<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
MARKET FACTS, INC.
(Name of Subject Company)
AEGIS ACQUISITION CORP.
AEGIS GROUP PLC
(Bidders)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(Title of Class of Securities)
570559 10 4
(CUSIP Number of Class of Securities)
------------------------
DANIEL M. FREEDMAN
MITCHELL SILBERBERG & KNUPP LLP
11377 WEST OLYMPIC BOULEVARD
LOS ANGELES, CALIFORNIA 90064
(310) 312-2000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on behalf of Bidders)
MAY 4, 1999
(Date of Event Which Requires Filing of this Statement)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$277,285,730 $55,458
</TABLE>
* Estimated for purposes of calculating the amount of the filing fee only. The
amount assumes the purchase of 8,944,701 shares of Common Stock, par value
$1.00 per share, of Market Facts, Inc. at a price per Share of $31.00 in
cash. Such number of shares includes all of such shares outstanding as of
April 29, 1999, but does not include any such shares issuable upon exercise
of employee stock options.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: none Filing Party: n/a
Form or Registration No.: n/a Date Filed: n/a
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(EXHIBIT INDEX IS LOCATED ON PAGE )
<PAGE>
CUSIP NO. 570559 10 4
- --------------------------------------------------------------------------------
1. Name of reporting persons: Aegis Acquisition Corp.
S.S. or I.R.S. Identification Nos. of Above Persons: Applied for
- --------------------------------------------------------------------------------
2. Check the appropriate box if a member of a group
(a) /X/
(b) / /
- --------------------------------------------------------------------------------
3. SEC use only
- --------------------------------------------------------------------------------
4. Sources of funds
BK AF
- --------------------------------------------------------------------------------
5. Check if disclosure of legal proceedings is required pursuant to items 2(e)
or 2(f)
/ /
- --------------------------------------------------------------------------------
6. Citizenship or place of organization
Delaware
- --------------------------------------------------------------------------------
7. Aggregate amount beneficially owned by each reporting person
2,760,484 shares of Common Stock*
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
/ /
- --------------------------------------------------------------------------------
9. Percent of class represented by amount in Row 7
Approximately 30.07%
- --------------------------------------------------------------------------------
10. Type of reporting person
CO GM
- --------------------------------------------------------------------------------
* Beneficial ownership is based solely on the provisions of the Option and
Voting Agreement, pursuant to which, among other things, Parent has an option to
purchase these shares from certain persons, as described below.
<PAGE>
CUSIP NO. 570559 10 4
- --------------------------------------------------------------------------------
1. Name of reporting persons: Aegis Group plc
S.S. or I.R.S. Identification Nos. of Above Persons: None
- --------------------------------------------------------------------------------
2. Check the appropriate box if a member of a group
(a) /X/
(b) / /
- --------------------------------------------------------------------------------
3. SEC use only
- --------------------------------------------------------------------------------
4. Sources of funds
BK OO WC
- --------------------------------------------------------------------------------
5. Check if disclosure of legal proceedings is required pursuant to items 2(e)
or 2(f)
/ /
- --------------------------------------------------------------------------------
6. Citizenship or place of organization
United Kingdom
- --------------------------------------------------------------------------------
7. Aggregate amount beneficially owned by each reporting person
2,760,484 shares of Common Stock*
- --------------------------------------------------------------------------------
8. Check if the Aggregate Amount in Row 7 Excludes Certain Shares
/ /
- --------------------------------------------------------------------------------
9. Percent of class represented by amount in Row 7
Approximately 30.07%
- --------------------------------------------------------------------------------
10. Type of reporting person
CO GM
- --------------------------------------------------------------------------------
* Beneficial ownership is based solely on the provisions of the Option and
Voting Agreement, pursuant to which, among other things, Parent has an option to
purchase these shares from certain persons, as described below.
<PAGE>
This Tender Offer Statement on Schedule 14D-1 relates to the offer by Aegis
Acquisition Corp., a Delaware corporation ("Purchaser") and an indirect wholly
owned subsidiary of Aegis Group plc, a corporation incorporated under the laws
of England and Wales ("Parent"), to purchase all outstanding shares of Common
Stock, par value $1.00 per share (the "Shares"), of Market Facts, Inc., a
Delaware corporation, at a purchase price of $31.00 per Share, net to the seller
in cash, on the terms and subject to the conditions set forth in the Offer to
Purchase dated May 4, 1999 (the "Offer to Purchase") and in the related Letter
of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2) (which, as amended or supplemented from time to time, together constitute
the "Offer"). This Tender Offer Statement on Schedule 14D-1 also constitutes a
Statement on Schedule 13D with respect to the acquisition by Parent of
beneficial ownership of certain Shares pursuant to an Option and Voting
Agreement, dated April 29, 1999, between Parent and Verne B. Churchill, Lawrence
W. Labash, Jeffery A. Oyster, Thomas H. Payne, Sanford M. Schwartz, Ned L.
Sherwood, Timothy J. Sullivan and MFI Investors, L.P. (the "Option Agreement").
The item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1. Unless the context requires, all references
herein to Shares shall be deemed to refer also to the associated preferred stock
purchase rights issued pursuant to the Rights Agreement dated as of July 26,
1989 between the Company and First Chicago Trust Company of New York, as amended
by a First Amendment to Rights Agreement dated as of June 5, 1996 and by a
Second Amendment to the Rights Agreement dated as of April 29, 1999.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Market Facts, Inc. The address of the
Company's principal executive offices is 3040 West Salt Creek Lane, Arlington
Heights, Illinois 60005.
(b) The information set forth in the Introduction of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d), (g) This Statement is filed by Purchaser and Parent. The
information set forth in the Introduction, in Section 8 ("Certain Information
Concerning Parent and Purchaser") and in Schedule I of the Offer to Purchase is
incorporated herein by reference.
(e)-(f) During the last five years, neither Parent nor Purchaser nor, to
their knowledge, any of the persons listed in Schedule I of the Offer to
Purchase, (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), or (ii) was 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 violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) The information set forth in Section 10 ("Background of the Offer;
Contacts with the Company") of the Offer to Purchase is incorporated herein by
reference. Except as set forth in Section 10 of the Offer to Purchase, since
January 1, 1996, there have been no transactions which would be required to be
disclosed under this Item 3(a) between any of Parent, Purchaser and the persons
listed in Schedule I to the Offer to Purchase, and the Company or any of its
executive officers, directors or affiliates.
(b) The information set forth in Section 10 ("Background of the Offer;
Contacts with the Company"), Section 11 ("The Offer and Merger; Merger
Agreement; Other Agreements") and Section 12 ("Purpose of the Offer and the
Merger; Plans for the Company; Rights Agreement") of the Offer to Purchase is
incorporated herein by reference. Except as set forth in Sections 10, 11 and 12
of the Offer to Purchase, since January 1, 1996, there have been no contacts,
negotiations or transactions which would be required to be disclosed under Item
3(b) between any of Parent, Purchaser, their respective subsidiaries or, to the
knowledge of Parent and Purchaser, those persons listed in Schedule I to the
Offer to Purchase, and
<PAGE>
the Company or its affiliates concerning a merger, consolidation or acquisition,
a tender offer or other acquisition of securities, an election of directors, or
a sale or other transfer of a material amount of assets.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a)-(b) The information set forth in Section 9 ("Sources and Amounts of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDERS
(a)-(g) The information set forth in the Introduction, in Section 11 ("The
Offer and Merger; Merger Agreement; Other Agreements"), in Section 12 ("Purpose
of the Offer and the Merger; Plans for the Company; Rights Agreement") and in
Section 13 ("Effect of the Offer on the Market for the Shares; Exchange Act
Registration; Margin Regulations; Voting") of the Offer to Purchase is
incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) The information set forth in the Introduction and Section 11 ("The
Offer and Merger; Merger Agreement; Other Agreements") of the Offer to Purchase
is incorporated herein by reference. Except as set forth in the Introduction and
Section 11 of the Offer to Purchase, neither Parent, Purchaser, nor, to the
knowledge of Parent and Purchaser, any of the persons listed in Schedule I to
the Offer to Purchase or any associate or majority-owned subsidiary of Parent or
Purchaser or any of the persons so listed beneficially
owns or has any right to acquire, directly or indirectly, any Shares.
