inconsistent with its fiduciary duties to the Company's
stockholders under applicable law. The Company consents to the inclusion of such
recommendation and approval in the Offer Documents. The Company has been advised
that all of its directors and executive officers intend either to tender their
Shares pursuant to the Offer or to vote their Shares in favor of the Merger.
(b) As promptly as practicable following the commencement of the
Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement Schedule 14D-9 (together with all amendments and supplements thereto
and including the exhibits thereto, the "Schedule 14D-9") which shall, subject
to the fiduciary duties of the Company's directors under applicable law and to
the provisions of this Agreement, contain the recommendations referred to in
Section 1.2(a) hereof. The Company represents that the Schedule 14D-9 will
comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or
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given to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied by
Parent or Purchaser for inclusion in the Schedule 14D-9. The information
supplied by Parent or Purchaser for inclusion in the Schedule 14D-9 shall not,
on the date filed with the SEC and on the date first published, sent or given to
the Company's stockholders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company further agrees to take all steps
necessary to cause the Schedule 14D-9 to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Each of the Company, on the one hand, and
Parent and Purchaser, on the other hand, agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false and misleading in any material respect and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given a reasonable opportunity
to review and comment on the initial Schedule 14D-9 before it is filed with the
SEC. In addition, the Company agrees to provide Parent, Purchaser and their
counsel in writing with any comments, or other communications that the Company
or its counsel may receive from time to time from the SEC or its staff with
respect to the Schedule 14D-9 promptly after the receipt of such comments or
other communications, and shall provide Parent, Purchaser and their counsel a
reasonable opportunity to comment on the proposed response of the Company to
such comments.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to Parent and Purchaser mailing labels, security position
listings and any available listing or computer file(s) containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
furnish Parent with such information and assistance as Parent or its agents may
reasonably request in communicating the Offer to the stockholders of the
Company. Except for such steps as are necessary to disseminate the Offer
Documents, Parent and Purchaser shall hold in confidence the information
contained in any of such labels and lists and the additional information
referred to in the preceding sentence, will use such information only in
connection with the Offer, and, if this Agreement is terminated, will upon
request of the Company deliver or cause to be delivered to the Company all
copies of such information then in its possession or the possession of its
agents or representatives.
1.3 Directors.
(a) Promptly upon the purchase of and payment for Shares by Parent or
any of its Subsidiaries (as defined in Section 8.10) which represent at least a
majority of the outstanding shares of Company Common Stock (on a fully diluted
basis), Parent shall be entitled to designate such number of directors, rounded
up to the next whole number, on the Board of Directors of the Company as is
equal to the product of the total number of directors on such Board (giving
effect to the directors designated by Parent pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by Purchaser, Parent and any of their affiliates bears to the total number
of shares of Company Common Stock then outstanding. The Company shall take all
action necessary to cause Parent's designees to be elected or appointed to the
Company's Board of Directors and to secure the resignations of such number of
its incumbent directors as is necessary to enable Parent's designees to be so
elected to the Company's Board, and shall cause Parent's designees to be so
elected. At such times, the Company will take all
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action necessary to cause individuals designated by Parent to constitute the
same percentage as such individuals represent on the Company's Board or
Directors of (A) each committee of the Board and (B) each board of directors
(and committee thereof) of each Subsidiary in each case to the extent permitted
by the National Association of Securities Dealers (the "NASD") rules.
Notwithstanding the foregoing, until the Effective Time (as defined in Section
1.5 hereof), the Company shall retain as members of its Board of Directors at
least two (2) directors that are directors of the Company on the date hereof
(the "Company Designees"), and Parent and Purchaser shall not vote their Shares
of Company Common Stock or take any other action inconsistent with this
provision; provided, that subsequent to the purchase of and payment for Shares
pursuant to the Offer, Parent shall always have its designees represent at least
a majority of the entire Board of Directors.
(b) The Company's obligations under Section 1.3(a) shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-l promulgated thereunder. The
Company shall promptly take all actions required pursuant to such Section 14(f)
and Rule 14f-l in order to fulfill its obligations under Section 1.3(a),
including mailing to stockholders the information required by such Section 14(f)
and Rule 14f-l as is necessary to enable Parent's designees to be elected to the
Company's Board of Directors. Parent or Purchaser will supply the Company any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-l.
(c) From and after the time, if any, that Parent's designees constitute a
majority of the Company's Board of Directors and prior to the Effective Time,
any amendment of this Agreement, any termination of this Agreement by the
Company, any extension of time for performance of any of the obligations of
Parent or Purchaser hereunder, any waiver of any condition or any of the
Company's rights hereunder, any other action by the Company hereunder or any
action that would adversely affect the rights of the stockholders of the Company
or the holders of Options (as defined in Section 2.1(d)) with respect to the
transactions contemplated hereby may be effected only by the action of a
majority of the Company Designees then in office, which action shall be deemed
to constitute the action of the full Board of Directors; provided, that if the
number of Company Designees shall be reduced below two for any reason
whatsoever, any remaining Company Designee shall be entitled to designate a
person to fill such vacancy who shall be deemed to be a Company Designee for
purposes of this Agreement or, if no Company Designee then remains, the other
directors shall designate two persons to fill such vacancies who shall not be
stockholders, affiliates or associates of Purchaser or Parent and such persons
shall be deemed to be Company Designees for purposes of this Agreement.
1.4 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time, the Company and Purchaser shall consummate a merger (the
"Merger") pursuant to which (a) Purchaser shall be merged with and into the
Company and the separate corporate existence of Purchaser shall thereupon cease,
(b) the Company shall be the successor or surviving corporation in the Merger
and shall continue to be governed by the laws of the State of Delaware and (c)
the separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue immediately after the Merger.
The corporation surviving the Merger is sometimes hereinafter referred to as the
"Surviving Corporation." The
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Merger shall have the effects set forth in the General Corporation Law of the
State of Delaware (the "DGCL").
1.5 Effective Time. Parent, Purchaser and the Company will cause a
Certificate of Merger, or if applicable, a Certificate of Ownership and Merger
(each, the "Certificate of Merger"), to be executed and filed on the date of the
Closing (as defined in Section 1.6) (or on such other date as Parent and the
Company may agree) with the Secretary of State of the State of Delaware as
provided in the DGCL. The Merger shall become effective at the time at which the
Certificate of Merger has been duly filed with the Secretary of State of the
State of Delaware or at such time as is agreed upon by the parties and specified
in the Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."
1.6 Closing. The closing of the Merger (the "Closing") shall take place (a)
at the offices of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New
York 10103 as soon as practicable following the satisfaction or waiver of all of
the conditions set forth in Article VI hereof or (b) at such other place, time
and date as Parent and the Company may agree.
1.7 Certificate of Incorporation of the Surviving Corporation. The
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Certificate of
Incorporation.
1.8 By-Laws of the Surviving Corporation. The By-Laws of Purchaser, as in
effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such By-Laws.
1.9 Directors and Officers of the Surviving Corporation. The directors and
officers of Purchaser at the Effective Time shall, from and after the Effective
Time, be the initial directors and officers, respectively, of the Surviving
Corporation until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and By-Laws.
1.10 Stockholders' Meeting.
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law;
(i) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "Special Meeting") as soon as practicable
following the acceptance for payment and purchase of Shares by
Purchaser pursuant to the Offer for the purpose of considering and
taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and
shall (x) obtain and furnish the
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information required to be included by the SEC in the Proxy Statement
(as hereinafter defined) and, after consultation with Parent, to
respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive
proxy or information statement (the "Proxy Statement") to be mailed to
its stockholders and (y) obtain the necessary approvals of the Merger
and this Agreement by its stockholders; and
(iii) subject to the fiduciary obligations of the Board under
applicable law as determined by the Board after consultation with its
legal counsel, include in the Proxy Statement the recommendation of
the board that the stockholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement.
(b) Parent agrees that it will provide the Company with the
information concerning Parent and Purchaser required to be included in the Proxy
Statement and will vote, or cause to be voted, all of the Shares then owned by
it, Purchaser or any of its other Subsidiaries and affiliates in favor of the
approval of the Merger and the adoption of this Agreement.
(c) If at any time prior to the Effective Time any event with respect
to the Company or any of its Subsidiaries should occur which is required to be
described in a supplement to the Proxy Statement, such event shall be so
described, and such supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of the Company. With respect
to the information relating to the Company, the Proxy Statement will comply as
to form and substance in all material respects with the requirements of the
Exchange Act.
1.11 Merger Without Meeting of Stockholders. Notwithstanding Section 1.10
hereof, in the event that Parent, Purchaser or any other Subsidiary of Parent
shall acquire at least 90% of the Shares, pursuant to the Offer or otherwise,
the parties hereto agree to take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with Section 253
of the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any shares of
Company Common Stock or common stock, par value $.01 per share, of Purchaser
("Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share of
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation with the same
rights, powers and privileges
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as the shares so converted and shall constitute the only outstanding shares of
capital stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares
of Company Common Stock that are owned by the Company as treasury stock and any
shares of Company Common Stock owned by Parent, Purchaser or any other wholly
owned Subsidiary of Parent shall be cancelled and retired and shall cease to
exist and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each share of Company Common Stock issued and
outstanding (other than Shares to be cancelled in accordance with Section 2.1(b)
hereof and other than Dissenting Shares (as defined in Section 2.2 below)),
shall be converted into the right to receive, in the manner provided in Section
2.3, the Offer Price, payable to the holder thereof, without interest (the
"Merger Consideration"). All such shares of Company Common Stock, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.3.
(d) Stock Options. As of the Effective Time, each outstanding stock
option (an "Option" and, collectively, the "Options") granted under the Ovid
Technologies, Inc. Stock Plan, effective July 1, 1990, and the Ovid
Technologies, Inc. 1993 Stock Plan, effective October 4, 1993 (collectively, the
"Option Plans"), whether or not then vested or exercisable, shall be converted
into the right to receive from the Company an amount of cash equal to the
product of (i) the number of shares of Company Common Stock subject to the
Option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per share of Company Common Stock of such option (the "Option
Consideration"). Prior to the Effective Time, the Company shall take all steps
necessary to give written notice to each holder of an Option that (i) all
Options shall be canceled effective as of the Effective Time and (ii) upon the
execution and delivery to the Company by such holder of an instrument
acknowledging cancellation of all Options held by such holder effective as of
the Effective Time ("Cancellation Instrument"), the Company shall pay such
holder, promptly following the Effective Time, the Option Consideration for all
Options held by such holder. The Board or any committee thereof responsible for
the administration of the Option Plans shall take any and all action necessary
to effectuate the matters described in this Section 2.1(d) on or before the
Effective Time. Section 3.2 sets forth the number of shares of Company Common
Stock reserved for issuance upon exercise of outstanding Options. Any amounts
payable pursuant to this Section 2.1(d) shall be subject to any required
withholding of taxes and shall be paid without interest. Parent agrees to
provide the Company with sufficient funds to permit the Company to satisfy its
obligations under this Section 2.1(d).
2.2 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, Shares outstanding immediately prior to the Effective Time and held by
a holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such Shares in accordance with
Section 262 of the DGCL, if such Section 262 provides for
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appraisal rights for such Shares in the Merger ("Dissenting Shares"), shall not
be converted into the right to receive the Merger Consideration as provided in
Section 2.1(c), unless and until such holder fails to perfect or withdraws or
otherwise loses his right to appraisal and payment under the DGCL. If, after the
Effective Time, any such holder fails to perfect or withdraws or loses his right
to appraisal, such Dissenting Shares shall thereupon be treated as if they had
been converted as of the Effective Time into the right to receive the Merger
Consideration, if any, to which such holder is entitled, without interest or
dividends thereon. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares and, prior to the Effective
Time, Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
2.3 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as agent for the holders of shares
of Company Common Stock in connection with the Merger (the "Paying Agent") to
receive the funds to which holders of shares of Company Common Stock shall
become entitled pursuant to Section 2.1(c) hereof. Parent shall take all steps
necessary to deposit or cause to be deposited with the Paying Agent such funds
as needed for timely payment hereunder in accordance with this Article II. Such
funds shall be invested by the Paying Agent as directed by Parent or the
Surviving Corporation. Parent shall pay all charges and expenses of the Paying
Agent.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time but in no event more than three (3) business days thereafter, the
Paying Agent shall mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates"), whose shares
were converted pursuant to Section 2.1 hereof into the right to receive the
Merger Consideration (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent and the Company may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for payment of the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, the Paying Agent shall promptly pay the person
entitled thereto the Merger Consideration for each share of Company Common Stock
formerly represented by such Certificate and the Certificate so surrendered
shall forthwith be cancelled. If payment of the Merger Consideration is to be
made to a person other than the person in whose name the surrendered Certificate
is registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable. Until
surrendered
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as contemplated by this Section 2.3, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive the Merger
Consideration in cash as contemplated by this Section 2.3.
(c) Transfer Books; No Further Ownership Rights in Company Common
Stock. At the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of transfers of
shares of Company Common Stock on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of shares of
Company Common Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article II.
(d) Termination of Fund Liability. At any time following one (1) year
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e) Lost or Stolen Certificates. If any Certificate shall have been
lost, stolen, mislaid or destroyed then upon receipt of (i) an affidavit of that
fact from the holder claiming such Certificate to be lost, mislaid, stolen or
destroyed, (ii) such bond, security or indemnity, as Parent or the Paying Agent
may reasonably require, and (iii) any other documentation to evidence and effect
the bona fide exchange thereof, the Merger Consideration with respect to the
shares of Company Common Stock represented by such Certificate may be paid. Each
such lost, stolen, mislaid or destroyed Certificate with respect to which any
Merger Consideration shall be paid in accordance with the provisions of this
Section 2.3(e) shall forthwith be deemed surrendered and cancelled.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent and Purchaser that:
3.1 Corporate Organization and Qualification. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation and is
qualified and in good standing as a foreign
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corporation in each jurisdiction where the properties owned, leased or operated,
or the business conducted, by it require such qualification, except where the
failure to so qualify or be in good standing would not have a Company Material
Adverse Effect (as defined in Section 8.10). Each of the Company and its
Subsidiaries has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power and authority would not
have a Company Material Adverse Effect. The Company has heretofore made
available to Parent complete and correct copies of its Certificate of
Incorporation and By-Laws, and the certificate of incorporation and by-laws (or
comparable governing instruments) of each of its Subsidiaries, each as in effect
as of the date hereof.