(b) The information set forth in the Introduction and Section 11 ("The
Offer and Merger; Merger Agreement; Other Agreements") of the Offer to Purchase
is incorporated herein by reference. Except as set forth in the Introduction and
Section 11 of the Offer to Purchase, neither Parent, Purchaser, nor, to the
knowledge of Parent and Purchaser, any of the persons or entities referred to in
Item 6(b) or any executive officer, director or subsidiary of any thereof has
effected any transactions in the Shares during the past sixty days.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
The information set forth in the Introduction, in Section 8 ("Certain
Information Concerning Parent and Purchaser"), in Section 9 ("Sources and
Amounts of Funds"), in Section 10 ("Background of the Offer; Contacts with the
Company"), in Section 11 ("The Offer and Merger; Merger Agreement; Other
Agreements"), in Section 12 ("Purpose of the Offer and the Merger; Plans for the
Company; Rights Agreement") and in Section 17 ("Fees and Expenses") of the Offer
to Purchase is incorporated herein by reference. Except as set forth in the
Introduction and Sections 8, 9, 10, 11, 12 and 17 of the Offer to Purchase, none
of Purchaser, Parent, nor, to the knowledge of Parent or Purchaser, any of the
persons listed on Schedule I, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including but not limited to contracts, arrangements, understandings or
relationships concerning the transfer or voting of such securities, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in the Introduction and in Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
Purchaser and Parent do not believe that any of the financial statements of
either of them or of any of their affiliates is material to a decision by
stockholders of the Company whether to sell, tender or hold Shares. However, as
supplemental material not required to be included in the Offer to Purchase or
this
<PAGE>
Tender Offer Statement, the financial information and financial statements of
Parent set forth in Section 8 ("Certain Information Concerning Parent and
Purchaser--Summary Consolidated Financial Information for Parent") of the Offer
to Purchase and Exhibit (g) attached to this Schedule 14D-1 are incorporated
herein by reference.
ITEM 10. ADDITIONAL INFORMATION
(a) Except as disclosed in Items 3 and 7 above, there are no present or
proposed material contracts, arrangements, understandings or relationships
between Parent or Purchaser, or to the knowledge of Parent and Purchaser, any of
the persons listed in Schedule I of the Offer to Purchase, and the Company, or
any of its executive officers, directors, controlling persons or subsidiaries.
(b)-(c) The information set forth in Section 15 ("Conditions to the
Offer"), and in Section 16 ("Certain Legal Matters; Regulatory Approvals") of
the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 13 ("Effect of the Offer on the
Market for the Shares; Exchange Act Registration; Margin Regulations; Voting")
and in Section 16 ("Certain Legal Matters; Regulatory Approvals") of the Offer
to Purchase is incorporated herein by reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase, dated May 4, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published on May 4, 1999.
(a)(8) Press Release dated April 30, 1999.
(a)(9) Press Release dated April 30, 1999.
(b)(1) Revolving Credit and Term Loan Facility, dated April 29, 1999, among
Parent, Purchaser and National Westminster Bank plc.
(b)(2) Placing Agreement, dated April 30, 1999, between Parent and Hoare
Govett Limited.
(c)(1) Agreement and Plan of Merger, dated as of April 29, 1999, by and
among Parent, Purchaser and the Company.
(c)(2) Option and Voting Agreement, dated April 29, 1999, between Parent
and Verne B. Churchill, Lawrence W. Labash, Jeffery A. Oyster,
Thomas H. Payne, Sanford M. Schwartz, Ned L. Sherwood, Timothy J.
Sullivan and MFI Investors, L.P.
(d) None.
(e) Not applicable.
(f) None.
(g) Aegis Group plc Report and Accounts 1998.
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
<TABLE>
<S> <C> <C> <C>
Dated: May 4, 1999 AEGIS GROUP PLC
By: /s/ ANDREW PARNES
--------------------------------------
Name: Andrew Parnes
Title: Group Treasurer
AEGIS ACQUISITION CORP.
By: /s/ ANDREW PARNES
--------------------------------------
Name: Andrew Parnes
Title: Treasurer
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
(a)(1) Offer to Purchase, dated May 4, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published on May 4, 1999.
(a)(8) Press Release dated April 30, 1999.
(a)(9) Press Release dated April 30, 1999.
(b)(1) Revolving Credit and Term Loan Facility, dated April 29, 1999, among Parent, Purchaser and National
Westminster Bank plc.
(b)(2) Placing Agreement, dated April 30, 1999, between Parent and Hoare Govett Limited.
(c)(1) Agreement and Plan of Merger, dated as of April 29, 1999 by and among Parent, Purchaser and the Company.
(c)(2) Option and Voting Agreement, dated April 29, 1999, between Parent and Verne B. Churchill, Lawrence W.
Labash, Jeffery A. Oyster, Thomas H. Payne, Sanford M. Schwartz, Ned L. Sherwood, Timothy J. Sullivan
and MFI Investors, L.P.
(d) None.
(e) Not applicable.
(f) None.
(g) Aegis Group plc Report and Accounts 1998.
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
MARKET FACTS, INC.
AT
$31.00 NET PER SHARE
BY
AEGIS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AEGIS GROUP PLC
--------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, JUNE 1, 1999, UNLESS EXTENDED.
---------------------
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF APRIL 29, 1999 (THE "MERGER AGREEMENT"), BY AND AMONG MARKET FACTS, INC.
(THE "COMPANY"), AEGIS GROUP PLC ("PARENT") AND AEGIS ACQUISITION CORP.
("PURCHASER"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED
THAT EACH OF THE MERGER AGREEMENT, THE OFFER AND THE MERGER ARE FAIR TO AND IN
THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, AND RECOMMENDED ACCEPTANCE OF THE OFFER, APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AND APPROVAL OF THE MERGER BY THE STOCKHOLDERS OF THE COMPANY.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OR TERMINATION OF THE OFFER A
NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE, OF THE COMPANY (THE
"SHARES") WHICH WILL CONSTITUTE A MAJORITY OF THE TOTAL NUMBER OF SHARES
OUTSTANDING ON A FULLY DILUTED BASIS, LESS THE NUMBER OF SHARES PURCHASER CAN
ACQUIRE UNDER AN OPTION AND VOTING AGREEMENT (THE "OPTION AGREEMENT"), DATED AS
OF APRIL 29, 1999, BETWEEN PARENT AND THE STOCKHOLDERS OF THE COMPANY WHO ARE
PARTIES THERETO (THE "MINIMUM CONDITION"), AND (II) THE EXPIRATION OR
TERMINATION OF ANY APPLICABLE WAITING PERIODS IMPOSED BY THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. STOCKHOLDERS OF THE COMPANY HAVE
GRANTED PARENT THE RIGHT TO ACQUIRE APPROXIMATELY 30.07% OF THE TOTAL NUMBER OF
OUTSTANDING SHARES ON A FULLY DILUTED BASIS PURSUANT TO THE OPTION AGREEMENT.