3.2 Capitalization. The authorized capital stock of the Company consists
of: (i) 10,000,000 Shares, of which, as of the date hereof 6,183,512 Shares were
issued and outstanding and 1,950,779 Shares are reserved for issuance pursuant
to outstanding Options, and (ii) 1,000,000 shares of preferred stock, par value
$.01 per share, none of which, as of the date hereof, were issued and
outstanding. All of the outstanding Shares have been duly authorized and validly
issued and are fully paid and nonassessable. Schedule 3.2 lists each Subsidiary
of the Company. Except as set forth on Schedule 3.2, as of the date hereof all
outstanding shares of capital stock of the Company's Subsidiaries are owned by
the Company or a direct or indirect wholly owned subsidiary of the Company, free
and clear of all liens, charges, encumbrances, claims and options of any nature.
Except as set forth on Schedule 3.2, there are not as of the date hereof any
outstanding or authorized options, warrants, calls, rights (including preemptive
rights), commitments or any other agreements of any character which the Company
or any of its Subsidiaries is a party to, or may be bound by, requiring it to
issue, transfer, sell, purchase, redeem or acquire any shares of capital stock
or any securities or rights convertible into, exchangeable for, or evidencing
the right to subscribe for, any shares of capital stock of the Company or any of
its Subsidiaries. Except for the capital stock of its Subsidiaries and except as
otherwise set forth on Schedule 3.2, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any corporation,
partnership, joint venture or other entity.
3.3 Authority Relative to This Agreement. The Company has the requisite
corporate power and authority to execute and deliver this Agreement and, subject
to approval of this Agreement by the holders of a majority of the outstanding
Shares in accordance with the DGCL, to consummate the transactions contemplated
hereby. This Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval of this Agreement by the holders of a majority of the outstanding
Shares in accordance with the DGCL). This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement constitutes
the valid and binding agreement of Parent and Purchaser, constitutes the valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement hereof may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors'
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rights generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
3.4 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by the Company nor the consummation by the Company of
the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the respective certificate of incorporation,
respective By-Laws or comparable governing instruments of the Company or any of
its Subsidiaries, (b) except as set forth on Schedule 3.4(b), require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, except (i) in connection with the
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (ii) pursuant to the applicable requirements
of the Exchange Act, (iii) the filing of the Certificate of Merger pursuant to
the DGCL and appropriate documents with the relevant authorities of other states
in which the Company or any of its Subsidiaries is authorized to do business,
all of which states are set forth on Schedule 3.4(b)(iii), (iv) as may be
required by any applicable state corporation, securities or "blue sky" laws or
state takeover laws or (v) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
have a Company Material Adverse Effect, (c) except as set forth on Schedule
3.4(c), result in a violation or breach of, or constitute (with or without due
notice or lapse or time or both) a default (or give rise to any right of
termination, cancellation or acceleration or lien or other charge or
encumbrance) under any of the terms, conditions or provisions of any note,
license, agreement or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which any of them or any of their
respective assets may be bound, except for such violations, breaches and
defaults (or rights of termination, cancellation or acceleration or liens or
other charges or encumbrances) as to which requisite waivers or consents have
been obtained or which would not have a Company Material Adverse Effect, or (d)
assuming the consents, approvals, authorizations or permits and filings or
notifications referred to in this Section 3.4 are duly and timely obtained or
made and the approval of this Agreement by the Company's stockholders has been
obtained, violate any order, writ, injunction, decree, statute, rule or
regulation in effect as of the date of this Agreement and applicable to the
Company or any of its Subsidiaries or any of their respective assets, except for
violations which would not have a Company Material Adverse Effect.
3.5 SEC Reports; Financial Statements.
(a) The Company has filed all reports required to be filed by it with
the SEC since January 1, 1997 pursuant to the federal securities laws and the
SEC rules and regulations thereunder, all of which as of their respective dates
complied in all material respects with applicable requirements of the Exchange
Act (collectively, the "Company SEC Reports"). None of the Company SEC Reports,
including, without limitation, any financial statements or schedules included
therein, as of their respective dates contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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(b) The consolidated balance sheets and the related consolidated
statements of operations, stockholders' equity and cash flows (including the
related notes thereto) of the Company included in the Company SEC Reports comply
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in conformity with generally accepted accounting principles ("GAAP")
applied on a basis consistent with prior periods (except as otherwise noted
therein), and present fairly the financial position of the Company as of their
respective dates, and the consolidated results of its operations and its cash
flows for the periods presented therein (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments).
(c) Except as set forth in the Company SEC Reports, and except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice, neither the Company nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a consolidated
balance sheet of the Company and its Subsidiaries or in the notes thereto which,
individually or in the aggregate, could reasonably be expected to have a Company
Material Adverse Effect.
3.6 Absence of Certain Changes or Events. As of the date of this Agreement,
except as set forth on Schedule 3.6 or as a consequence of, or as contemplated
by, this Agreement, since December 31, 1997, (a) the business of the Company has
been carried on only in the ordinary and usual course, and other than in the
ordinary course of business, there has not occurred any change (other than a
change affecting the Company's industry generally) which has resulted or is
reasonably likely to result in a Company Material Adverse Effect and (b) except
as specifically set forth in the Company SEC Reports or otherwise specifically
disclosed in this Agreement or the Schedules hereto, neither the Company nor any
of its Subsidiaries has taken or omitted to take any action, nor has any event
occurred, which (if taken, omitted or occurring after the date hereof) would
constitute a breach of any of clause (i) through (xiii) of Section 5.1of this
Agreement.
3.7 Litigation. As of the date of this Agreement, except as set forth on
Schedule 3.7, there is no action, claim, suit, proceeding or governmental
investigation pending or, to the knowledge of the Company, threatened against
the Company or its Subsidiaries by or before any court, governmental or
regulatory authority or by any third party.
3.8 Taxes.
(a) The Company and its Subsidiaries have filed (or have obtained
extensions to file) all Tax Returns (as defined below) required to be filed by
the Company and its Subsidiaries for taxable periods ending on or prior to the
date of this Agreement, other than those Tax Returns the failure of which to
file would not have a Company Material Adverse Effect. Such Tax Returns are
true, correct and complete in all material respects.
(b) All Taxes (as defined below) shown as due on such Tax Returns have
been paid in full or adequate provision has been made to reflect such items on
the Company's or its Subsidiaries' balance sheet (in accordance with GAAP).
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(c) There are no material liens for Taxes upon the assets of either
the Company or its Subsidiaries except for statutory liens for current Taxes not
yet due.
(d) Except as described on Schedule 3.8(d), as of the date of this
Agreement, there are no ongoing Audits (as defined below) of the Company or any
of its Subsidiaries, and neither the Company nor any of its Subsidiaries has
been notified in writing by any Tax Authority (as defined below) that any such
Audit is contemplated, threatened or pending.
(e) Except as described on Schedule 3.8(d), as of the date of this
Agreement, there are no claims, investigations (to the knowledge of the
Company), actions or proceedings pending or, to the knowledge of the Company,
threatened, against the Company or any of its Subsidiaries by any Tax Authority
for any past due Taxes with respect to which the Company or such Subsidiary
would be liable. There has been no waiver of any applicable statute of
limitations nor any consent for the extension of the time for the assessment of
any Tax against the Company or any of its Subsidiaries.
(f) For the purpose of this Agreement, (i) "Audit" shall mean any
audit, assessment of Taxes, any other examination or claim by any Tax Authority,
judicial, administrative or other proceeding or litigation (including any appeal
of any such judicial, administrative or other proceeding or litigation) relating
to Taxes and/or Tax Returns, (ii) "Taxes" shall mean all taxes, charges, fees,
levies, penalties or other assessments imposed by any United States federal,
state, local, or foreign taxing authority, including, but not limited to income,
excise, property, sales, transfer, franchise, payroll, withholding, social
security or other taxes, including any interest, penalties or additions
attributable thereto, (iii) "Tax Authority" shall mean the Internal Revenue
Service and any other domestic or foreign authority responsible for the
administration of any Taxes, and (iv) "Tax Return" shall mean any return,
declaration, report, information return or other document (including any related
or supporting information) with respect to Taxes.
3.9 Employee Benefit Plans; Labor Matters.
(a) Schedule 3.9 sets forth a true and complete list of all collective
bargaining agreements, employment, consulting, severance, deferred compensation
and non-competition agreements, executive compensation plans, stock purchase,
stock award and stock option plans and agreements, restricted stock awards,
bonus and incentive plans, directors fee arrangements, both tax qualified and
non-qualified and statutory and non-statutory employee pension plans, employee
profit sharing plans, 401(k) savings plans, multiemployer plans, employee
welfare plans, group life insurance, hospitalization insurance and other similar
plans or arrangements (either written or oral but only to the extent an oral
plan provides material benefits) providing for benefits to any employees,
consultants or directors of the Company or any Subsidiaries or affiliates of the
Company. With respect to the employee benefit plans, stock option plans,
restricted stock award programs and other programs and arrangements maintained
or contributed to by the Company or any of its Subsidiaries (the "Company
Plans"), except as specifically set forth on Schedule 3.9: (i) each Company Plan
intended to be qualified under Section 401(a) of
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the Internal Revenue Code of 1986, as amended (the "Code"), has received a
favorable determination letter from the Internal Revenue Service (the "IRS")
that it is so qualified and nothing has occurred since the date of such letter
that could reasonably be expected to affect the qualified status of such Company
Plan, (ii) each Company Plan has been operated in all material respects in
accordance with its terms and the requirements of applicable law; (iii) neither
the Company nor any of its Subsidiaries has incurred any direct or indirect
liability under, arising out of or by operation of Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), in connection with
the termination of, or withdrawal from, any Company Plan or other retirement
plan or arrangement, and no fact or event exists that could reasonably be
expected to give rise to any liability. No benefit plan that is a group health
plan provides or is required to provide post employment or post retirement
medical or health benefits to any current or former employee of the Company or
any of its Subsidiaries other than medical continuation requirements mandated by
the Code.
(b) The Company is not subject to any collective bargaining or other
labor union contracts applicable to persons employed by the Company or its
Subsidiaries as of the date of this Agreement. As of the date of this Agreement,
there is no pending or threatened in writing labor dispute, strike or work
stoppage against the Company or any of its Subsidiaries which may interfere with
the respective business activities of the Company or its Subsidiaries
(c) As of the date of this Agreement, there are no more than 1,904,779
Options issued and outstanding under the Company's stock option plans. No
Options have been issued to employees or directors of the Company or its
Subsidiaries since the date of the Board of Directors meeting on July 28, 1998.
There are no restricted stock awards which have been issued by the Company that
are currently outstanding.
(d) Except as disclosed on Schedules 3.6 and 3.9, the consummation of
the transactions contemplated by this Agreement will not give rise to an
obligation on behalf of the Company to make severance or change of control
payments to any individuals, except such as may arise from actions of the
Company taken at the direction of Parent following the Effective Time.
(e) Except as described on Schedule 3.9(e), no payments made to any
individual by the Company or any Subsidiary as a result of the consummation of
the transactions contemplated by this Agreement would be non-deductible under
either Section 162(m) of the Code or Section 280G of the Code.
(f) Neither the Company nor any Subsidiary has taken any action or
failed to take any action which would result in the imposition of a material
excise tax on the Company pursuant to Sections 4975, 4980B and 4999 of the Code.
3.10 Environmental Laws and Regulations. As of the date of this Agreement,
except as set forth on Schedule 3.10, (i) the Company and each of its
Subsidiaries is in compliance with all applicable federal, state and local laws
and regulations relating to pollution or protection of human health or the
environment including, without limitation, ambient air, surface water,
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ground water, land surface or subsurface strata) (collectively, "Environmental
Laws"), except for non-compliance that would not have a Company Material Adverse
Effect; (ii) neither the Company nor any of its Subsidiaries (a) has received
written notice of any action, cause of action, claim, investigation, demand or
notice by any person or entity alleging liability under or non-compliance with
any Environmental Law (an "Environmental Claim") or (b) to the knowledge of the
Company is subject to any Environmental Claim which is reasonably likely to have
a Company Material Adverse Effect; (iii) there has not been a Release of
Hazardous Materials by the Company or any of its Subsidiaries or any predecessor
in interest, or to the knowledge of the Company, by any other person at any
property currently operated by the Company, any of its Subsidiaries or
predecessor in interest except where such Release would not have a Company
Material Adverse Effect; (iv) to the knowledge of the Company there has not been
a Release of Hazardous Materials at any disposal or treatment facility that
received Hazardous Materials generated by the Company, its Subsidiaries or a
predecessor in interest. For purposes of this Section, "Hazardous Materials"
means (a) any element, compound, or chemical that is defined, listed or
otherwise classified as a contaminant, pollutant, toxic pollutant, toxic or
hazardous substance, extremely hazardous substance or chemical, hazardous waste,
special waste, or solid waste under Environmental Laws; (b) petroleum,
petroleum-based or petroleum-derived products; (c) polychlorinated biphenyls;
(d) any substance exhibiting a hazardous waste characteristic including but not
limited to corrosivity, ignitability, toxicity or reactivity as well as any
radioactive or explosive materials; and (e) any asbestos-containing materials.
The term "Release" means any spilling, leaking, pumping, emitting, emptying,
discharging, injecting, escaping, leaching, migrating, dumping or disposing of
Hazardous Materials (including the abandonment or discarding of barrels,
containers or other closed receptacles containing Hazardous Materials) into the
environment.
3.11 Intellectual Property; Technology. (a) Schedule 3.11(a) contains a
true, correct and complete list of all Intellectual Property (as defined below),
which constitute applications and registrations by the Company and each
Subsidiary with or in any governmental agency, foreign or domestic, having
jurisdiction over such subject matter. All such applications and registrations
have been duly filed, and those registrations which have issued are validly
existing and in full force and effect. With respect to all U.S. registered
service and trademarks, Section 8 and 15 declarations, where applicable, have
been timely filed and accepted. Except as set forth on Schedule 3.11(a), no
service or trademarks listed on Schedule 3.11(a) have been abandoned.
(b) Except for proprietary material of persons other than the Company
which is licensed to the Company and which is generally commercially available
on a non-exclusive basis, material which is publicly available without
restriction, or material held under licenses referred to in Section 3.11(c)
without regard to the $100,000 limitation (collectively, the "Non-Owned
Intellectual Property"), the Company has good and marketable title to all
Intellectual Property and Technology, free and clear of all liens, claims,
security interests, restrictions and encumbrances and without payment of any
royalties, license fees or other amounts.
(c) The Company has provided Purchaser with a true and complete list
of all licenses, agreements, obligations or other commitments by which the
Company or any of its Subsidiaries may be bound with third parties under which
the Company or such Subsidiary uses,
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has the right to use or exercises any rights with respect to any Intellectual
Property or Technology (as defined below) and pursuant to which the Company has
paid or is obligated to pay at least $100,000 per year.
(d) Neither the Company nor any of its Subsidiaries has received (nor
does the Company have any knowledge of) any notice, claim or allegation from any
other party challenging the right of the Company or any of its Subsidiaries to
use, possess, transfer, convey or otherwise dispose of any Intellectual Property
or Technology. There is no interference, opposition, cancellation, reexamination
or other contest proceeding, action, claim, dispute or claim of infringement,
misappropriation or other violation of any intellectual property or other
proprietary rights of any other party. The Company's use of the Intellectual
Property and Technology, past and present, other than the Non-Owned Intellectual
Property, has not and does not, to the Company's knowledge, violate or infringe
upon the rights of any other party nor does such use constitute a breach of any
agreement, obligation, promise or commitment by which the Company or any of its
Subsidiaries may be bound or constitute a violation of any laws, regulations,
ordinances codes or statutes in any jurisdiction.
(e) Except for standard customer license agreements, copies of the
forms of which have previously been provided to Purchaser, or as set forth on
Schedule 3.11(e), no licenses or other rights have been granted by the Company
or any of its Subsidiaries and neither the Company nor any of its Subsidiaries
has any obligation to grant licenses with respect to any Intellectual Property
or Technology. No claims have been made by or against the Company or any of its
Subsidiaries of any violation or infringement by others of any rights with
respect to any Intellectual Property or Technology. Neither the Company nor any
of its Subsidiaries is aware of any such claim which the Company or any of its
Subsidiaries may have the right or a reasonable basis to make or assert.
(f) Except as set forth on Schedule 3.11(f), (i) the Intellectual
Property and Technology includes all rights and interests necessary to conduct
the business of the Company and its Subsidiaries as it is currently conducted
and as proposed to be conducted and (ii) such rights will not be adversely
affected by the Company or any of its Subsidiaries or any other party claiming
under or through the Company or any of its Subsidiaries or otherwise in
connection with or arising from the execution and delivery of this Agreement,
the Closing or the consummation of any of the transactions contemplated hereby.
(g) All statements and representations made by the Company or any of
its Subsidiaries in any pending Intellectual Property applications, filings and
registrations were true in all material respects as of the time they were made.
(h) As to the Intellectual Property and Technology to which the
Company has good and marketable title (the "Owned Intellectual Property"), the
documentation, source code with its embedded commentary, descriptions and
indicated authorships, Core Class specifications and other informational
materials which describe the operation, functions and technical characteristics
applicable to the Owned Intellectual Property are complete in all material
respects, have been faithfully and accurately compiled in accordance with
standards generally practiced by
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companies whose principal business is software development and which are listed
on the New York Stock Exchange or the NASDAQ National Market and are sufficient
to permit the Company to support and maintain its products and services. The
Company has taken all actions which a reasonably prudent person in the Company's
business would take to maintain its source code as confidential and proprietary
and to protect against the loss, theft or unauthorized use of such source code.
(i) The Company has taken all actions which a reasonably prudent
person in the Company's business would take to protect against the existence of
(I) any protections, encryption, security or lock-out devices, whether triggered
by the passage of time, the use or operation of the Intellectual Property and
Technology, remotely or otherwise which might in any way interrupt, discontinue
or otherwise adversely affect the Intellectual Property and Technology or
Purchaser's use thereof; and (II) any so-called computer viruses, worms, trap or
back doors, Trojan horses or any other instructions, codes, programs, data or
materials which could improperly, wrongfully and/or without the authorization of
Purchaser, interfere with the operation or use of the Intellectual Property and
Technology.
(j) The Company has delivered to Purchaser a description of the
Company's "Year 2000 Project." Since January 1, 1998, the Company has used
reasonable efforts to implement the Year 2000 Project. The anticipated cost to
the Company of implementing the Year 2000 Project is $530,000.
(k) For purposes hereof, "Intellectual Property" shall mean all
intellectual property rights, common law, statutory or otherwise, domestic and
foreign, including, without limitation, patents (including all reissues,
divisions, continuations and extensions), service marks, trademarks, tradenames,
brand, product and service names, and all logos and distinctive identifications
of the Company and its Subsidiaries, their products and services, copyrights as
well as all applications for any and all of the foregoing, licenses and other
contractual rights and other such property and intangible rights owned, used or
held for use by the Company and its Subsidiaries, together with the goodwill of
the business of the Company and its Subsidiaries in connection with all of the
foregoing.
(l) For purposes hereof, "Technology" shall mean all formulae,
algorithms, processes, procedures, designs, ideas, strategic and other business
plans, research records, inventions and all records of the foregoing, test,
engineering and technical data, know-how, proprietary information and
methodologies, trade secrets, technology, communications and associated
peripheral devices and resources, computer software, programs and code, both
object and source, in whatever form and media, all databases, specifications and
other information processing tangible and intangible items, owned, used or held
for use by the Company and its Subsidiaries with respect to the business of the
Company and its Subsidiaries.
3.12 Real Property. Neither the Company nor any of its Subsidiaries owns
any real property. Each of the leases for real property to which the Company or
any of its Subsidiaries is a party (the "Leases") and all amendments,
modifications and/or extensions thereto are listed on Schedule 3.12 hereto.
Schedule 3.12 hereto also lists, with respect to each Lease, the name of the
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tenant(s), landlord(s), whether the Lease is a lease or a sublease, the current
expiration dates and remaining options to extend the Leases, and the minimum
monthly rent and additional rent under the Leases. With respect to the Leases,
(i) the Leases are in full force and effect, are unmodified (other than as
listed on Schedule 3.12 hereto) and are binding and enforceable in accordance
with their terms; (ii) all rental and other charges payable pursuant to the
terms and conditions of the Leases have been paid and no rent has been paid in
advance more than 30 days; (iii) there are no charges, offsets or defenses
against the enforcement by the lessors thereunder of any agreement, covenant or
condition on the part of the Company or any of its Subsidiaries, as the case may
be, to be performed or observed pursuant to the terms of the Leases; (iv) there
are no defaults by the Company or any of its Subsidiaries, as the case may be,
of any agreement, covenant or condition on the part of the Company or such
Subsidiary, as the case may be, to be performed or observed pursuant to the
terms of the Leases which with the giving of notice or the lapse of time would
give rise to the termination of any such Leases; (v) there are no actions or
proceedings pending or to the best of the Company's knowledge, threatened, by
any lessor under the Leases; (vi) the consummation of the Offer and the Merger
will not constitute a prohibited transfer or assignment under any of the Leases;
and (vii) to the knowledge of the Company, there are no material defaults by any
of the respective lessors of any agreement, covenant or condition on the part of
the lessor to be performed or observed pursuant to the terms of the Leases.
3.13 Compliance with Applicable Laws. Except as set forth on Schedule 3.13,
since January 1, 1996 neither the Company nor any of its Subsidiaries has
violated or failed to comply with any statute, law, regulation, rule, judgment,
decree or order of any governmental entity applicable to its business or
operations, except for violations and failures to comply that would not,
individually or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect The conduct of the business of the Company and its
Subsidiaries is in conformity with all federal, state and local governmental and
regulatory requirements applicable to its business and operations, except where
such nonconformities would not, in the aggregate, reasonably be expected to
result in a Company Material Adverse Effect. The Company and its Subsidiaries
have all permits, licenses and franchises from governmental agencies required to
conduct their businesses as now being conducted, except for such permits,
licenses and franchises the absence of which would not, in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect.
3.14 Insurance. Schedule 3.14 identifies all insurance policies maintained
by the Company and its Subsidiaries. The Company and its Subsidiaries have
obtained and maintained in full force and effect insurance with such insurance
companies or associations in such amounts, on such terms and covering such
risks, including fire and other risks insured against by extended coverage, as
is reasonably prudent, and each has maintained in full force and effect public
liability insurance, insurance against claims for personal injury or death or
property damage occurring in connection with the activities of the Company or
its Subsidiaries or any properties owned, occupied or controlled by the Company
or its Subsidiaries, in such amount as reasonably deemed necessary by the
Company or its Subsidiaries.
3.15 Approvals; Antitakeover Provisions. The Board of Directors of the
Company has approved this Agreement for all purposes under Section 203 of the
DGCL and the Company has
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heretofore furnished to Parent a true and correct copy of resolutions duly
adopted by the unanimous vote of such board on September 29, 1998 and such
resolutions are in full force and effect on the date hereof. Such action is the
only action necessary so that the restrictions on business combinations
contained in Section 203 of the DGCL will not apply with respect to or as a
result of the Merger Agreement or any of the transactions contemplated hereby.
3.16 Voting Requirements. The affirmative vote of the holders of a majority
of the outstanding shares of Company Common Stock is the only vote of the
holders of any class of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated by this Agreement.
3.17 Brokers and Finders. Other than Goldman, Sachs & Co., which has been
retained by the Company's Board of Directors, the Company has not employed any
investment banker, broker, finder, advisor, consultant or intermediary in
connection with the transactions contemplated by this Agreement which would be
entitled to any investment banking, brokerage, finder's, advisory or similar fee
or commission in connection with this Agreement or the transactions contemplated
hereby.
3.18 Opinion of Financial Advisors. The Board of Directors has received the
opinion of Goldman, Sachs & Co., dated as of the date of this Agreement, to the
effect that, as of the date of such opinion, the $24.59 in cash per Share to be
received by the holders of Shares in the Offer and the Merger is fair from a
financial point of view to such holders.
3.19 Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) the
Offer Documents, (ii) the Schedule 14D-9 or (iii) the information to be filed by
the Company in connection with the Offer pursuant to Rule 14f-1 promulgated
under the Exchange Act (the "Information Statement") will, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
stockholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. If at any time prior to the Effective Time any event with
respect to the Company or its Subsidiaries should occur which is required to be
described in a supplement to (i) the Offer Documents, (ii) the Schedule 14D-9 or
(iii) the Information Statement such event shall be so described, and such
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company and to Parent. The Schedule
14D-9 and the Information Statement will comply in all material respects with
the requirements of the Exchange Act and the rules and regulations thereunder.
3.20 Confidentiality Agreements. Except as set forth on Schedule 3.20, the
confidentiality agreements entered into with any other potential purchasers are
in substantially the same form as the Confidentiality Agreement (as defined in
Section 5.5) and all benefits under such agreements shall inure to the Company
as of the Effective Time.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
AND PURCHASER
Each of Parent and Purchaser represents and warrants jointly and severally
to the Company that:
4.1 Corporate Organization and Qualification. Each of Parent and Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of Parent and Purchaser is qualified and in
good standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated, or the business conducted, by it require such
qualification, except where the failure to so qualify or be in good standing
would not have a Parent Material Adverse Effect.
4.2 Authority Relative to This Agreement. Each of Parent and Purchaser has
the requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This Agreement
and the consummation by Parent and Purchaser of the transactions contemplated
hereby have been duly and validly authorized by the respective Boards of
Directors of Parent and Purchaser and by Parent as the sole stockholder of
Purchaser, and no other corporate proceedings on the part of Parent and
Purchaser are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Purchaser and, assuming this
Agreement constitutes the valid and binding agreement of the Company,
constitutes the valid and binding agreement of each of Parent and Purchaser,
enforceable against each of them in accordance with its terms, except that the
enforcement hereof may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
4.3 Consents and Approvals; No Violation. Neither the execution and
delivery of this Agreement by Parent or Purchaser nor the consummation by Parent
or Purchaser of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the Certificate of Incorporation or the
By-laws, respectively, of Parent or Purchaser; (b) require any consent,
approval, authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, except (i) in connection with the
applicable requirements of the HSR Act, (ii) pursuant to the applicable
requirements of the Exchange Act, (iii) the filing of the Certificate of Merger
pursuant to the DGCL and appropriate documents with the relevant authorities of
other states in which Parent or Purchaser is authorized to do business, (iv) as
may be required by any applicable state corporation, securities or "blue sky"
laws or state takeover laws, (v) informational filings with the Bureau of
Economic Analysis of the United States Department of Commerce or (vi) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications would not have a Parent Material Adverse
Effect; (c) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or
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acceleration or liens or other charges or encumbrances) under any of the terms,
conditions or provisions of any note, license, agreement or other instrument or
obligation to which Parent or any of its Subsidiaries is a party or by which any
of them or any of their respective assets may be bound, except for such
violations, breaches and defaults (or rights of termination, cancellation or
acceleration or lien or other charge or encumbrance) as to which requisite
waivers or consents have been obtained or which would not have a Parent Material
Adverse Effect; or (d) assuming the consents, approvals, authorizations or
permits and filings or notifications referred to in this Section 4.3 are duly
and timely obtained or made, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Parent or any of its Subsidiaries or
to any of their respective assets, except for violations which would not have a
Parent Material Adverse Effect.
4.4 Interim Operations of Purchaser. Purchaser was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not engaged
in any business activities or conducted any operations other than in connection
with the transactions contemplated hereby.
4.5 Sufficient Funds. Either Parent or Purchaser has sufficient funds
available (through existing credit arrangements or otherwise) to purchase, in
accordance with the terms hereof, all of the Shares outstanding on a fully
diluted basis and to pay all fees, expenses and payments related to the
Transactions.
4.6 Share Ownership. None of Parent and Purchaser nor any of their
respective "affiliates" or Associates (as such terms are defined in Rule 12b-2
under the Exchange Act) beneficially own any Shares.
4.7 Information in Proxy Statement and Schedule 14D-9. None of the
information supplied by Parent or Purchaser for inclusion or incorporation by
reference in the Proxy Statement or the Schedule 14D-9 will, at the date mailed
to stockholders and at the time of the Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Parent or any of its
Subsidiaries should occur which is required to be described in a supplement to
the Proxy Statement or the Schedule l4D-9, such event shall be so described, and
such supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the stockholders of the Company and Parent. With respect to
information relating to Parent or Purchaser, the Proxy Statement will comply in
all material respects with the provisions of the Exchange Act and the rules and
regulations thereunder.
4.8 Brokers and Finders. Other than Credit Suisse First Boston Corporation,
whose fees will be paid by Parent, Parent and Purchaser have not employed any
investment banker, broker, finder, advisor, consultant or intermediary in
connection with the transactions contemplated by this Agreement which would be
entitled to any investment banking, brokerage, finder's, advisory or similar fee
or commission in connection with this Agreement or the transactions contemplated
hereby.