SEE SECTION 11. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE
SECTION 11.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such holder's
Shares (as defined herein) should either (a) complete and sign the Letter of
Transmittal (or a manually signed facsimile copy thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver it together with
the certificate(s) evidencing the tendered Shares and all other required
documents to the Depositary, or tender such Shares pursuant to the procedure for
book-entry transfer described in Section 3 of this Offer to Purchase, or (b)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. A stockholder
whose Shares are registered in the name of a broker, dealer, commercial bank,
trust company or other nominee must contact such broker, dealer, commercial
bank, trust company or other nominee if the stockholder desires to tender the
Shares.
Any stockholder who desires to tender Shares and whose certificates
evidencing 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
by following the procedures for guaranteed delivery set forth in Section 3 of
this Offer to Purchase.
Questions and requests for assistance may be directed to Morgan Stanley &
Co. Incorporated, the Dealer Manager, or to D.F. King & Co., Inc., the
Information Agent, at their respective addresses and telephone numbers set forth
on the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and the
other tender offer materials may also be obtained from the Information Agent,
brokers, dealers, commercial banks or trust companies.
---------------------------
The Dealer Manager for the Offer is:
MORGAN STANLEY DEAN WITTER
May 4, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
INTRODUCTION............................................................................................... 1
1. Terms of the Offer..................................................................................... 3
2. Acceptance for Payment and Payment..................................................................... 5
3. Procedures for Tendering Shares........................................................................ 6
4. Withdrawal Rights...................................................................................... 8
5. Certain Tax Considerations............................................................................. 9
6. Price Range of Shares; Dividends....................................................................... 10
7. Certain Information Concerning the Company............................................................. 11
8. Certain Information Concerning Parent and Purchaser.................................................... 13
9. Sources and Amounts of Funds........................................................................... 15
10. Background of the Offer; Contacts with the Company..................................................... 17
11. The Offer and Merger; Merger Agreement; Other Agreements............................................... 19
12. Purpose of the Offer and the Merger; Plans for the Company; Rights Agreement........................... 27
13. Effect of the Offer on the Market for the Shares; Exchange Act Registration; Margin Regulations........ 32
14. Dividends and Distributions............................................................................ 33
15. Conditions to the Offer................................................................................ 33
16. Certain Legal Matters; Regulatory Approvals............................................................ 35
17. Fees and Expenses...................................................................................... 37
18. Miscellaneous.......................................................................................... 37
Schedule I--Directors and Executive Officers of Aegis Acquisition Corp. and Aegis Group plc................ S-1
</TABLE>
<PAGE>
To the Holders of Common Stock of
Market Facts, Inc.:
INTRODUCTION
Aegis Acquisition Corp., a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of Aegis Group plc, a corporation incorporated
under the laws of England and Wales ("Parent"), hereby offers to purchase all of
the outstanding shares of Common Stock, par value $1.00 per share (the
"Shares"), of Market Facts, Inc., a Delaware corporation (the "Company"), at
$31.00 per Share, net to the seller in cash (the "Offer Price"), upon the terms
and subject to the conditions set forth in this Offer to Purchase and in the
related Letter of Transmittal (which, as amended or supplemented from time to
time, together constitute the "Offer"). For purposes of this Offer to Purchase,
references to "Section" are references to a section of this Offer to Purchase,
unless the context otherwise requires. Unless the context requires otherwise,
all references in this Offer to Purchase shall be deemed to refer also to the
associated preferred stock purchase rights (the "Rights") issued pursuant to the
Rights Agreement dated as of July 26, 1989 (the "Rights Agreement") between the
Company and First Chicago Trust Company of New York, as amended by a First
Amendment to Rights Agreement dated as of June 5, 1996 and by a Second Amendment
to the Rights Agreement dated as of April 29, 1999, and all references to rights
shall be deemed to include all benefits that may inure to the stockholders of
the Company or to holders of the Rights pursuant to the Rights Agreement. In
connection with the Merger Agreement (as defined below), the Company has amended
the Rights Agreement so that the execution and delivery of the Merger Agreement
and the Option Agreement (as defined below), and the consummation of the
transactions contemplated thereby, including the Offer and the purchase of
Shares pursuant thereto, will not result in Parent, Purchaser or any of their
affiliates becoming an Acquiring Person (as defined in the Rights Agreement), or
(ii) the occurrence of a Distribution Date of a Shares Acquisition Date (each as
defined in the Rights Agreement). Unless and until the Distribution Date occurs,
the Rights will be transferred with and only with the Shares and, therefore, the
surrender for transfer of any of the certificates representing Shares (the
"Stock Certificates"), including upon acceptance for payment of such Shares
pursuant to the Offer, will also constitute the surrender for transfer of the
Rights associated with the Shares represented by such Share Certificates. See
Section 12.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. Purchaser or Parent will pay all charges and expenses of
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), which is acting as the
Dealer Manager (in such capacity, the "Dealer Manager"), First Chicago Trust
Company of New York (the "Depositary"), and D.F. King & Co., Inc. (the
"Information Agent"), incurred in connection with the Offer in accordance with
the terms of agreements entered into between Purchaser and/or Parent and such
persons. See Section 17.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OR TERMINATION OF THE OFFER A
NUMBER OF SHARES WHICH WILL CONSTITUTE A MAJORITY OF THE TOTAL NUMBER OF SHARES
OUTSTANDING ON A FULLY DILUTED BASIS, LESS THE NUMBER OF SHARES PURCHASER CAN
ACQUIRE UNDER THE OPTION AGREEMENT, AS DEFINED BELOW (THE "MINIMUM CONDITION"),
AND (II) EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
CONDITION"). SEE SECTION 15.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of April 29, 1999 (the "Merger Agreement"), by and among the Company, Parent
and Purchaser. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that, as promptly as
practicable following the purchase of Shares pursuant to the Offer (the
"consummation" of the Offer) and the approval and adoption of the Merger
Agreement by the stockholders of the Company,
1
<PAGE>
if required by applicable law, and the satisfaction or waiver of certain other
conditions set forth therein, Purchaser will be merged with and into the Company
(the "Merger"), with the Company continuing as the surviving corporation (the
"Surviving Corporation") and becoming an indirect wholly owned subsidiary of
Parent. Pursuant to the Merger, each issued and outstanding Share (other than
(i) Shares held by Purchaser, Parent or the Company or any direct or indirect
subsidiary of Purchaser, Parent or the Company and (ii) Dissenting Shares (as
hereinafter defined)) will be converted into the right to receive $31.00 in cash
or any higher price that may be paid per Share in the Offer, without interest
thereon, less any required withholding of taxes (the "Merger Price"). The Merger
is more fully described in Section 11.
Simultaneously with entering into the Merger Agreement, MFI Investors, L.P.,
and certain of its affiliates and certain senior executives of the Company (the
"Selling Stockholders"), entered into an Option and Voting Agreement, dated as
of April 29, 1999, with Parent (the "Option Agreement"). Pursuant to the Option
Agreement, the Selling Stockholders have agreed, among other things, (i) to sell
to Parent or its permitted assign 2,760,484 Shares (30.07% of the Shares, on a
fully diluted basis, after giving effect to the exercise of vested employee
options) at a price of $31.00 per Share, (ii) not to tender such Shares into the
Offer without Parent's consent, and (iii) to vote such Shares and all shares of
Series B Preferred Stock, no par value (the "Series B Shares") held by the
Selling Stockholders in favor of the Merger, in each case upon the terms and
subject to conditions and limitations set forth in the Option Agreement. The
Option Agreement is more fully described in Section 11.