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ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Interim Operations of the Company. Except as set forth on Schedule 5.1,
during the period from the date of this Agreement to the Effective Time (unless
Parent shall otherwise agree in writing and except as otherwise contemplated by
this Agreement), the Company will conduct its operations according to its
ordinary and usual course of business consistent with past practice and seek to
preserve intact its current business organization, keep available the services
of its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
their goodwill and ongoing businesses shall be unimpaired in any material
respect at the Effective Time. Without limiting the generality of the foregoing,
and except as otherwise contemplated by this Agreement or as set forth on
Schedule 5.1, the Company will not, and will not permit any of its Subsidiaries
to, prior to the Effective Time, without the prior written consent of Parent:
(i) except for the issuance of Shares upon the exercise of Options
outstanding on the date of this Agreement and in accordance with their
present terms, issue, sell, grant, dispose of, pledge or otherwise
encumber, or authorize or propose the issuance, sale, disposition or pledge
or other encumbrance of (A) any additional shares of capital stock of any
class (including the Shares), or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for any shares of
capital stock, or any rights, warrants, options, calls, commitments or any
other agreements of any character to purchase or acquire any shares of
capital stock or any securities or rights convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of capital stock
or (B) any other securities in respect of, in lieu of, or in substitution
for, Shares outstanding on the date hereof;
(ii) redeem, purchase or otherwise acquire, or propose to redeem,
purchase or otherwise acquire, any of its outstanding Shares;
(iii) split, combine, subdivide or reclassify any Shares or declare,
set aside for payment or pay any dividend, or make any other actual,
constructive or deemed distribution in respect of any Shares or otherwise
make any payments to stockholders in their capacity as such, other than
dividends by a direct or indirect wholly owned Subsidiary of the Company,
(iv) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its direct or indirect Subsidiaries
(other than the Merger),
(v) adopt any amendments to its Certificate of Incorporation or
By-laws or alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any direct
or indirect Subsidiary of the Company;
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(vi) make any acquisition, by means of merger, consolidation or
otherwise, or disposition, of assets or securities (other than the Merger),
in each case other than in the ordinary course of business consistent with
past practice;
(vii) sell, lease, license, mortgage or otherwise encumber or subject
to any Lien or otherwise dispose of any of its properties or assets, except
sales in the ordinary course of business consistent with past practice and
Liens existing as of the date of this Agreement;
(viii) (A) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, or issue or sell any debt securities
or warrants or other rights to acquire any debt securities of the Company
or any of its Subsidiaries, or (B) make any loans or advances, other than
in the ordinary course of business consistent with past practice, or any
capital contributions to, or investments in, any other person, other than
the Company or any direct or indirect wholly owned Subsidiary of the
Company;
(ix) make or agree to make any new capital expenditure or expenditures
which, individually, is in excess of $100,000 or, in the aggregate, are in
excess of $600,000;
(x) make any material tax election or settle or compromise any
material income tax liability;
(xi) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction,
in the ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved against
in, or contemplated by, the most recent consolidated financial statements
(or the notes thereto) included in the Company SEC Reports or incurred in
the ordinary course of business consistent with past practice, or waive any
benefits of, or agree to modify in any respect, any confidentiality,
standstill or similar agreements to which the Company, or any of its
Subsidiaries is a party;
(xii) except in the ordinary course of business, modify, amend or
terminate any contract or agreement to which the Company or any of its
Subsidiaries is a party, or waive, release or assign any rights or claims;
(xiii) except as required to comply with applicable law, (A) adopt,
enter into, terminate or amend any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability,
death benefit, hospitalization, medical or other plan, arrangement or
understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of the Company or any of
its
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Subsidiaries (collectively, "Benefit Plans"), other than arrangements or
understandings adopted, entered into, terminated or amended in the ordinary
course of business consistent with past practice, (B) increase in any
manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee (except for normal increases or bonuses in
the ordinary course of business consistent with past practice), (C) pay any
benefit not provided for under any Benefit Plan, other than in the ordinary
course of business consistent with past practice, (D) except as permitted
in clause (B) above, or for options included in the representation set
forth in Section 3.2, grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Benefit Plan
(including the grant of stock options, stock appreciation rights, stock
based or stock related awards, performance units or restricted stock, or
the removal of existing restrictions in any Benefit Plans or agreement or
awards made thereunder) or (E) other than in the ordinary course of
business consistent with past practice, take any action to fund or in any
other way secure the payment of compensation or benefits under any employee
plan, agreement, contract or arrangement or Benefit Plan; or
(xiv) (A) take, or agree or commit to take, any action that would make
any representation or warranty of the Company hereunder inaccurate at the
Effective Time (except for representations and warranties which speak as of
a particular date, which need be accurate only as of such date), (B) omit,
or agree or commit to omit, to take any action necessary to prevent any
such representation or warranty from being inaccurate in any material
respect at the Effective Time (except for representations and warranties
which speak as of a particular date, which need be accurate only as of such
date), provided however that the Company shall be permitted to take or omit
to take such action which can be cured, and in fact is cured, at or prior
to the Effective Time or (C) take, or agree or commit to take, any action
that would result in, or is reasonably likely to result in, any of the
conditions of the Merger set forth in Article VI not being satisfied except
that, with respect to the condition set forth in Section 6.1(a), such
action shall be permitted if it is consistent with the fiduciary duties of
the Company's Board of Directors to the Company's stockholders under
applicable law; or
(xv) authorize, recommend, propose or announce an intention to do any
of the foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
5.2 Alternative Proposals. Subject to the last sentence of this Section
5.2, from and after the date hereof and prior to the Effective Time, the Company
(a) will not, nor shall it authorize or permit its officers, directors,
employees, representatives and agents to, initiate, solicit or encourage,
directly or indirectly, any Alternative Proposal (as defined in Section 8.10) or
engage in any negotiations or enter into any agreement or provide any
confidential information or data to any person in connection with or relating to
any Alternative Proposal; (b) will immediately cease any existing discussions or
negotiations, if any, with any parties conducted heretofore with respect to any
Alternative Proposal; and (c) will notify Parent as soon as practicable if any
such inquiries or proposals are received by, any such information is requested
from, or any such negotiations and/or discussions are sought to be initiated or
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continued with, the Company. Notwithstanding the foregoing, nothing in this
Section 5.2 shall require the Board of Directors of the Company on behalf of the
Company to act, or refrain from acting with respect to unsolicited Alternative
Proposals, in any manner which, in the opinion of the Board of Directors of the
Company after consultation with its counsel, could reasonably be deemed
inconsistent with its fiduciary duties to the Company's stockholders under
applicable law, including without limitation disclosing to its stockholders a
position required by Rule 14e-2(a) under the Exchange Act.
5.3 Certain Filings. The Company and Purchaser shall reasonably cooperate
with one another (a) in connection with the preparation of the Proxy Statement
and the Schedule 14D-9, and (b) in determining whether any action by or in
respect of, or filing with, any governmental body, agency or official, or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement and (c)
in seeking any such actions, consents, approvals, or waivers or making any such
filings, furnishing information required in connection therewith or with the
Proxy Statement and the Schedule 14D-9 and seeking timely to obtain any such
actions, consents, approvals or waivers.
5.4 Satisfaction of Conditions; Receipt of Necessary Approvals.
(a) Subject to the terms and conditions herein provided, each of the
parties hereto agrees to (i) promptly effect all necessary registrations,
submissions and filings, including, but not limited to, filings under the HSR
Act and submissions of information requested by governmental authorities, which
may be necessary or required in connection with the consummation of the
transactions contemplated by this Agreement, (ii) use all reasonable efforts to
secure federal antitrust clearance (including taking steps to avoid or set aside
any preliminary or permanent injunction or other order of any federal or state
court of competent jurisdiction or other governmental authority), (iii) use all
reasonable efforts to take all other action and to do all other things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement and (iv) use all
reasonable efforts to obtain all other necessary or appropriate waivers,
consents and approvals (including but not limited to such filings, consents,
approvals, orders, registrations and declarations as may be required under the
laws of any foreign country in which the Company or any of its Subsidiaries or
Parent or any of its Subsidiaries conducts any business or owns any assets) and
to lift any injunction or other legal bar to the Merger (and, in such case, to
proceed with the Merger as expeditiously as possible), subject, however, to the
requisite vote of the stockholders of the Company. Parent represents and
warrants to the Company that Parent's affiliates have full power and authority
to effect the transactions contemplated by this Section 5.4.
(b) Notwithstanding the foregoing, the Company shall not be obligated
to use all reasonable efforts or take any action pursuant to this Section 5.4 if
in the opinion of the Board of Directors after consultation with its counsel
such actions could reasonably be deemed inconsistent with its fiduciary duties
to the Company's stockholders under applicable law.
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5.5 Access to Information. To the extent permitted by applicable law, upon
reasonable notice, the Company shall (and shall cause each of its Subsidiaries
to) afford to the officers, employees, accountants, counsel, financing sources
and other representatives of Parent, access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to the Parent (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its business,
properties and personnel as Parent may reasonably request. Parent will hold any
such information which is nonpublic in confidence in accordance with the
provisions of the Confidentiality Agreement between the Company and Parent,
dated as of May 11, 1998 (the "Confidentiality Agreement").
5.6 Publicity. The initial press release with respect to the execution of
this Agreement shall be a joint press release acceptable to Parent and the
Company. Thereafter, so long as this Agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other transactions contemplated hereby without
prior consultation with the other party, except as may be required by law, the
rules and regulations of any national securities exchange or over the counter
market or by any listing agreement with a national securities exchange.
5.7 Directors' and Officers' Insurance and Indemnification.
(a) From and after the consummation of the Offer, Parent shall, and
shall cause the Company (or, if after the Effective Time, the Surviving
Corporation) to, indemnify, defend and hold harmless any person who is now, or
has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, an officer or director (the "Company Indemnified Party") of the
Company and its Subsidiaries against all losses, claims, damages, liabilities,
costs and expenses (including attorney's fees and expenses), judgments, fines,
losses, and amounts paid in settlement in connection with any actual or
threatened action, suit, claim, proceeding or investigation (each a "Claim") to
the extent that any such Claim is based on, or arises out of, the fact that such
person is or was a director or officer of the Company or any of its
Subsidiaries, and to the extent that any such Claim pertains to any matter or
fact arising out of any act or omission prior to or at the Effective Time,
regardless of whether such Claim is asserted or claimed prior to, at or after
the Effective Time, to the full extent permitted under applicable law or the
Company's Articles of Incorporation, By-laws or indemnification agreements in
effect at the date hereof identified on Schedule 5.7, or otherwise as permitted
by contracts identified on Schedule 5.7, including provisions relating to
advancement of expenses incurred in the defense of any action or suit. Without
limiting the foregoing, in the event any Company Indemnified Party becomes
involved in any capacity in any Claim, then from and after consummation of the
Offer Parent shall, or shall cause the Company (or the Surviving Corporation if
after the Effective Time) to, periodically advance to such Company Indemnified
Party its legal and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the provision by such
Company Indemnified Party
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of an undertaking to reimburse the amounts so advanced in the event of a final
non-appealable determination by a court of competent jurisdiction that such
Company Indemnified Party is not entitled thereto.
(b) Parent and the Company agree that all rights to indemnification
and all limitations on liability existing in favor of a Company Indemnified
Party as provided in the Company's Certificate of Incorporation and By-laws as
in effect as of the date hereof shall survive the Merger and shall continue in
full force and effect, without any amendment thereto, for a period of six years
from the Effective Time to the extent such rights are consistent with the DGCL;
provided, that in the event any claim or claims are asserted or made within such
six year period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims; provided
further, that nothing in this Section 5.7 shall impair any rights or obligations
of any present or former directors or officers of the Company.
(c) Parent shall cause to be maintained in effect for the Indemnified
Parties (as defined below) for not less than six years after the Effective Time
policies of directors' and officers' liability insurance and fiduciary liability
insurance with respect to matters occurring at or prior to the Effective Time
(including without limitation, the transaction, contemplated by this Agreement)
providing substantially the same coverage and containing terms and conditions
which are no less advantageous, in any material respect, to those currently
maintained by the Company for the benefit of the Company's present or former
directors, officers, employees or agents covered by such insurance policies
prior to the Effective Time (the "Indemnified Parties").
(d) In the event Parent or Purchaser or any of their successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary
to effectuate the purposes of this Section 5.7, proper provision shall be made
so that the successors and assigns of Parent and Purchaser assume the
obligations set forth in this Section 5.7 and none of the actions described in
clauses (i) or (ii) shall be taken until such provision is made.
5.8 Employees; Continuation of Benefits. (a) Following the Effective Time,
the Surviving Corporation will provide pension, health and welfare benefits
(other than stock option, stock purchase or similar plans) to employees of the
Company and its Subsidiaries who continue their employment after the Effective
Time (each, a "Continuing Employee") on terms which are generally no less
favorable to such Continuing Employee than the benefits being provided to such
Continuing Employee immediately prior to the Effective Time.
(b) If at any time Parent shall make a determination that any
Continuing Employee is eligible to participate in any of Parent's benefit plans
after the Effective Time, then, for purposes of eligibility and vesting with
respect to any such plans, Parent will cause the Surviving Corporation to
recognize the service of the Continuing Employees through the Effective Time as
if such service had been performed with Parent.
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ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
6.1 Conditions to Each Party's Obligation to Effect Merger. The respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. If approval of the Merger by the
stockholders of the Company is required by applicable law, this Agreement shall
have been duly approved by the stockholders of the Company entitled to vote with
respect thereto in accordance with applicable law and the Certificate of
Incorporation and By-laws of the Company; provided, that Parent and Purchaser
shall vote (or cause to be voted, if applicable) all shares of Company Common
Stock then owned or controlled by them, directly or indirectly, in favor of the
Merger.
(b) Injunction. There shall not be in effect any statute, rule,
regulation, executive order, decree, ruling or injunction or other order or a
court or governmental or regulatory agency of competent jurisdiction directing
that the transactions contemplated herein not be consummated or otherwise
materially limiting or restricting ownership or the operation of the business of
the Surviving Corporation; provided, however, that, subject to the terms and
provisions herein provided (including but not limited to Section 5.4 of this
Agreement), prior to invoking this condition each party shall use its reasonable
efforts to have any such decree, ruling, injunction or order vacated.
(c) Governmental Filings and Consents. Subject to the terms and
provisions herein provided (including but not limited to Section 5.4 hereof),
all governmental consents, orders and approvals legally required for the
consummation of the Merger and the transactions contemplated hereby shall have
been obtained and be in effect at the Effective Time, other than those consents,
orders or approvals which would not reasonably be expected to have a Company
Material Adverse Effect or which would prohibit or materially limit or restrict
the consummation of the transactions contemplated herein or the ownership or
operation of the business of the Surviving Corporation, and the waiting periods
under the HSR Act and under antitrust laws of applicable jurisdictions outside
the United States shall have expired or been terminated.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after stockholder approval thereof:
(a) By the mutual consent of Parent, Purchaser and the Company.
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(b) By either the Company or Parent:
(i) if shares of Company Common Stock shall not have been
purchased pursuant to the Offer on or prior to three (3) months from
the execution of this Agreement; provided, however, that the passage
of the period referred to in the foregoing clause shall be tolled
during (A) the period during which any party shall be subject to a
non-final order, decree, ruling or action restraining, enjoining or
otherwise prohibiting the purchase of shares of Company Common Stock
pursuant to the Offer or the consummation of the Merger, but not later
than six (6) months from the execution of this Agreement, or (B) any
additional waiting period under the HSR Act resulting from a second
request; provided, further, however, that the right to terminate this
Agreement under this Section 7.1(b) (i) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of Parent or Purchaser,
as the case may be, to purchase shares of Company Common Stock
pursuant to the Offer on or prior to such date; or
(ii) if any governmental entity of competent jurisdiction in the
United States or other country in which the Company directly or
indirectly has material assets or operations shall have issued an
order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their
respective reasonable efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and non-appealable.
(c) By the Board of Directors of the Company:
(i) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, (a) the Board of Directors of the Company shall
have entered into or shall have publicly announced its intention to
enter into an agreement or an agreement in principle with respect to
any Alternative Proposal that the Board of Directors determines, in
good faith after consultation with its financial advisors, is a
Superior Proposal (as defined in Section 8.10); (b) the Board of
Directors of the Company shall have withdrawn, or modified or changed
in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger or shall
have recommended a Superior Proposal or shall have executed, or shall
have announced its intention to enter into, an agreement in principle
or definitive agreement relating to a Superior Proposal with a person
or entity other than Parent, Purchaser or their affiliates (or the
Board of Directors of the Company resolves to do any of the
foregoing); (c) any person or group (as defined in Section 13(d) (3)
of the Exchange Act) (other than Parent, Purchaser or any affiliate
thereof or Mark L. Nelson) shall have become, after the date of this
Agreement, the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of a majority of the outstanding Shares, or
(d) any representation or warranty made by Parent or Purchaser in this
Agreement shall not have been true and correct in all material
respects when made, or Parent or Purchaser shall have failed to
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observe or perform in any material respect any of its material
obligations under this Agreement, provided that prior to exercising
such right of termination, the Company shall give prompt written
notice to Parent of such misrepresentation or breach of warranty or
failure to observe or perform; provided, further, that the Company
shall not have such right of termination if the condition resulting in
such misrepresentation or breach of warranty or failure to observe or
perform is cured (i) in the event such notice is delivered on or prior
to the fourth business day prior to the then-scheduled expiration date
of the Offer, not later than the earlier of (A) such expiration date
and (B) ten business days following delivery of such notice and (ii)
in the event such notice is delivered on or after the third business
day prior to such expiration date, not later than three business days
following such delivery (it being agreed that in such event the Offer
shall be extended as necessary at least until the end of such cure
period); or
(ii) if Parent or Purchaser shall have terminated the Offer, or
the Offer shall have expired, without Parent or Purchaser, as the case
may be, purchasing any shares of Company Common Stock pursuant
thereto; provided that the Company may not terminate this Agreement
pursuant to this Section 7.1(c)(ii) if the Company is in material
breach of this Agreement; or
(iii) if Parent, Purchaser or any of their affiliates shall have
failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer or
shall have failed to pay for the Shares in accordance with the terms
of the Offer; provided, that the Company may not terminate this
Agreement pursuant to this Section 7.1(c)(iii) if the Company is in
material breach of this Agreement.
(d) By Parent or Purchaser:
(i) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of
the conditions set forth in Annex A hereto, Parent, Purchaser, or any
of their affiliates shall have failed to commence the Offer on or
prior to five business days following the date of the initial public
announcement of the Offer; provided that Parent may not terminate this
Agreement pursuant to this Section 7.1(d)(i) if Parent or Purchaser is
in material breach of this Agreement; or
(ii) prior to the purchase of shares of Company Common Stock
pursuant to the Offer, if (a) the Company shall have received any
Alternative Proposal which the Board of Directors of the Company has
determined to designate as a Superior Proposal; (b) the Board of
Directors of the Company shall have withdrawn, or modified or changed
in a manner adverse to Parent or Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger or shall
have recommended an Alternative Proposal or shall have executed, or
shall have announced its intention to enter into, an agreement in
principle or definitive agreement relating to an Alternative Proposal
with a person or entity other than Parent, Purchaser or their
affiliates (or the Board of Directors
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of the Company resolves to do any of the foregoing); (c) any person or
group (as defined in Section 13(d) (3) of the Exchange Act) (other
than Parent, Purchaser or any affiliate thereof or Mark L. Nelson)
shall have become, after the date of this Agreement, the beneficial
owner (as defined in Rule 13d-3 promulgated under the Exchange Act) of
50% or more of the outstanding Shares, or (d) any representation or
warranty made by the Company in this Agreement shall not have been
true and correct in all material respects when made and shall have
resulted in, or is reasonably likely to result in, a Company Material
Adverse Effect, or the Company shall have failed to observe or perform
in any material respect any of its material obligations under this
Agreement; provided that prior to exercising such right of
termination, Parent and Purchaser shall give prompt written notice to
the Company of such misrepresentation or breach of warranty or failure
to observe or perform; provided, further, that Parent and Purchaser
shall not have such right of termination if the condition resulting in
such misrepresentation or breach of warranty or failure to observe or
perform is cured (i) in the event such notice is delivered on or prior
to the fourth business day prior to the then-scheduled expiration date
of the Offer, not later than the earlier of (A) such expiration date
and (B) ten business days following delivery of such notice and (ii)
in the event such notice is delivered on or after the third business
day prior to such expiration date, not later than three business days
following such delivery (it being agreed that in such event the Offer
shall be extended as necessary at least until the end of such cure
period).
7.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 7.1, written notice thereof shall forthwith be
given to the other party or parties specifying the provision hereof pursuant to
which such termination is made, and this Agreement shall forthwith become null
and void, and there shall be no liability on the part of Parent, Purchaser or
the Company or their respective directors, officers, employees, representatives,
agents, advisors or stockholders other than the obligations pursuant to this
Section 7.2, except that the agreements contained in Sections 8.1, 8.2, 8.3,
8.4, 8.6, 8,7, 8.8, 8.9, 8.16 and the last sentence of Section 5.5 shall survive
the termination hereof, provided, however, that if this Agreement is terminated
by the Board of Directors of the Company pursuant to Section 7.1(c)(i)(a), (b)
or (c) hereof or by Parent or Purchaser pursuant to Section 7.1(d)(ii)(a), (b)
or (c) hereof, then immediately following such termination the Company shall pay
to Parent in full satisfaction of the obligations of the Company under this
Agreement a termination fee of $7,000,000, plus Parent's and Purchaser's
reasonable out-of-pocket fees and expenses, not to exceed $500,000, incurred in
connection with the due diligence investigation, the Offer, the Merger, this
Agreement and the consummation (or proposed consummation) of the transactions
contemplated hereby. Nothing contained in this Section 7.2 shall relieve any
party from liability for fraud or for willful breach of this Agreement.
32
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ARTICLE VIII
MISCELLANEOUS AND GENERAL
8.1 Payment of Expenses and Other Payments. Whether or not the Merger shall
be consummated, each party hereto shall pay its own expenses incident to
preparing for, entering into and carrying out this Agreement and the
consummation of the transactions contemplated hereby.
8.2 Survival of Representations and Warranties; Survival of Confidentiality
Agreement. The representations and warranties made herein shall not survive
beyond the earlier of termination of this Agreement or the Effective Time. This
Section 8.2 shall not limit any covenant or agreement of the parties hereto
which by its terms contemplates performance after the Effective Time. The
Confidentiality Agreement shall survive any termination of this Agreement, and
the provisions of such Confidentiality Agreement shall apply to all information
and material delivered by any party hereunder.
8.3 Modification or Amendment. Subject to the applicable provisions of the
DGCL, at any time prior to the Effective Time, the parties hereto may modify or
amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties; provided, however, that after
approval of this Agreement by the stockholders of the Company, no amendment
shall be made which reduces or changes the consideration payable in the Merger
or adversely affects the rights of the Company's stockholders hereunder without
the approval of such stockholders.
8.4 Waiver of Conditions. Except as otherwise provided in this Agreement,
any failure of any of the parties to comply with any obligation, covenant
agreement or condition herein may be waived by the party or parties entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
8.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
8.6 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof.
8.7 Notices. Any notice request, instruction or other document to be given
hereunder by any party to the other parties shall be in writing and delivered
personally or sent by overnight courier, registered or certified mail, postage
prepaid, or by facsimile transmission (with a confirming copy sent by overnight
courier), as follows:
33
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(a) If to the Company, to
Mark L. Nelson, President
Ovid Technologies, Inc.
333 Seventh Avenue
New York, New York 10001
(212) 563-3006 (telephone)
(212) 563-3784 (telecopier)
with a copy to:
Paul Jacobs, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
(212) 318-3000 (telephone)
(212) 752-5958 (telecopier)
(b) if to Parent or Purchaser, to
Bruce C. Lenz, Executive Vice President
Wolters Kluwer United States Inc.
161 North Clark Street
48th Floor
Chicago, Illinois 60601
(312) 425-7020 (telephone)
(312) 425-0233 (telecopier)
with a copy to:
Arnold J. Schaab, Esq.
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
(212) 326-0168 (telephone)
(212) 326-0806 (telecopier)
or to such other persons or addresses as may be designated in writing (by like
notice) by the party to receive such notice.
8.8 Entire Agreement; Assignment. This Agreement and the Confidentiality
Agreement (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof and (b) shall not be
34
<PAGE>
assigned by operation of law or otherwise without the prior written consent of
the other parties. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective permitted successors and assigns.
8.9 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns. Nothing in this Agreement, express or implied, other than the right to
receive the consideration payable in the Merger pursuant to Article II hereof,
is intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement;
provided, however, that the provisions of Sections 5.7 shall inure to the
benefit of the Company Indemnified Parties and the Indemnified Parties and shall
be binding on all successors and assigns of Parent, Purchaser, the Company and
the Surviving Corporation and shall be enforceable by the Company Indemnified
Parties and the Indemnified Parties, as the case may be, after the Effective
Time.
8.10 Certain Definitions. As used herein:
(a) "Alternative Proposal" shall mean any proposal or offer for a
merger, asset acquisition or other business combination involving the Company or
any proposal or offer to acquire a significant equity interest in, or a
significant portion of the assets of, the Company other than the transactions
contemplated by this Agreement.
(b) "Company Material Adverse Effect" shall mean any adverse change in
the assets, liabilities, financial condition, or results of operations of the
Company or any of its Subsidiaries which is material to the Company and its
Subsidiaries taken as a whole, other than any change or effect arising out of
general economic conditions.
(c) "Parent Material Adverse Effect" shall mean any material adverse
change in the assets, liabilities, financial condition, or results of operations
of Parent or any of its Subsidiaries which is material to Parent and its
Subsidiaries taken as a whole other than any change or effect arising out or
general economic conditions.
(d) "Subsidiary" shall mean, when used with reference to any entity,
any corporation a majority of the outstanding voting securities of which are
owned directly or indirectly by such entity.
(e) "Superior Proposal" means any bona fide proposal to acquire,
directly or indirectly, all of the Shares then outstanding or all or
substantially all the assets of the Company, and otherwise on terms which the
Board of Directors of the Company determines in good faith (after consultation
with the Company's financial advisor) to be more favorable to the Company and
its stockholders than the Offer and the Merger.
8.11 Obligation of Parent. Whenever this Agreement requires Purchaser to
take any action, such requirement shall be deemed to include an undertaking on
the part of Parent to cause Purchaser to take such action.
35
<PAGE>
8.12 Joint and Several Liability. Parent and Purchaser hereby agree that
they will be jointly and severally liable for all covenants, agreements,
obligations and representations and warranties made by either of them in this
Agreement.
8.13 Validity. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby are not affected in any manner materially adverse to any
party.
8.14 Interpretation. The words "hereof", "herein", and "herewith" and words
of similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement unless
otherwise specified. Whenever the words "include, "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". The words describing the singular number shall include the plural
and vice versa, and words denoting any gender shall include all genders and
words denoting natural persons shall include corporations and partnerships and
vice versa. The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. As used in this Agreement, the
term "affiliate(s)" shall have the meaning set forth in Rule 12b-2 of the
Exchange Act. No presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this
Agreement.
8.15 Captions. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
8.16 Specific Performance. Each of the parties hereto acknowledges and
agrees that in the event of any breach of this Agreement, each non-breaching
party would be irreparably and immediately harmed and could not be made whole by
monetary damages. It is accordingly agreed that the parties hereto (a) will
waive, in any action for specific performance, the defense of adequacy of a
remedy at law and (b) shall be entitled in addition to any other remedy to which
they may be entitled at law or in equity, to compel specific performance of this
Agreement in any action instituted in a court of competent jurisdiction.
8.17 Schedules. The Schedules to this Agreement shall be construed with and
as an integral part of this Agreement to the same extent as if the same had been
set forth verbatim herein. No such disclosure shall be deemed to be an admission
or representation as to the materiality of the item so disclosed.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
OVID TECHNOLOGIES, INC.
By: /s/ MARK L. NELSON
------------------------------
Name: Mark L. Nelson
Title: President
WOLTERS KLUWER U.S. CORPORATION
By: /s/ PETER W. VAN WEL
------------------------------
Name: Peter W. van Wel
Title: President
OTI ACQUISITION CORP.