The Company has advised Purchaser and Parent that as of April 30, 1999 there
were (i) 8,944,701 Shares issued and outstanding, (ii) 1,965,357 Shares held in
the treasury of the Company, (iii) 932,900 Shares reserved for issuance pursuant
to outstanding employee stock options granted under the Company's stock option
plan (of which approximately 234,400 have vested), (iv) 100,000 Shares reserved
for issuance in connection with possible future purchase price payments in
connection with a past acquisition by the Company and (v) 100 Series B Shares.
As of April 30, 1999, the Purchaser believes that the Minimum Condition will be
satisfied if Purchaser acquires 1,829,067 Shares pursuant to the Offer (which,
together with the 2,760,484 Shares covered by the Option Agreement, will total
4,589,551 Shares). If the Minimum Condition is satisfied and Purchaser accepts
for payment Shares tendered pursuant to the Offer and purchases the Shares
subject to the Option Agreement, Purchaser will have the right to select a
majority of the Company's Board of Directors (as more fully described in Section
11) and to approve the Merger without the affirmative vote of any other
stockholder of the Company. See Section 12.
The Board of Directors of the Company (the "Board" or "Board of Directors")
has received the opinion dated April 28, 1999 and affirmed April 29, 1999 of
Schroder & Co. Inc. ("Schroder"), financial advisor to the Company, to the
effect that, as of such dates and based upon and subject to certain assumptions
stated therein, the $31.00 per Share cash consideration to be received in the
Offer by holders of Shares (other than Parent, the Company, their respective
direct or indirect subsidiaries and holders who exercise their appraisal rights
in accordance with applicable law) was fair from a financial point of view to
such holders. A copy of the opinion of Schroder is attached to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being
distributed to the stockholders of the Company, and stockholders are urged to
read the opinion carefully in its entirety for the assumptions made, matters
considered and limitations on the review undertaken by Schroder.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT EACH
OF THE MERGER AGREEMENT, THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST
INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
RECOMMENDED ACCEPTANCE OF THE OFFER, APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND APPROVAL OF THE MERGER BY THE STOCKHOLDERS OF THE COMPANY.
ADDITIONALLY, THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OPTION AGREEMENT FOR PURPOSES OF SECTION 203 OF THE DELAWARE GENERAL CORPORATION
2
<PAGE>
LAW (THE "DGCL"). ACCORDINGLY, SECTION 203 OF THE DGCL (WHICH RESTRICTS AN
"INTERESTED STOCKHOLDER" FROM ENGAGING IN A "BUSINESS COMBINATION" WITH A
DELAWARE CORPORATION FOR A PERIOD OF THREE YEARS FOLLOWING THE DATE ON WHICH
SUCH STOCKHOLDER BECAME AN "INTERESTED STOCKHOLDER") IS INAPPLICABLE TO THE
OFFER, THE MERGER AND THE PURCHASE OF SHARES PURSUANT TO THE OPTION AGREEMENT.
SEE SECTION 16.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY 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 such extension or
amendment), Purchaser will accept for payment and pay for all Shares which are
validly tendered on or prior to the Expiration Date and not properly withdrawn
in accordance with Section 4. The term "Expiration Date" means 12:00 midnight,
New York City time, on Tuesday, June 1, 1999, unless and until Purchaser, in its
sole discretion, but subject to the terms of the Merger Agreement, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall refer to the latest time and date at which the
Offer, as so extended by Purchaser, shall expire.
The Offer is subject to certain conditions described in Section 15,
including satisfaction of the Minimum Condition and the HSR Condition. Subject
to the provisions of the Merger Agreement and the applicable rules and
regulations of the Securities and Exchange Commission (the "Commission"),
Purchaser reserves the right, in its sole discretion, to waive any or all
conditions to the Offer and otherwise to modify the terms of the Offer in any
respect. Without limiting the preceding sentence, if any condition to the Offer
is not satisfied prior to the expiration of the Offer, Purchaser reserves the
right, in its sole discretion, subject to the terms of the Merger Agreement and
such rules and regulations, to (i) terminate the Offer and return all tendered
Shares to tendering stockholders, (ii) extend the Offer and, subject to
withdrawal rights as set forth in Section 4, retain all such Shares until the
expiration of the Offer as so extended, or (iii) waive such condition and,
subject to any requirement to extend the period of time during which the Offer
is open, purchase all Shares validly tendered and not withdrawn by the
Expiration Date. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement thereof, the announcement in the
case of an extension to be issued no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date in
accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Without limiting the
obligation of Purchaser under such rules or the manner in which Purchaser may
choose to make any public announcement, Purchaser currently intends to make
announcements by issuing a release to the Dow Jones News Service.
The Merger Agreement provides that, subject only to the Minimum Condition
and the other conditions provided in the Merger Agreement, Purchaser shall
consummate the Offer as soon as legally permissible. The Merger Agreement also
provides that the Offer shall be made by means of an offer to purchase
containing the Minimum Condition, and no other conditions except those set forth
in the Merger Agreement, and shall not be amended with respect to any such
condition or the Minimum Condition, with respect to a reduction in the price or
change in the form of consideration to be paid in the Offer, or with respect to
an extension of the Offer (except as provided below) without the consent of the
Company; provided, however, that Purchaser may extend the expiration date (x) in
its sole discretion from time to time, if on the initial scheduled or any
extended expiration date of the Offer the Minimum Condition has not been
satisfied, or any of the other conditions set forth in the Merger Agreement
shall not have been satisfied or waived (provided, however, that unless agreed
to by the Company any extended expiration date pursuant to this clause (x) may
not be later than 90 days from the date of commencement of the Offer or
3
<PAGE>
120 days from such date if within such 90 day period a tender offer for at least
20% of the outstanding Shares is commenced by any person who is not an affiliate
(as defined under the rules promulgated pursuant to the Securities Act of 1933
as amended (the "Securities Act")) of Parent or Purchaser (an "Intervening
Tender Offer")), or (y) for a period not to exceed ten business days,
notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer, if, immediately prior to the expiration date of
the Offer (as it may be extended), the Shares tendered and not withdrawn
pursuant to the Offer, together with the Shares subject to the Option Agreement,
without duplication, equal less than 90% of the outstanding Shares and Purchaser
expressly irrevocably waives any condition (other than the Minimum Condition)
that subsequently may not be satisfied during such extension of the Offer; or
(z) for any period required by any rule, regulation, interpretation or position
of the Commission or the staff thereof applicable to the Offer. Without limiting
the right of Purchaser to extend the Offer pursuant to the provisions of the
Merger Agreement, in the event that (i) the Minimum Condition shall not have
been satisfied or (ii) the other conditions set forth in the Merger Agreement
shall not have been satisfied or waived at the scheduled or any extended
expiration date of the Offer, at the request of the Company, the Purchaser has
agreed that it will extend the expiration date of the Offer in increments of
five business days each until the earliest to occur of (x) the satisfaction or
waiver of the Minimum Condition or such other condition, (y) the termination of
this Agreement in accordance with its terms, and (z) 90 days from commencement
of the Offer or 120 days from such date in the event of an Intervening Tender
Offer (unless extended by agreement of Parent, Purchaser and the Company).