By: /s/ BRUCE C. LENZ
------------------------------
Name: Bruce C. Lenz
Title: President
37
<PAGE>
ANNEX A
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex A shall have the meanings ascribed
to them in the Agreement and Plan of Merger to which it is attached, except that
the term "Merger Agreement" shall be deemed to refer to such Agreement and Plan
of Merger.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Purchaser's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions 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-l(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, and may
delay the acceptance for payment of or, subject to the restriction referred to
above, the payment for, any tendered Shares, and may terminate the Offer if (i)
any applicable waiting period under the HSR Act or the antitrust laws of
applicable jurisdictions outside the United States has not expired or terminated
prior to the expiration of the Offer, (ii) the Minimum Condition has not been
satisfied, or (iii) at any time on or after the date hereof, and before the
expiration of the Offer any of the following conditions exist:
(a) there shall be any statute, rule, regulation, judgment, order or
injunction promulgated, entered, enforced, enacted, issued or applicable to the
Offer or the Merger by any governmental entity of competent jurisdiction in the
United States or other country in which the Company directly or indirectly has
material assets or operations which (1) prohibits the consummation of the Offer
or the Merger, (2) as a result of the Offer or the Merger, restrains or
prohibits, or imposes any material limitations on, Parent's or Purchaser's
ownership or operation of all or a material portion of the businesses or assets
of the Company and its Subsidiaries, taken as a whole, or of Parent and its
Subsidiaries, taken as a whole, or compels Parent or any of its Subsidiaries or
affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or of
Parent and its Subsidiaries, taken as a whole, or requires the Company, Parent
or Purchaser to pay damages that are material in relation to the Company and its
Subsidiaries, taken as a whole, (3) challenges, prohibits, or makes illegal the
acceptance for payment, payment for or purchase of Shares pursuant to, or
consummation of, the Offer or the Merger, (4) imposes material limitations on
the ability of Purchaser or Parent effectively to exercise full rights of
ownership of the Shares accepted for payment pursuant to the Offer, including,
without limitation, the right to vote the Shares purchased by it on all matters
properly presented to the Company's stockholders, or (5) requires divestiture by
Parent or any of its Subsidiaries or affiliates of any Shares, provided that
Parent shall have used all reasonable efforts to cause any such judgment, order
or injunction to be vacated or lifted;
(b) there shall be instituted or pending any action, suit, or
proceeding by any governmental entity of competent jurisdiction in the United
States, or any other country in which
A-1
<PAGE>
the Company directly or indirectly has material assets or operations, that is
reasonably likely, directly or indirectly, to result in any of the consequences
referred to in clauses (1) through (5) of paragraph (a) above; provided, that
Parent shall have used all reasonable efforts to cause any such action, suit or
proceeding to be withdrawn or dismissed;
(c) there has been since the date hereof any event, occurrence or
development or state of circumstances or facts which has had or would reasonably
be expected to have a Company Material Adverse Effect;
(d) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and accurate as of the date of consummation
of the Offer as though made on or as of such date or the Company shall have
breached or failed in any material respect to perform or comply with any
material obligation, agreement or covenant required by the Merger Agreement to
be performed or complied with by it except, (i) those representations and
warranties that address matters only as of a particular date or only with
respect to a specified period of time which need only be true and accurate as of
such date or with respect to such period or (ii) where the failure of such
representations and warranties to be true and accurate, or the breach,
non-performance or non-compliance with such obligations, agreements or
covenants, do not have, individually or in the aggregate, or would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect;
(e) the Merger Agreement shall have been terminated in accordance with
its terms;
(f) the Company shall have entered into a definitive agreement or
agreement in principle with any person with respect to an Alternative Proposal;
or
(g) the Company's Board of Directors shall have withdrawn, or modified
or changed in a manner adverse to Parent or Purchaser (including by amendment of
the Schedule 14D-9) its recommendation of the Offer, the Merger Agreement, or
the Merger, or recommended an Alternative Proposal, or shall have resolved to do
any of the foregoing;
which in the sole judgment of Parent or Purchaser, in any such case, and
regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payments.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be waived by Parent or Purchaser, in whole or in part at any time and
from time to time in the sole discretion of Parent or Purchaser.
A-2
STOCK OPTION AND TENDER AGREEMENT
Stock Option and Tender Agreement (this "Agreement"), dated September 29,
1998, by and among Wolters Kluwer U.S. Corporation, a Delaware corporation
("Parent"), OTI Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Sub"), and the stockholders set forth in Schedule I
hereto (each, a "Stockholder" and collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, Parent, Sub, and Ovid Technologies, Inc., a Delaware corporation
(the "Company") are entering into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which Sub has agreed to make a tender offer (the
"Offer") for all outstanding shares of Common Stock, par value $.01 per share
(the "Common Stock"), of the Company at a price per share of Common Stock, based
upon the representations set forth in Section 3.2 of the Merger Agreement, of
$24.59 net to the seller in cash (such price, or such higher price per share of
Common Stock as may be paid in the Offer, being referred to herein as the "Offer
Price"), to be followed by a merger (the "Merger") of Sub with and into the
Company.
WHEREAS, as a condition to the willingness of Parent and Sub to enter into
the Merger Agreement, each of Parent and Sub has required that each Stockholder
agree, and in order to induce Parent and Sub to enter into the Merger Agreement,
each Stockholder has agreed, among other things, subject to the provisions
contained herein, (i) to tender in the Offer all of the shares of Common Stock
now owned or which may hereafter be acquired by such Stockholder (the "Shares"),
(ii) to grant to Parent or Sub, as Parent shall designate (the "Optionee") the
option to purchase the Shares in certain circumstances, (iii) to appoint Parent
as such Stockholder's proxy under certain circumstances to vote the Shares in
connection with the Merger Agreement, (iv) with respect to certain questions put
to stockholders of the Company for a vote, to vote the Shares, in each case, in
accordance with the terms and conditions of this Agreement, and (v) to restrict
transfers or exercises of Company Options (as defined in Section 8 below), if
any, held by such Stockholder except as provided herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the adequacy of
which is hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Tender of Shares. Each Stockholder severally (and not jointly) agrees to
tender and sell to Parent and/or Sub pursuant to the Offer all of the Shares
legally and/or beneficially owned by such Stockholder (as set forth on Schedule
I hereto) and that once tendered, each Stockholder agrees, subject to the
provisions of Section 2, that such Shares will not be withdrawn from the Offer
unless the Offer is terminated by Parent or Sub without any shares of Common
Stock being purchased thereunder. Each Stockholder severally (and not jointly)
agrees that such Stockholder shall deliver to the depositary for the Offer,
promptly, but not later than five (5)
<PAGE>
days, following the commencement of the Offer, either a letter of transmittal
together with the certificates for the Shares, if available, or a "Notice of
Guaranteed Delivery", if the Shares are not available. Nothing contained in this
Agreement shall be deemed to require any Stockholder to exercise any Company
Option (as defined in Section 8).
2. Stock Option.
2.1 Grant of Stock Option. Each Stockholder hereby grants to Optionee
an irrevocable option (the "Stock Option") on the terms and conditions set forth
in this Section 2, to purchase all of the Shares legally and/or beneficially
owned by such Stockholder (as set forth on Schedule I hereto) (including Shares
subject to Company Options), at such time as Optionee may exercise the Stock
Option during the Exercise Period (as defined below), at a purchase price equal
to the Offer Price.
2.2 Exercise of Stock Option. (a) Each Stock Option may be exercised
by Optionee, in whole and for all of such Stockholder's Shares but not in part
or for less than all of such Stockholder's Shares, and only simultaneously as to
all Stockholders (i) if the Offer has been terminated by Parent or Sub for the
reasons set forth in (f) or (g) of the Conditions to the Offer (as set forth in
Annex A to the Merger Agreement) or (ii) if the Offer has expired without the
purchase of Shares thereunder and at the time of such expiration (x) the Minimum
Condition (as defined in the Merger Agreement) has not been satisfied or (y)
circumstances had occurred giving rise to a right of termination by Parent or
Sub for the reasons set forth in (f) or (g) of said Conditions of the Offer, in
each case without any violation of the Offer or the Merger Agreement by Parent
or Sub. Notice of exercise may be given at any time during the period (the
"Exercise Period") commencing after the Stock Option becomes exercisable (under
the circumstances provided in this Section 2.2) and ending on the date which is
three months following the date on which any Superior Proposal (as defined in
the Merger Agreement) expires or is withdrawn or terminated without the purchase
of any Shares. In addition, Optionee may also exercise the Stock Option if the
Merger Agreement shall terminate by reason of the Company's exercise of its
termination rights pursuant to Section 7.1(c)(i)(a) or (b) of the Merger
Agreement, whereupon the Exercise Period shall commence on the date such
termination rights are exercised and end on the date which is three months
following the date on which any Superior Proposal expires or is withdrawn or
terminated without the purchase of any Shares.
(b) In the event Optionee wishes to exercise the Stock Option,
Optionee shall send a written notice (an "Exercise Notice") during the Exercise
Period to each Stockholder specifying that Optionee shall purchase the total
number of Shares held by such Stockholder and a date, which shall be a business
day, and a place, which shall be in New York City, New York, for the closing of
such purchase (the "Stock Option Closing"). The Stock Option Closing shall be
delayed during such time as (I) any party shall be subject to a non-final order,
decree, ruling or action restraining, enjoining or otherwise prohibiting the
purchase of the Shares pursuant to the Stock Option or (II) the waiting period,
if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, shall not have expired or been terminated.
2
<PAGE>
(c) Upon receipt of the Exercise Notice, each Stockholder shall
be obligated to deliver to Optionee, and Optionee shall be obligated to purchase
(and Parent shall cause Optionee to purchase), a certificate or certificates
representing the number of Shares held by such Stockholder (or to direct the
depositary for the Offer to so deliver such certificate or certificates), in
accordance with the terms of this Agreement, on the later of the date specified
in such Exercise Notice or the first business day on which the conditions
specified in Section 2.3 shall be satisfied. The date specified in such Exercise
Notice may be as early as one business day after the date of such Exercise
Notice but shall not be later than five (5) business days after the later of (i)
the date of such Exercise Notice, or (ii) the date all conditions under Section
2.3 are satisfied.
2.3 Conditions to Delivery of the Shares. The obligation of the
Stockholders to deliver, and of the Optionee to pay for, the Shares upon
exercise of the Stock Option is subject to the following conditions:
(a) All waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, applicable to the exercise of the Stock
Option and the delivery of the Shares shall have expired or been terminated; and
(b) There shall be no permanent injunction or other order by any
court of competent jurisdiction restricting, preventing or prohibiting the
exercise of the Stock Option or the delivery of the Shares in respect of such
exercise.
2.4 Stock Option Closing. At the Stock Option Closing, each
Stockholder will deliver to Optionee a certificate or certificates evidencing
the number of Shares owned by such Stockholder, each such certificate being duly
endorsed in blank and accompanied by such stock powers and such other documents
as may be necessary in Optionee's judgment to transfer record ownership of the
Shares into Optionee's name on the stock transfer books of the Company, and
Optionee will purchase the delivered Shares at the Offer Price. All payments
made by Optionee to the Stockholders pursuant to this Section 2.4 shall be made
by wire transfer of immediately available funds or by certified bank check
payable to the Stockholders, in an amount for each Stockholder equal to the
product of (a) the Offer Price and (b) the number of Shares delivered by such
Stockholder in respect of the Stock Option Closing.
2.5 Adjustments Upon Changes in Capitalization. In the event of any
change in the number of issued and outstanding shares of Common Stock by reason
of any stock dividend, subdivision, merger, recapitalization, combination,
conversion or exchange of shares, or any other change in the corporate or
capital structure of the Company (including, without limitation, the declaration
or payment of an extraordinary dividend of cash or securities) which would have
the effect of diluting or otherwise adversely affecting Optionee's rights and
privileges under this Agreement, the number and kind of the shares and the
consideration payable in respect of the Shares shall be appropriately and
equitably adjusted to restore to Optionee its rights and privileges under this
Agreement. Without limiting the scope of the foregoing, in any such event, at
the option of Optionee, the Stock Option shall represent the right to purchase,
in addition to the number and kind of Shares which Optionee would be entitled to
3
<PAGE>
purchase pursuant to the immediately preceding sentence, whatever securities,
cash or other property the Shares subject to the Stock Option shall have been
converted into or otherwise exchanged for, together with any securities, cash or
other property which shall have been distributed with respect to such Shares.
2.6 Tender of Shares by Stockholders in Connection with Tender Offer
Superior Proposal.
(a) Notwithstanding anything herein to the contrary, and
notwithstanding that the Stock Option has become exercisable pursuant to Section
2.2 hereof, if at any time during the Exercise Period a tender offer pursuant to
any Superior Proposal (the "Superior Offer") is commenced, then, subject to the
terms and conditions of this Section 2.6, on the last day of the offer period of
the Superior Offer such Stockholders shall tender their Shares in the Superior
Offer. Concurrent therewith, if Optionee's tender offer is continuing at such
time, the Stockholders' Shares shall be released from Optionee's tender offer.
Subject to the provisions of Section 2.6(d), Optionee's right to exercise the
Stock Option shall be suspended for so long as the Superior Offer shall not have
expired or been terminated or withdrawn and, subject to the terms of this
Section 2.6, such right shall terminate simultaneously with the consummation of
the Superior Offer and receipt by the Stockholders of the consideration
therefor. Notwithstanding the foregoing, Optionee may elect, by written notice
to the Stockholders at any time prior to the tender of such Shares into the
Superior Offer by the Stockholders, to require the Stockholders, on a pro rata
basis, to retain Shares in an amount, as determined by Optionee, up to 25% of
the then outstanding shares of Common Stock on a fully diluted basis (the
"Minority Percentage"), whereupon the Stockholders shall not tender such amount
of Shares in the Superior Offer and Optionee's right to exercise the Stock
Option as to such Shares shall continue without limitation.
(b) In the event that the Superior Offer is consummated, as to
Shares tendered by the Stockholders in accordance with paragraph (a) of this
Section 2.6, each Stockholder shall deliver to the Optionee that portion of the
consideration received by such Stockholder which is equal to the Incremental
Value (as defined below) multiplied by the number of Shares tendered by such
Stockholder in connection with such Superior Proposal. The Incremental Value
shall be determined as follows: If the consideration payable pursuant to the
Superior Offer is all cash, the Incremental Value shall equal the amount by
which the offer price in such Superior Proposal exceeds the Offer Price. If the
consideration payable consists of cash and securities or only securities, the
Incremental Value shall equal the amount by which (x) the sum of the cash, if
any, plus the value of the securities received in the Superior Proposal (the
amount of such cash and the value of such securities being determined on a per
share basis) exceeds (y) the Offer Price. The value of any publicly-traded
securities issued to the Stockholders upon consummation of the Superior Proposal
shall be determined by reference to the closing price of such securities on the
date of consummation of the Superior Proposal. The value of any securities which
have not previously been publicly traded ("Newly Registered Securities") shall
be determined by reference to the average closing price of such securities over
the twenty (20) trading days following consummation of the Superior Proposal.
Each Stockholder shall deliver to the Optionee the Incremental Value for each
Share held by such Stockholder immediately upon receipt if the consideration is
cash or cash and publicly-traded
4
<PAGE>
securities or, if the consideration includes Newly Registered Securities, upon
the later of receipt of the consideration or the date on which the value of the
securities is determined. The Incremental Value shall be payable to Optionee in
cash and securities in the same proportion as the cash and securities payable to
the Stockholders.
(c) If Optionee has required the Stockholders to retain the
Minority Percentage, the Optionee will exercise the Stock Option with respect to
the Minority Percentage promptly upon the consummation of the Superior Offer.
(d) In the event that the Superior Offer expires or is terminated
or withdrawn without purchase of the Shares tendered by the Stockholders, or if
the Stockholders breach their obligation to tender their Shares in the Superior
Offer or withdraw the tender of such Shares in such Superior Offer, Optionee's
right to exercise the Stock Option with respect to such Shares shall,
simultaneously with such expiration, termination, withdrawal or breach, be
restored.
2.7 Voting of Shares in Connection with Merger Superior Proposal.
(a) Notwithstanding the provisions of Section 5.1(a) and Section
7, in the event that the Superior Proposal is structured as a merger which is
not preceded by a tender offer, the Stockholders shall be permitted to vote such
Stockholders' Shares in favor of such merger; provided, however, that Optionee
may elect, by written notice to the Stockholders, to require the Stockholders to
abstain from voting in favor of the merger with respect to the Minority
Percentage. Subject to the provisions of Section 2.7(c), Optionee's right to
exercise the Stock Option shall be suspended so long as the Superior Proposal
described in this Section 2.7 shall not have expired or been terminated or
withdrawn and, subject to the terms of this Section 2.7, such right shall
terminate simultaneously with the consummation of the Superior Proposal
described in this Section 2.7 and receipt by the Stockholders of the
consideration therefor.
(b) In the event that a Superior Offer described in this Section
2.7 is consummated, each Stockholder shall pay to Optionee, at the time
determined in accordance with Section 2.6(b), the Incremental Value (as
determined in accordance with Section 2.6(b)) received by such Stockholder for
each of such Stockholder's Shares.
(c) In the event that the Superior Offer described in this
Section 2.7 expires or is terminated or withdrawn without purchase of the
Shares, or if the Stockholders fail to vote their Shares (other than the
Minority Percentage if so directed by Optionee) in favor of such Superior Offer,
Optionee's right to exercise the Stock Option with respect to such Shares, and
the restrictions on voting set forth in Section 5.1(a) and Section 7, shall,
simultaneously with such expiration, termination, withdrawal or breach, be
restored.
2.8 Tender Offer Upon Exercise of Stock Option. Parent and Sub hereby
agree that, in the event that (pursuant to the Stock Option) Optionee purchases
an amount of the Stockholders' Shares greater than the Minority Percentage, then
as promptly as practicable (and in any event within five (5) business days
thereafter), Sub will, and Parent will cause Sub to, make a tender offer to the
stockholders of the Company for the remaining shares of Common
5
<PAGE>
Stock (the consummation of which shall be subject only to the conditions that no
court, arbitrator or governmental body, agency or official shall have issued any
order, decree or ruling and there shall not be any statute, rule or regulation,
enjoining or prohibiting the consummation of such tender offer) pursuant to
which the stockholders of the Company (other than the Company, any direct or
indirect subsidiary of the Company or Parent or Sub) will be entitled to receive
an amount of cash consideration per share of Common Stock equal to the Offer
Price, and will take such actions as may be necessary or appropriate to
effectuate, and purchase shares of Common Stock pursuant to, such tender offer
at the earliest practicable time.
2.9 Termination. This Agreement will terminate and be of no further
force and effect if, as a result of the failure of any conditions to such Stock
Option Closing to be satisfied, the Stock Option Closing shall not have occurred
within one (1) year following delivery of the Exercise Notice; provided,
however, that Optionee shall have the right, by delivery of written notice to
the Stockholders, to extend this Agreement for thirty (30) days if Optionee
reasonably believes that any conditions to the Stock Option Closing which remain
unsatisfied may be satisfied during such thirty (30) day period.
3. Representations and Warranties of Stockholders.
Each Stockholder severally (and not jointly), represents and warrants to
Parent and Sub that:
3.1 Power and Authority. Such Stockholder has all necessary power and
authority to enter into this Agreement and to sell, assign, transfer and deliver
to Parent and/or Sub, pursuant to the terms and conditions of this Agreement and
the Merger Agreement, the Shares legally and/or beneficially owned by such
Stockholder (as set forth on Schedule I hereto).
3.2 No Other Rights. Except for this Agreement, there are no
outstanding options, warrants or rights to purchase or acquire such Shares of
such Stockholder.
3.3 Only Shares. Such Shares of such Stockholder subject to this
Agreement are the only shares of Common Stock owned of record, or owned
beneficially with the power to sell, by such Stockholder.
3.4 Title. Except as specifically disclosed on Schedule 5.1 to the
Merger Agreement, such Stockholder has, and upon the closing of the Offer, Sub
shall receive good and marketable title to such Shares of such Stockholder, free
and clear of all liens, claims, encumbrances and security interests of any
nature whatsoever.
3.5 Validity. This Agreement is the legal, valid and binding agreement
of such Stockholder enforceable against such Stockholder in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally and
except that the availability of equitable remedies, including specific
performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
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<PAGE>
3.6 Non-Contravention. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both) by
Stockholder under, or give rise to a right of termination, cancellation or
acceleration of any obligation under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the properties or assets of
such Stockholder under, any provision of (i) the charter or organizational
documents of such Stockholder, if any (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to such Stockholder or (iii) any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to such Stockholder or any of its properties or assets, other than, in the case
of clauses (ii) and (iii), any such conflicts, violations, defaults, rights,
liens, security interests, charges or encumbrances that, individually or in the
aggregate, would not materially impair the ability of such Stockholder to
perform its obligations hereunder or prevent, limit or restrict the consummation
of any of the transactions contemplated hereby.
4. Representations and Warranties of Parent and Sub. Parent and Sub hereby
represent and warrant to each Stockholder as follows:
4.1 Power and Authority. Each of Parent and Sub has all necessary
power and authority to enter into the Agreement and to purchase the Shares
pursuant to the terms and conditions of this Agreement and the Merger Agreement.
4.2 Sufficient Funds. Parent and/or Sub has, or prior to the date of
the Stock Option Closing will have, all of the funds necessary to consummate the
transactions contemplated hereby on a timely basis and to pay any and all of its
related fees and expenses.
4.3 Validity. This Agreement is the legal, valid and binding agreement
of Parent and Sub enforceable against them in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
4.4 Non-Contravention. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Parent, Sub or any
of Parent's other subsidiaries which are both owned directly or indirectly by
Parent and which directly or indirectly owns Sub ("Owning Subs") under, any
provision of (i) the Charter or Bylaws of Parent (or any comparable
organizational documents) or any provision of the comparable charter or
organizational documents of Sub or any Owning Sub, (ii) any loan or credit
agreement, note,
7
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bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Parent, Sub or any Owning Sub or
(iii) any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent, Sub or any Owning Sub or any of their respective
properties or assets, other than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate would not have a Parent
Material Adverse Effect (as defined in the Merger Agreement), materially impair
the ability of Parent or Sub to perform its obligations hereunder or prevent,
limit or restrict the consummation of any of the transactions contemplated
hereby.
5. Covenants of Stockholders.
5.1 No Disposition or Encumbrance of Shares; No Acquisition of Shares.
(a) Each Stockholder severally (and not jointly) covenants and agrees that,
except as contemplated by this Agreement, no Stockholder shall, and no
Stockholder shall offer or agree to, sell, transfer, tender, assign, hypothecate
or otherwise dispose of, or create any security interest, lien, claim, pledge,
option, right of first refusal, agreement, limitation on such Stockholder's
voting rights, charge or other encumbrance of any nature whatsoever with respect
to the Shares now legally and/or beneficially owned by, or that may hereafter be
acquired by, such Stockholder. Each Stockholder severally (and not jointly)
agrees that such Stockholder shall not grant any proxy or power of attorney with
respect to the voting of Shares (each a "Voting Proxy") to any person except to
vote in favor of any of the transactions contemplated by this Agreement or the
Merger Agreement. Each Stockholder hereby represents and warrants that such
Stockholder has granted no Voting Proxy which is currently (or which will
hereafter become) effective with respect to Shares owned by such Stockholder
except Voting Proxies, if any, granted to another Stockholder, and if such
Stockholder has granted a Voting Proxy to any person other than a Stockholder,
such Voting Proxy is hereby revoked. No Voting Proxy shall be given or written
consent executed by such Stockholder after the date hereof with respect to such
Stockholder's Shares (and if given or executed, shall not be effective) so long
as this Agreement remains in effect; provided, however, that such Stockholder
may hereafter grant Voting Proxies in furtherance of such Stockholder's
obligations under Section 7.1 hereof.
(b) Each Stockholder hereby severally (and not jointly) covenants
and agrees that it shall not, and shall not offer to agree to, acquire any
additional shares of Common Stock, or options, warrants or other rights to
acquire shares of Common Stock (except upon exercise of stock options presently
held by such Stockholder), without the prior written consent of Parent or Sub.
5.2 No Solicitation of Transactions. Each Stockholder shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any acquisition or exchange of all
or any material portion of the assets of, or any equity interest in, the Company
or any of its subsidiaries or any business combination with the Company or any
of its subsidiaries. From and after the date hereof, no Stockholder shall,
directly or indirectly, solicit or initiate any takeover proposal or offer from
any person, or (except to the extent permitted by the last sentence of Section
5.2 of the Merger Agreement) engage in discussions or negotiations relating
thereto (including by way of furnishing information). Each
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<PAGE>
Stockholder shall promptly advise Parent of the receipt of any Alternative
Proposal (as defined in the Merger Agreement). Notwithstanding anything to the
contrary contained herein, the provisions of this Section 5.2 shall not limit or
restrict in any manner whatsoever any Stockholder's actions or conduct as a
director or representative of the Company.
5.3 Stockholders' Representative. Each Stockholder hereby appoints
Mark L. Nelson as Stockholders' Representative to act as Stockholders'
Representative for purposes of giving and receiving notices under this
Agreement.
6. Covenants of Parent and Sub.
6.1 No Sale. Neither Parent nor Sub will sell, offer to sell or
otherwise dispose of the Shares in violation of the Securities Act of 1933, as
amended.
6.2 Performance. Parent and Sub shall perform in all material respects
all of their respective obligations under the Merger Agreement.
7. Voting Agreement: Proxy of Stockholder.
7.1 Voting Agreement. (a) Each Stockholder hereby severally (and not
jointly) agrees that, during the time this Agreement is in effect, at any
meeting of the stockholders of the Company, however called, and in any action by
written consent of the stockholders of the Company, such Stockholder shall (i)
vote all of the Shares legally and/or beneficially owned by such Stockholder in
favor of the Merger, the Merger Agreement (as amended from time to time) and any
of the transactions contemplated by the Merger Agreement; (ii) vote such Shares
against any action or agreement that would result in a breach in any material
respect of any covenant, representation or warranty or any other obligation of
the Company under the Merger Agreement; and (iii) vote the Shares against any
action or agreement that would materially impede, interfere with or attempt to
discourage the Offer or the Merger.
(b) Each Stockholder hereby severally (and not jointly) further
agrees that, if the Merger Agreement shall terminate solely by reason of the
Company's exercise of its termination rights pursuant to Section 7.1(c)(i)(a) or
(b) of the Merger Agreement and for as long as the Exercise Period has not
ended, such Stockholder (i) shall attend or otherwise participate in all duly
called stockholder meetings and in all actions by written consent of
stockholders, (ii) shall not, without the prior written consent of Parent or
Sub, vote any of such Shares in favor of any actions requiring stockholder
approval which are described in Section 5 of the Merger Agreement and (iii)
shall otherwise vote such Shares, and use its reasonable efforts in its capacity
as stockholder of the Company, to prevent the actions prohibited by Section 5 of
the Merger Agreement.
7.2 Irrevocable Proxy. In the event that any Stockholder shall breach
its covenant set forth in Section 7.1, such Stockholder (without any further
action on such Stockholder's part) shall be deemed to have hereby irrevocably
appointed Parent as the attorney-in-fact and proxy of such Stockholder, with
full power of substitution, to vote, and otherwise act
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<PAGE>
(by written consent or otherwise) with respect to all shares of Common Stock
(including the Shares) that such Stockholder is entitled to vote at any meeting
of stockholders of the Company (whether annual or special and whether or not an
adjourned or postponed meeting) or consent in lieu of any such meeting or
otherwise to vote such shares as set forth in Section 7.1 above; provided that
in any such vote or other action pursuant to such proxy, Parent shall not have
the right (and such proxy shall not confer the right) to vote to reduce the
Offer Price or the Merger Consideration (as defined in the Merger Agreement) or
to otherwise modify or amend the Merger Agreement to reduce the rights or
benefits of the Company or any stockholders of the Company (including the
Stockholders) under the Offer or the Merger Agreement or to reduce the
obligations of Parent and/or Sub thereunder; and provided further, that this
proxy shall irrevocably cease to be in effect at any time that (x) the Offer
shall have expired or terminated without any shares of Common Stock being
purchased thereunder, in violation of the terms of the Offer or the Merger
Agreement or (y) Parent or Sub shall be in violation of the terms of this
Agreement. THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND COUPLED WITH AN
INTEREST AND IS EXECUTED AND INTENDED TO BE IRREVOCABLE IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 212(e) OF THE DELAWARE GENERAL CORPORATION LAW. Each
Stockholder shall execute and deliver to Parent any proxy cards that such
Stockholder receives to vote in favor of the consummation of the Merger. Parent
shall deliver to the Secretary of the Company any such proxy cards received by
it at any meeting called to approve the consummation of the Merger.
8. Transfer of Options. Each of the Stockholders identified on Schedule I
hereto as holding options to purchase shares of Common Stock of the Company
(each a "Company Option") severally (and not jointly) agrees that so long as
this Agreement shall remain in effect, such Stockholder (for purposes of this
Section 8, an "Optionholder") will not transfer any Company Options held by such
Optionholder; provided, however, that at the Effective Time, (as defined in the
Merger Agreement) each Optionholder agrees to accept an amount in respect of
such Company Options equal to the product of (A) the excess, if any, of the
Offer Price over the per share exercise price of each such Company Option and
(B) the number of Shares subject thereto (such payment to be net of applicable
withholding taxes) and each such Company Option shall thereafter be canceled.
9. Indemnification
9.1 Agreement to Indemnify. Notwithstanding the provisions of Section
8.2 of the Merger Agreement regarding the non-survival of the Company's
representations and warranties contained in the Merger Agreement, Mark L. Nelson
(the "Indemnitor") agrees as follows:
(a) To indemnify, defend and hold harmless Parent and Sub (each,
an "Indemnified Party") and their affiliates (including any officer, director,
stockholder, partner, member, employee, agent or representative of any thereof)
(each a "Parent Affiliate") to the extent provided in Section 9.5 from and
against all assessments, losses, damages, liabilities, costs and expenses,
including without limitation interest, penalties and reasonable fees and
expenses of legal counsel chosen by Parent, Sub or Parent Affiliate
(collectively, "Damages"), imposed upon
10
<PAGE>
or incurred by Parent, Sub or any Parent Affiliate arising out of or in
connection with or resulting from any breach of any representation or warranty
of the Company, or nonfulfillment, at any time prior to the consummation of the
Offer, of any covenant or agreement by the Company, in each case contained in or
made pursuant to the Merger Agreement or any Schedule thereto, or any
certificate furnished or to be furnished to Parent or Sub thereunder.
(b) The Indemnitor shall reimburse an Indemnified Party promptly
after delivery of an Indemnification Notice certifying that the Indemnified
Party has incurred Damages after compliance with the terms of this Section 9,
provided, however, that the Indemnitor shall have the right to contest any such
Damages in good faith.