Subject to the applicable rules and regulations of the Commission and the
provisions of the Merger Agreement described above, Purchaser expressly reserves
the right, in its sole discretion, at any time and from time to time, and
regardless of whether or not any of the events set forth in Section 15 shall
have occurred, to (i) extend the period of time during which the Offer is open
and thereby delay acceptance for payment of, and the payment for, any Shares, by
giving oral or written notice of such extension to the Depositary or (ii) amend
the Offer in any respect by giving oral or written notice of such amendment to
the Depositary. During any such extension, all Shares previously tendered and
not properly withdrawn will remain subject to the Offer, subject to the right of
a tendering stockholder to withdraw such stockholder's Shares.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will disseminate additional tender offer materials and extend the
Offer if and to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1(c)
under the Exchange Act. The minimum period during which the Offer must remain
open following material changes in the terms of the Offer or information
concerning the Offer, other than a change in the Offer Price or a change in
percentage of securities sought, will depend upon the facts and circumstances,
including the materiality of the terms or information. With respect to a change
in the Offer Price or, subject to certain limitations, a change in percentage of
securities sought, a minimum ten business day period is generally required to
allow for adequate dissemination to stockholders. If, prior to the Expiration
Date, Purchaser should decide to increase the Offer Price, such increase will be
applicable to all stockholders whose Shares are accepted for payment pursuant to
the Offer. The Selling Stockholders and the Parent have agreed, however, that
the exercise price to be paid for shares purchased under the Option Agreement
will remain at $31.00 per share. As used in this Offer to Purchase, "business
day" means 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, as computed in accordance with Rule 14d-1 under the Exchange Act.
The Company has agreed to provide Purchaser with the Company's stockholder
list and security position listings for the purpose of disseminating the Offer
to holders of Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares and will
be furnished to brokers, banks and similar persons whose names, or the names of
whose nominees,
4
<PAGE>
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
Upon the terms and subject to the conditions of the Merger Agreement and the
Offer (including, if the Offer is extended or amended, the terms and conditions
of any such extension or amendment), Purchaser will accept for payment and pay
for all Shares validly tendered and not properly withdrawn on or prior to the
Expiration Date, as soon as practicable after the later of (i) the Expiration
Date and (ii) satisfaction or waiver of the conditions to the Offer set forth in
Section 15 in accordance with the terms of the Merger Agreement. In addition,
subject to applicable rules of the Commission, Purchaser expressly reserves the
right to delay acceptance for payment of or payment for Shares pending receipt
of any other regulatory approvals specified in Section 16. Any such delays will
be effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to
a bidder's obligation to pay for or return tendered securities promptly after
the termination or withdrawal of such bidder's offer). For a description of
Purchaser's right to terminate the Offer and not accept for payment or pay for
Shares or to delay acceptance for payment of, or payment for, Shares, see
Section 1.
For purposes of the Offer, Purchaser will be deemed to have accepted
tendered Shares for payment if, as and when Purchaser gives oral followed by
written notice to the Depositary of its acceptance of the tenders of such
Shares. Payment for Shares purchased pursuant to the Offer will be made by
deposit of the Offer Price with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from Purchaser and
transmitting such payments to tendering stockholders. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after the
expiration of the Offer and timely receipt by the Depositary of (i) Stock
Certificates or confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Shares into the Depositary's account at a Book-Entry
Transfer Facility (as defined in Section 3), (ii) a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile copy thereof),
with any required signature guarantees, or in the case of a book-entry transfer,
an Agent's Message (as defined in Section 3), and (iii) any other documents
required by the Letter of Transmittal. For a description of the procedure for
tendering Shares pursuant to the Offer, see Section 3.
IN NO CIRCUMSTANCES WILL INTEREST BE PAID BY PURCHASER ON THE CONSIDERATION
PAID FOR SHARES PURSUANT TO THE OFFER, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING PAYMENT.
If, for any reason whatsoever, acceptance for payment of or payment for any
Shares tendered pursuant to the Offer is delayed or Purchaser is unable to
accept for payment or pay for Shares tendered pursuant to the Offer, then
without prejudice to Purchaser's rights set forth herein, the Depositary may
nevertheless, on behalf of Purchaser and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Shares and such Shares may not be withdrawn except
to the extent that the tendering stockholder is entitled to and duly exercises
withdrawal rights as described in Section 4.
PRIOR TO A DISTRIBUTION DATE, A VALID TENDER OF SHARES WILL ALSO CONSTITUTE
A TENDER OF THE ASSOCIATED RIGHTS.
If Purchaser increases the consideration to be paid for Shares pursuant to
the Offer, Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer (but not Shares of the Selling Stockholders
purchased under the Option Agreement).
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates the right to purchase Shares
tendered pursuant to the Offer, but any such transfer or assignment will not
relieve Purchaser of its obligations under the Offer or prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment.
5
<PAGE>
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Stock Certificates are submitted for more Shares than are
tendered, Stock Certificates for Shares not purchased or not tendered will be
returned (or, in the case of Shares tendered by book-entry transfer, such Shares
will be credited to an account maintained at the Book-Entry Transfer Facility,
without expense to the tendering stockholder, as promptly as practicable after
the expiration or termination of the Offer.
3. PROCEDURES FOR TENDERING SHARES
VALID TENDER. In order for Shares to be validly tendered pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or an Agent's
Message (in the case of any book-entry transfer), and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date, and either (i) the Stock Certificates evidencing such
Shares to be tendered must be received by the Depositary at such address, or
(ii) such Shares must be delivered to the Depositary pursuant to the procedures
for book-entry transfer described below and a Book-Entry Confirmation (including
an Agent's Message) must be received by the Depositary, in each case prior to
the Expiration Date, or (b) the tendering stockholder must comply with the
guaranteed delivery procedures described below. The term "Agent's Message" means
a message transmitted by the Book-Entry Transfer Facility to, and received by,
the Depositary and forming a part of a Book-Entry Confirmation, 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
which are the subject of such Book-Entry Confirmation that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that Purchaser may enforce such agreement against such participant.
BOOK-ENTRY TRANSFER. The Depositary will make a request to establish an
account with respect to the Shares at The Depository Trust Company (the
"Book-Entry Transfer Facility") for purposes of the Offer within two business
days after the date of this Offer to Purchase, and any financial institution
that is a participant in the system of the Book-Entry Transfer Facility 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 procedures of the Book-Entry Transfer Facility.
However, although delivery of Shares may be effected through book-entry
transfer, either the Letter of Transmittal (or a manually signed facsimile copy
thereof), properly completed and duly executed, together with any required
signature guarantees, or an Agent's Message, and any other documents required by
the Letter of Transmittal must, in any case, be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase prior
to the Expiration Date, or the guaranteed delivery procedures described below
must be complied with.
DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
SIGNATURE GUARANTEES. Generally, signatures on all Letters of Transmittal
must be guaranteed by a member firm of a registered national securities exchange
(registered under Section 6 of the Exchange Act) or by a member firm of the
National Association of Securities Dealers, Inc., by a commercial bank or trust
company having an office or correspondent in the United States or by any other
"Eligible Guarantor Institution" as defined in Rule 17Ad-15 under the Exchange
Act that is a participant in the Medallion Signature Guarantee Program (each of
the foregoing constituting an "Eligible Institution"). However, signatures on a
Letter of Transmittal need not be guaranteed (a) if the Letter of Transmittal is
signed by the registered holder of the Shares tendered therewith and such holder
has not completed the box entitled "Special Payment Instructions" on the Letter
of Transmittal, or (b) if such Shares are tendered for the account of an
Eligible Institution.
6
<PAGE>
If a Stock Certificate is registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made, or a Stock
Certificate not accepted for payment or evidencing Shares not tendered is to be
returned, to a person other than the registered holder(s), then the Stock
Certificate must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear
thereon, with the signature(s) guaranteed as described above. See Instructions 1
and 5 of the Letter of Transmittal.