(c) Notwithstanding anything herein to the contrary, Indemnitor
shall have no indemnification obligations hereunder unless Parent and Sub have
consummated the Offer or have purchased the Shares pursuant to the Stock Option.
9.2 Notice of Damages. An Indemnified Party will give the Indemnitor
prompt notice (hereinafter, the "Indemnification Notice") of any demands,
claims, actions or causes of action (collectively, "Claims") asserted against
the Indemnified Party. Failure to give such notice shall not relieve the
Indemnitor of any obligations which the Indemnitor may have to the Indemnified
Party under this Section 9, except to the extent that such failure has
materially adversely prejudiced the Indemnitor under the provisions for
indemnification contained in this Agreement.
9.3 Conditions of Indemnification of Third Party Claims. The
obligations and liabilities of Indemnitor under Section 9.1 hereof with respect
to Damages resulting from Claims by persons not party to the Merger Agreement
shall be subject to the following terms and conditions:
(a) The Indemnified Party will have the right (upon further
notice to the Indemnitor) to undertake the defense, compromise or settlement of
such Claim for the account of the Indemnitor, subject to the right of the
Indemnitor to participate in the defense of such Claim pursuant to the terms of
paragraph (b) of this Section 9.3 at any time prior to settlement, compromise or
final determination thereof.
(b) After delivery of an Indemnification Notice in respect of a
Claim and subject to paragraph (c) of this Section 9.3, the Indemnitor may
elect, by written notice to the Indemnified Party, to participate in the defense
thereof with counsel reasonably satisfactory to the Indemnified Party. If the
Indemnitor chooses to participate in the defense of any claim, the Indemnified
Party shall cooperate with all reasonable requests of the Indemnitor and shall
make available to the Indemnitor any books, records or other documents within
its control that are necessary or appropriate for such defense.
(c) The Indemnitor shall not, without written consent of all
Indemnified Parties, settle or compromise any Claim or consent to entry of any
judgment which does not include as an unconditional term thereof the release by
the claimant or the plaintiff of all
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<PAGE>
Indemnified Parties from all liability arising from events which allegedly give
rise to such Claim.
(d) Until such time as the amount of Damages incurred by the
Indemnified Party exceeds $5,000,000, all fees and expenses of counsel selected
by Indemnitor incurred in participating in the defense of such Claim shall be
borne solely by Indemnitor. From and after such time as the amount of Damages
incurred by the Indemnified Party exceeds $5,000,000, subject to paragraph (e)
of this Section 9.3, the reasonable fees and expenses of counsel to Indemnitor
thereafter incurred, together with the reasonable fees and expenses of counsel
to Indemnitor incurred by Indemnitor prior to such time as the Damages of the
Indemnified Party exceed $5,000,000, shall be considered additional Damages for
purposes of this Section 9.
(e) If the Indemnified Party desires not to defend any Claim or
to settle or compromise any Claim or consent to entry of any judgment with
respect to such Claim, the Indemnified Party shall provide written notice (the
"Proposed Settlement Notice") to the Indemnitor of such desire, which Proposed
Settlement Notice shall state the amount of Damages which the Indemnified Party
is prepared to incur as a result of such settlement, compromise or entry of
judgment (the "Proposed Damage Limit"). Indemnitor shall have the right, by
written notice to the Indemnified Party within ten (10) days after receipt of
the Proposed Settlement Notice, to assume the defense of such Claim and to
employ its own counsel in the defense of such Claim; provided, however, that
upon the final determination of Damages with respect to such Claim, any Damages
(including counsel fees and expenses) in excess of the Proposed Damage Limit
shall be borne solely by Indemnitor and shall not be considered Damages for
purposes of making any determinations pursuant to Section 9.5 as to the amount
for which Indemnitor may be responsible.
9.4 Limitation on Indemnification. Notwithstanding anything to the
contrary provided elsewhere in the Merger Agreement, the obligations of any
Indemnitor under this Agreement to indemnify any Indemnified Party with respect
to any Claim pursuant to Section 9.2 shall be of no force and forever barred
unless the Indemnified Party has given the Indemnitor notice of such claim prior
to such date which is eighteen (18) months after the consummation of the Offer
or the Stock Option Closing, as the case may be. In any event, the parties shall
fully cooperate with each other and their respective counsel in accordance with
Section 9.3 in connection with any such litigation, defense, settlement or other
attempted resolution.
9.5 Limitation upon Indemnification Obligations. Indemnitor shall not
be required to indemnify any Indemnified Party until such time as the Damages in
the aggregate equal or exceed five million dollars ($5,000,000.00). Thereafter,
Indemnitor's indemnification obligations hereunder shall apply to 100% of the
next $5,000,000 of Damages, and 50% of the next $20,000,000 of Damages. No
indemnification shall be required by Indemnitor for any Damages in the aggregate
in excess of $30,000,000 (i.e., Indemnitor's maximum liability for Damages under
this Section 9 shall not exceed $15,000,000).
10. Effectiveness: Termination: No Survival. This Agreement shall become
effective as to each Stockholder upon its execution by such Stockholder, Parent
and Sub hereto and upon
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the execution of the Merger Agreement. This Agreement may be terminated as to
each Stockholder at any time by mutual written consent of such Stockholder,
Parent and Sub. Other than the Stock Option, which shall be governed by Section
2, and the indemnification provisions which shall be governed by Section 9, this
Agreement shall terminate (including without limitation the provisions of
Section 1), without any action by the parties hereto, on the date on which the
Merger Agreement terminates in accordance with its terms. No such termination
shall relieve any party from liability for any breach of this Agreement. The
representations and warranties of the parties set forth in Sections 3 and 4
hereof shall not survive the termination of this Agreement (except that if the
Stock Option is duly exercised, Sections 3.1, 3.2, 3.4 and 3.5 shall survive the
exercise of the Stock Option and the purchase of the Shares pursuant thereto,
regardless of any investigation made by Parent or Sub).
11. Miscellaneous.
11.1 Notices. Any notice request, instruction or other document to be
given hereunder by any party to the other parties shall be in writing and
delivered personally or sent by overnight courier, registered or certified mail,
postage prepaid, or by facsimile transmission (with a confirming copy sent by
overnight courier), as follows:
If to Parent or Sub, to:
Wolters Kluwer United States Inc.
161 North Clark Street
48th Floor
Chicago, Illinois 60601
Attention: Mr. Bruce C. Lenz,
Executive Vice President
(312) 425-7020 (telephone)
(312) 425-0233 (telecopier)
with a copy to:
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
Attention: Arnold J. Schaab, Esq.
(212) 326-0168 (telephone)
(212) 326-0806 (telecopier)
If to the Stockholders, to the Stockholders' Representative at:
Mr. Mark L. Nelson
Ovid Technologies, Inc.
333 Seventh Avenue
New York, New York 10001
13
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(212) 536-3006 (telephone)
(212) 563-3784 (telecopier)
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103-3198
Attention: Paul Jacobs, Esq.
(212) 318-3000 (telephone)
(212) 752-5958 (telecopier)
11.2 Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party which is entitled to the benefits thereof and
this Agreement may be amended or supplemented at any time. No such waiver,
amendment or supplement shall be effective unless in writing and signed by the
party sought to be bound thereby.
11.3 No Prior Agreements. This Agreement and the Merger Agreement
contain the entire agreement, and supersede all other prior agreements and
understandings, both written and oral, among the parties hereto with respect to
the subject matter hereof. This Agreement is not intended to confer upon any
other person any rights or remedies hereunder.
11.4 Successors and Assigns. This Agreement shall not be assignable,
except that Parent or Sub may assign its rights under this Agreement to another
direct or indirect wholly-owned subsidiary of Parent, but such assignment shall
not relieve Parent or Sub of their respective obligations hereunder. This
Agreement shall be binding upon, inure to the benefit of and be enforceable by
and against the parties hereto and their successors (including heirs,
administrators and executors of individuals) and permitted assigns.
11.5 Remedies. Parent and Sub, on the one hand, and the Stockholders,
on the other hand, each acknowledge and agree that the other would be
irreparably damaged in the event any of the provisions of this Agreement were
not performed by the other in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party shall be entitled
to an injunction or injunctions to redress the breaches of this Agreement and to
specifically enforce the terms and provisions hereof in any action instituted in
any court of the United States or any state thereof having jurisdiction, in
addition to any other remedy to which such party may be entitled at law or in
equity.
11.6 Expenses. Each of the parties shall pay its own expenses in
connection with the negotiation, execution and performance of the Agreement.
11.7 Counterparts. This Agreement and any amendments hereto may be
executed in two or more counterparts, each of which shall be considered to be an
original, both of which together shall constitute the same instrument.
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11.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the state of Delaware, without regard to the
principles of conflicts of laws.
11.9 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
12. Effect of Headings. The section headings herein are for convenience
only and shall not affect the meaning or interpretation of this Agreement.
15
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IN WITNESS WHEREOF, the parties have executed this Agreement to take effect
as of the date set forth above.
WOLTERS KLUWER U.S. CORPORATION
By: /s/ PETER W. VAN WEL
-----------------------------
Name: Peter W. van Wel
Title: President
OTI ACQUISITION CORP.
By: /s/ BRUCE C. LENZ
----------------------------
Name: Bruce C. Lenz
Title: President
STOCKHOLDERS
/s/ MARK L. NELSON
------------------------------------------
Mr. Mark L. Nelson
/s/ CARLEEN NELSON
------------------------------------------
Ms. Carleen Nelson
/s/ DEBORAH HULL
------------------------------------------
Ms. Deborah Hull
/s/ MARTIN KAHN
------------------------------------------
Mr. Martin Kahn
16
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STOCKHOLDERS
NAME NUMBER OF SHARES HELD NUMBER OF OPTIONS HELD
- ---- --------------------- ----------------------
Mr. Mark L. Nelson 4,060,000 46,000
Ms. Carleen Nelson 10,630 545,500
Ms. Deborah Hull 0 163,500
Mr. Martin Kahn 0 295,500
17
WOLTERS KLUWER nv
Box 818
1000 AV Amsterdam THE NETHERLANDS
September 29, 1998
Ovid Technologies, Inc.
333 Seventh Avenue
New York, New York 10001
In connection with and pursuant to your entering into the Agreement and
Plan of Merger dated as of September 29, 1998 with OTI Acquisition Corp. and
Wolters Kluwer U.S. Corporation, we hereby unconditionally guarantee the payment
obligations of OTI Acquisition Corp. and Wolters Kluwer U.S. Corporation under
that Agreement.
Sincerely,
WOLTERS KLUWER nv
By: /s/ PETER W. VAN WEL
--------------------------
Peter W. van Wel
Member, Executive Board
Agreed and Accepted:
OVID TECHNOLOGIES, INC.
By: /s/ MARK L. NELSON
-----------------------
Name: Mark L. Nelson
Its: President
WOLTERS KLUWER U.S. CORPORATION
161 North Clark Street
Chicago, Illinois 60601-3221
Ovid Technologies, Inc.
333 Seventh Avenue
New York, New York 10001
Attention: Mark Nelson, President
Mr. Mark L. Nelson
c/o Ovid Technologies, Inc.
333 Seventh Avenue
New York, New York 10001
Ladies and Gentlemen:
In order to induce Wolters Kluwer U.S. Corporation ("WKUS") to commit the
resources, forego other potential opportunities, and incur the legal,
accounting, and incidental expenses necessary to properly evaluate acquiring
100% of the equity of Ovid Technologies, Inc. (the "Company") and to negotiate
the terms of definitive documentation with respect thereto, the Company and Mark
Nelson ("Nelson") agree that
(a) WKUS will have exclusive negotiating rights which will expire on the
earlier of (i) Monday, September 28, 1998 at 5:00 p.m. or (ii) the time at which
the discussions and negotiations with respect to the possible acquisition of the
equity have been finally terminated by WKUS (the "Expiration Time"). That is,
from and after the date hereof and prior to the Expiration Time, (i) the Company
will not (and will cause its officers, directors, employees, representatives and
agents not to) and Nelson will not, (A) initiate, solicit or encourage, directly
or indirectly, or conduct negotiations with respect to any proposal or offer for
a merger, asset acquisition or other business combination involving the Company
or any proposal or offer to acquire a significant equity interest in, or a
significant portion of the assets of, the Company (collectively, an "Acquisition
Proposal") with any person, or otherwise contact any prospective buyer, other
than WKUS or (B) enter into any agreement or provide any confidential
information or data to any person in connection with or relating to any such
Acquisition Proposal; (ii) each of such persons will immediately cease (and will
cause its representatives to cease) any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any such Acquisition
Proposal; and (iii) each of such persons will notify (and will cause its
representatives to notify) WKUS as soon as practicable if any such inquiries or
proposals are received by, any such information is requested from, or any such
negotiations and/or discussions are sought to be initiated or continued with,
the Company or Nelson.
(b) The Company will continue to allow the representatives of WKUS to meet
with the management of the Company (at reasonable times so as not to interfere
with the operation of the Company) to examine (but not retain) the Company's
financial, accounting, and business records, assets and liabilities, and all of
its contracts and other legal documents, and generally to conduct a commercial,
accounting, and legal investigation of the business and affairs of the Company.
Such investigation, and any information obtained by WKUS as a result thereof,
will be maintained by WKUS in confidence in accordance with our previously
signed confidentiality agreement and will not be used or disclosed by WKUS if
for any reason the transaction contemplated hereby is not consummated except to
the extent
<PAGE>
permitted by such agreement. The results of such due diligence reviews must
continue to be satisfactory to WKUS. The due diligence review will be completed
by the execution of definitive documentation.
(c) None of the Company, Nelson nor WKUS (subject to requirements of law)
will make any announcement regarding this letter or any transaction which
results from the contemplated negotiations without the prior approval of both
the Company and WKUS, having regard for the fact that timely announcements may
be required by law to be made to the financial and general press in the United
States and the Netherlands. Accordingly, the Company and WKUS agree not to
withhold or delay approval of such announcements unreasonably.
(d) The Company and WKUS shall each pay their respective expenses incident
to the negotiations, due diligence and the preparation of definitive
documentation.
If you are in agreement with the terms and conditions of this letter,
please so indicate by executing a copy of this letter in the space provided
below.
Sincerely,
WOLTERS KLUWER U.S. CORPORATION
By: /s/ BRUCE C. LENZ
----------------------------
Bruce C. Lenz,
Executive Vice President
Accepted and Agreed to this
22nd day of September, 1998
OVID TECHNOLOGIES, INC.
By: /s/ MARK L. NELSON
-------------------------
Mark L. Nelson, President
/s/ MARK L. NELSON
-----------------------------
Mark L. Nelson