If Stock Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile copy thereof) must accompany each such delivery.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Stock Certificates 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 basis, such Shares may nevertheless be tendered if all the
following conditions are satisfied:
(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 provided by Purchaser, is received by
the Depositary prior to the Expiration Date; and
(iii) Stock Certificates 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 copy thereof), with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and any other documents required by the Letter of Transmittal, are
received by the Depositary within three trading days after the date of
execution of the Notice of Guaranteed Delivery. A "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 mailed 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 STOCK CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
BACK-UP FEDERAL INCOME TAX WITHHOLDING. Under the federal income tax laws,
the Depositary will be required to withhold 31% of the amount of any payments
made to certain stockholders pursuant to the Offer. In order to avoid such
back-up withholding, each tendering stockholder must provide the Depositary with
such stockholder's correct taxpayer identification number and certify that such
stockholder is not subject to back-up federal income tax withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal (see
Instruction 10 of the Letter of Transmittal) or by filing a Form W-9 with the
Depositary prior to any such payments. If the stockholder is a nonresident alien
or foreign entity not subject to back-up withholding, the stockholder must give
the Depositary a completed Form W-8 Certificate of Foreign Status prior to
receipt of any payments.
7
<PAGE>
OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
the stockholder's attorneys-in-fact and proxies, in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of the stockholder's rights with respect to the Shares tendered by the
stockholder and accepted for payment by Purchaser (and any and all other Shares
or other securities or property issued or issuable in respect of such Shares on
or after April 29, 1999). All such proxies and powers of attorney shall be
irrevocable and coupled with an interest in the tendered Shares. Such
appointment is effective only upon acceptance for payment of the Shares by
Purchaser. Upon such acceptance for payment, all prior powers of attorney,
proxies and consents given by the stockholder with respect to such Shares (and
such other Shares and other securities or property) will, without further
action, be revoked, and no subsequent powers of attorney and proxies may be
given nor any subsequent written consent executed by such stockholder with
respect thereto (and, if given or executed, will not be deemed to be effective).
The designees of Purchaser will, with respect to all such Shares and other
securities, be empowered to exercise all voting and other rights of such
stockholder as they in their sole discretion may deem proper at any annual,
special or adjourned meeting of the Company's stockholders, by written consent,
or otherwise. Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon Purchaser's acceptance for
payment of such Shares, Purchaser is able to exercise full voting and other
rights with respect to all such Shares and other securities (including voting at
any meeting of stockholders or acting by written consent without a meeting).
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 (a) such stockholder has the full power and authority to
tender and assign the Shares tendered, as specified in the Letter of
Transmittal, (b) such stockholder has a net long position in the Shares being
tendered within the meaning of Rule 14e-4 under the Exchange Act and (c) the
tender of such Shares complies with Rule 14e-4. Purchaser's acceptance for
payment of Shares tendered pursuant to the Offer will constitute a binding
agreement between the tendering stockholder and Purchaser upon the terms and
subject to the conditions of the Offer.
DETERMINATION 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 Purchaser in its sole discretion,
which determination shall be final and binding. Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form or
the acceptance for payment of which, or payment for which, may, in the opinion
of Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right
to waive any defect or irregularity in any tender of Shares. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
relating thereto have been cured or waived. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
Instructions thereto) will be final and binding. None of Purchaser, Parent, any
of their affiliates or assigns, the Depositary, the Dealer Manager, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after July 2, 1999. If
Purchaser extends the Offer, is delayed in its acceptance for payment of Shares
or is unable to purchase Shares validly tendered pursuant to the Offer for any
reason, then without prejudice to Purchaser's rights under the Offer, the
Depositary may nevertheless, on behalf of Purchaser, retain tendered Shares and
such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described in this Section 4,
subject to Rule 14e-1(c) under the Exchange
8
<PAGE>
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. Any
such delay in acceptance for payment will be accompanied by an extension of the
Offer to the extent required by law or by the Merger Agreement.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
notice of withdrawal 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 that of the person who tendered such
Shares. If Stock Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, a signed notice of
withdrawal with signatures guaranteed by an Eligible Institution (except in the
case of Shares tendered by an Eligible Institution) must be submitted prior to
the release of such certificates. In addition, such notice must specify, in the
case of Shares tendered by delivery of Stock Certificates, the name of the
registered holder (if different from that of the tendering stockholder) and the
serial numbers shown on the particular Stock Certificates evidencing the Shares
to be withdrawn, or, in the case of Shares tendered by book-entry transfer, the
name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares.
Withdrawals of tendered Shares may not be rescinded, and Shares withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be retendered again by following one of the
procedures described in Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent, any of
their affiliates or assigns, the Depositary, the Dealer Manager, 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.
5. CERTAIN TAX CONSIDERATIONS
The summary of tax consequences set forth below is for general information
only and is based on the U.S. federal income tax law as currently in effect. The
summary does not address all aspects of U.S. federal income taxation that may be
relevant to particular holders of Shares and thus, for example, may not be
applicable to holders of Shares who are not citizens or residents of the United
States, who are employees and who acquired their Shares pursuant to the exercise
of compensatory stock options, or who are entities that are otherwise subject to
special tax treatment (such as insurance companies, tax-exempt entities and
regulated investment companies) under the Internal Revenue Code of 1986, as
amended (the "Code"); nor does this summary address the effect of any applicable
state, local, foreign or other tax laws. The discussion assumes that each holder
of Shares holds such Shares as a capital asset within the meaning of Section
1221 of the Code. The precise tax consequences of the Offer or the Merger will
depend on the particular circumstances of the holder. STOCKHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX CONSEQUENCES TO THEM OF THE PROPOSED TRANSACTION.
The receipt of cash for Shares pursuant to the Offer, the Option Agreement
or the Merger will be a taxable transaction for U.S. federal income tax purposes
and may also be a taxable transaction under applicable state, local or foreign
tax laws. In general, a stockholder who receives cash for Shares pursuant to the
Offer, the Option Agreement or the Merger will recognize gain or loss for U.S.
federal income tax purposes equal to the difference between the amount of cash
received and such stockholder's adjusted tax basis in the shares sold. Such gain
or loss will be capital gain or loss, and will be long-term capital gain or loss
if the holder has held the Shares for more than one year at the time of sale.
Gain or loss will be calculated separately for each Share tendered pursuant to
the Offer, sold pursuant to the Option Agreement or canceled pursuant to the
Merger.
9
<PAGE>
Capital gains recognized on marketable securities such as the Shares will be
taxable at a maximum U.S. federal rate of 20% for individuals if the
individual's holding period is more than one year. Capital gains for individuals
whose holding period is one year or less is taxed at the same rate as ordinary
income or, a maximum rate of 39.6%. Corporations are taxed at a maximum rate of
35% on both ordinary income and capital gain.
WITHHOLDING. Unless a stockholder complies with certain reporting and/or
certification procedures, or is an exempt recipient under applicable provisions
of the Code (and regulations thereunder), such stockholder may be subject to a
"backup" withholding tax of 31% with respect to any payments received pursuant
to the Offer, the Option Agreement or the Merger. Stockholders should contact
their brokers to ensure compliance with such procedures. Foreign stockholders
should consult with their tax advisors regarding U.S. withholding taxes in
general. See Section 3.
6. PRICE RANGE OF SHARES; DIVIDENDS
The Common Stock is traded on the Nasdaq National Market under the symbol
"MFAC." The following table sets forth, for the periods indicated, the high and
low sale prices per Share for the Common Stock, as reported in the Company's
1998 Annual Report to Stockholders incorporated by reference into the Company's
Annual Report on Form 10-K for the year ending December 31, 1998 (the "Company
10-K"), and as reported in published financial sources thereafter. The
information set forth in the table has been adjusted retroactively to reflect a
two-for-one stock split in May 1997.
<TABLE>
<CAPTION>
COMMON STOCK
--------------------
LOW HIGH
------- ---------
<S> <C> <C>
1997
First Quarter............................................................. $ 7 $10 5/8
Second Quarter............................................................ $ 9 1/8 $14
Third Quarter............................................................. $10 1/4 $31 5/8
Fourth Quarter............................................................ $16 3/4 $24 3/4
1998
First Quarter............................................................. $15 1/4 $20 15/16
Second Quarter............................................................ $19 $24 1/4
Third Quarter............................................................. $18 1/2 $28 1/2
Fourth Quarter............................................................ $17 5/8 $28 1/2
1999
First Quarter............................................................. $18 3/4 $26 1/4
Second Quarter (through April 28, 1999)................................... $19 1/4 $26
</TABLE>
On April 29, 1999, the last full day of trading prior to the public
announcement of the execution of the Merger Agreement, the reported closing sale
price per Share of Common Stock (as reported in The Wall Street Journal) was
$25 7/8. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
The rights are currently attached to the outstanding Shares and may not be
traded separately. If a Distribution Date occurs, the rights could begin trading
separately from the Shares. See Section 12.
DIVIDENDS. The Purchaser has been advised by the Company that the Company
has paid no dividends on its Common Stock subsequent to December 13, 1996. The
Merger Agreement prohibits the Company from declaring or paying any dividends
until the effectiveness of the Merger.
10
<PAGE>
7. CERTAIN INFORMATION CONCERNING THE COMPANY
The following information concerning the Company has been taken from or
based upon publicly available documents on file with the Commission, other
publicly available information and information provided by the Company. Although
neither Purchaser nor Parent has any knowledge that would indicate that such
information is untrue, neither Purchaser nor Parent takes any responsibility
for, or makes any representation with respect to, the accuracy or completeness
of such information or for any failure by the Company to disclose events that
may have occurred and may affect the significance or accuracy of any such
information but which are unknown to Purchaser or Parent.
GENERAL. The Company is a Delaware corporation with its headquarters
located at 3040 West Salt Creek Lane, Arlington Heights, Illinois 60005. The
Company is a leading provider of custom market research services. It provides
quantitative and qualitative marketing research both domestically and
internationally. Through its network of 21 offices and its international
affiliations, the Company engages in the design, execution and interpretation of
market research conducted on behalf of its clients.
AVAILABLE INFORMATION. The Company is subject to the information
requirements of the Exchange Act, and is required to file reports and other
information with the Commission relating to its business, financial condition
and other matters. Information, as of particular dates, concerning the Company's
directors and officers, their remuneration, options granted to them, the
principal holders of the Company's securities and any material interest of such
persons in transactions with the Company is required to be described in filings
with the Commission. These filings, including the Company 10-K and the Company's
Schedule 14D-9 to be filed in connection with this Offer, are or, when filed,
will be available for inspection at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be
available for inspection and copying at prescribed rates at the regional offices
of the Commission located at Seven World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of this material may also be obtained by mail, upon
payment of the Commission's customary fees, from the Commission's principal
office. The Commission also maintains a site on the World Wide Web at
http://www.sec.gov that contains such filings and other information. Such
material should also be available for inspection at the library of the Nasdaq
Stock Market, 1735 K Street, N.W., Washington, D.C. 20006.
11
<PAGE>
CERTAIN CONSOLIDATED FINANCIAL INFORMATION FOR THE COMPANY. Set forth below
are certain selected consolidated financial data for the Company's last five
fiscal years which were derived from the Company 10-K. More comprehensive
financial information is included in the reports (including management's
discussion and analysis of financial condition and results of operations) and
other documents filed by the Company with the Commission, and the following
financial data are qualified in their entirety by reference to such reports and
other documents, including the financial information and related notes contained
therein. Such reports and other documents may be examined and copies thereof may
be obtained in the manner set forth above. Neither Parent nor Purchaser assumes
any responsibility for the accuracy of the financial information set forth
below.
MARKET FACTS, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenue........................... $ 55,483,032 $ 64,608,724 $ 83,795,562 $ 100,064,294 $ 136,532,924
------------- ------------- ------------- -------------- --------------
Income from operations............ 3,294,736 5,194,779 8,397,948 10,281,163 14,559,481
------------- ------------- ------------- -------------- --------------
Net income........................ 1,434,167 2,226,119 4,277,656 5,822,098 9,009,949
Basic earnings per share.......... .20 .29 .57 .80 1.02
------------- ------------- ------------- -------------- --------------
Diluted earnings per share........ .19 .29 .55 .77 .98
------------- ------------- ------------- -------------- --------------
Cash and cash equivalents......... $ 911,209 $ 3,530,157 $ 129,428 $ 36,444,256 $ 28,475,066
------------- ------------- ------------- -------------- --------------
Working capital................... 3,624,220 5,993,486 3,104,192 40,160,854 25,859,308
------------- ------------- ------------- -------------- --------------
Total assets...................... 31,681,983 34,376,637 38,385,227 86,891,747 105,454,474
Long-term obligations............. 11,453,019 10,955,870 10,742,988 10,409,088 11,197,130
Total Stockholders' equity........ 9,746,185 12,049,807 10,525,210 53,545,253 64,313,967
------------- ------------- ------------- -------------- --------------
Cash dividends declared........... .0725 .095 .10 -- --
------------- ------------- ------------- -------------- --------------
</TABLE>
PROJECTED FINANCIAL INFORMATION. In connection with Parent's review of the
Company and during the course of negotiations between Parent and the Company and
their respective advisors described in Section 10 of this Offer to Purchase, the
Company provided Parent with certain business and financial information which
was not publicly available. Such information included, among other things,
projections of future operating performance of the Company.
The inclusion herein of the summary of projections should not be regarded as
an indication that the Company, Parent, Purchaser or any other person considers
such information to be an accurate prediction of future events and should not be
relied on as such. While presented with numerical specificity, such projections
are based upon a variety of assumptions relating to the business of the Company,
industry performance, general business and economic conditions and other matters
and are subject to significant uncertainties and contingencies, many of which
are beyond Parent's, Purchaser's or the Company's control. Therefore, such
projections are inherently imprecise, subjective, and susceptible to various
interpretations and there can be no assurances, and no representation or
warranty is made, that any such projections will be realized or that actual
results will not differ significantly from those set forth below. None of
Parent, Purchaser, the Company, their respective officers, directors or advisors
accepts any responsibility for such projections or the bases or assumptions on
which they were prepared. The Company has informed Purchaser that as a matter of
course, the Company does not make public projections or forecasts of its
anticipated financial position or results of operations. Such projections have
not been updated by the Company, were not intended to be a forecast of financial
results by the Company and were not prepared with a view to public disclosure or
compliance with published guidelines of the Commission or with the guidelines
established by the American Institute of Certified Public Accountants regarding
projections and
12
<PAGE>
forecasts. None of the Company, Purchaser or Parent intends to update, revise or
correct such projections if it becomes aware that such projections are
inaccurate (even in the short term).
Such projections for the Company's fiscal years 1999, 2000 and 2001 are
being summarized below and included herein solely because they were furnished to
Parent by the Company, and the summary below should not be interpreted as
suggesting that Parent relied on such projections in evaluating a transaction
with the Company. The Company stated that it believed that the projections for
2000 and 2001 were more aggressive than the 1999 projection, and represented a
best case scenario. In light of the foregoing factors and the uncertainties
inherent in the forecasts, holders of Shares are cautioned not to place undue or
significant reliance thereon.
COMPANY FINANCIAL PROJECTIONS
($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1999 2000 2001
--------- --------- ---------
<S> <C> <C> <C>
Revenues......................................................... $ 162.6 $ 184.8 $ 212.5
Gross margin..................................................... 74.2 84.4 97.2
Operating expenses (excluding goodwill).......................... (53.1) (56.5) (64.0)
Operating profit................................................. 21.1 27.9 33.2
Other income including interest.................................. (0.3) (0.4) (0.2)
Profit before tax and before goodwill............................ 20.8 27.5 33.0
Goodwill......................................................... (1.5) (1.8) (2.0)
Profit before tax................................................ 19.3 25.7 31.0
Diluted earnings per share....................................... $ 1.23 $ 1.68 $ 2.02
</TABLE>
The principal assumptions underlying the projections are as follows:
(i) Revenue growth in the U.S. business, excluding 1997 and 1998
acquisitions, will be 15%.
(ii) Operating margin will increase from 11.3% in 1998 to 15.6% in 2001.
(iii) No revenues or profits from the Company's acquisition in April 1999 or
from future acquisitions are included.
In reaching its decision to acquire the Company, Parent made certain
assumptions of its own with regard to revenues, operations and costs of the
Company's businesses as a wholly owned subsidiary of Parent.
8. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER
GENERAL. Parent is the holding company for Carat, the leading group of
media communications specialists, with 1998 world-wide billings of over $9
billion, of which the United States represents over $1 billion. Carat's services
span the provision of media strategy, planning and buying of communication in
traditional media, TV, press, radio, cinema and outdoor, including programming
and media or event sponsorship. Response media such as direct mail, direct
response advertising, digital TV and the internet increase Carat's competitive
edge. Carat has offices in 31 countries and has the largest market share in
Europe with market share of over 12%. Parent's principal executive office is
located at 11A West Halkin Street, London SW1X 8JL.
The Purchaser, a Delaware corporation, was recently incorporated for the
purpose of acquiring the Company. The Purchaser has not conducted any other
business. The principal executive office of the Purchaser is located at 3 Park
Avenue, New York, New York 10016. All outstanding shares of common stock of
Purchaser are indirectly owned by Parent.
13
<PAGE>
The name, business address, present principal occupation or employment,
five-year employment history and citizenship of each of the directors and
executive officers of the Purchaser and Parent as well as the name, principal
business and address of the corporation or other organization in which such
present occupation or employment is carried on are set forth in Schedule I
hereto.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION FOR PARENT. Set forth below is
certain summary selected financial information with respect to Parent for the
years ended December 31, 1998, 1997 and 1996. The selected consolidated
financial data are stated in pounds sterling. On May 2, 1999, The New York Times
reported that, as of April 30, 1999, one pound sterling equaled 1.6090 U.S.
dollars. The summary below is qualified in its entirety by reference to Parent's
Report and Accounts 1998 filed as an exhibit to the Tender Offer Statement on
Schedule 14D-1 with respect to the Offer filed by the Purchaser and Parent (the
"Schedule 14D-1"), which may be inspected and copies obtained at the offices of
the Commission as set forth in Section 7 (except that they will not be available
at the regional offices of the Commission), and such financial information and
related notes are incorporated herein by reference. Stockholders of the Company
may also obtain copies of Parent's Report and Accounts 1998 by contacting the
Company Secretary of Parent at Parent's principal executive office in the United
Kingdom set forth above.
AEGIS GROUP PLC
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(POUNDS STERLING IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
CONSOLIDATED PROFIT AND LOSS ACCOUNT DATA
Turnover.................................................................... L4,130.0 L3,652.5 L3,452.5
Profit on ordinary activities before taxation............................... 50.6 45.6 39.6
Taxation on ordinary activities............................................. (14.5) (12.2) (10.7)
Profit on ordinary activities after taxation................................ 36.1 33.4 28.9
Minority interests.......................................................... (0.6) (0.6) (0.9)
Profit attributable to members of the parent company........................ 35.5 32.8 28.0
Dividends...................................................................
Preference.................................................................. 0.2 (0.8) (0.8)
Ordinary.................................................................... (8.0) (5.8) (5.0)
--------- --------- ---------
Retained profit for the financial year...................................... L27.7 L26.2 L22.2
--------- --------- ---------
--------- --------- ---------
CONSOLIDATED BALANCE SHEET DATA
(At End Of Period)
Cash at bank and in hand.................................................... L114.0 L61.6 L49.1
Current assets excluding cash............................................... 670.0 578.8 513.0
Fixed assets................................................................ 34.8 15.6 15.4
Current liabilities......................................................... (859.3) (733.7) (641.7)
Other liabilities........................................................... (21.1) (28.0) (30.8)
--------- --------- ---------
BALANCE SHEET TOTAL......................................................... L(61.6) L(105.7) L(95.0)
--------- --------- ---------
--------- --------- ---------
Capital and reserves........................................................ L(63.1) L(107.5) L(95.8)
Minority interests.......................................................... 1.5 1.8 0.8
--------- --------- ---------
BALANCE SHEET TOTAL......................................................... L(61.6) L(105.7) L(95.0)
--------- --------- ---------
--------- --------- ---------
</TABLE>
14
<PAGE>
Parent's selected consolidated financial data included herein have been
prepared in accordance with applicable United Kingdom ("U.K.") accounting
standards, including the Companies Act of 1985, which represent generally
accepted accounting principles in the U.K. ("U.K. GAAP"). U.K. GAAP differs in
certain significant respects from United States generally accepted accounting
principles ("U.S. GAAP"). Parent has not determined its financial position or
results of operations for any period under U.S. GAAP. A general summary of the
significant differences between U.K. GAAP and U.S. GAAP is set forth below.
However, Parent believes that the differences between U.K. GAAP and U.S. GAAP
are not material to a decision by a holder of Shares whether to sell, tender or
hold any Shares.
SUMMARY OF CERTAIN SIGNIFICANT DIFFERENCES BETWEEN U.K. GAAP AND U.S. GAAP
GOODWILL. For acquisitions before January 1, 1998, the excess of the cost
of shares in subsidiaries and associates over the fair value of underlying
separable net assets at the date of acquisition is deducted from Parent's
consolidated stockholders' equity. For acquisitions on or after January 1, 1998,
goodwill is capitalized. The estimated useful life of the goodwill is examined
for each acquisition on a case by case basis to determine the appropriate
accounting treatment. There is a rebuttable presumption that goodwill has an
estimated useful life of not more than 20 years although U.K. GAAP permits no
amortization under certain circumstances. Under U.S. GAAP, goodwill is
capitalized and amortized over its estimated useful life, but not more than 40
years.
CONTINGENT PAYMENTS ON ACQUISITIONS. Where the consideration for an
acquisition includes payments which are contingent on certain events, a
provision is included based on an estimate of the likely payment to be made.
Under U.S. GAAP, no provision is made for contingent consideration until the
amount is determined.
DISPOSAL OF BUSINESSES. Profits and losses on disposal of a subsidiary or
associate under U.K. GAAP are calculated as the net of the proceeds over (i)
carrying value plus (ii) on acquisitions prior to January 1, 1998, amounts with
respect to goodwill previously charged to stockholders' equity and on
acquisitions on or after January 1, 1998, the unamortized element of goodwill.
U.S. GAAP reflects the unamortized element of goodwill in the calculation.
DIVIDENDS. Ordinary share dividends are provided in the financial year in
respect of which they are recommended by the board of directors for approval by
the shareholders. Under U.S. GAAP, such dividends are not provided for until the
date declared.
DEFERRED TAXATION. Deferred taxation is provided where it is probable that
a taxation liability will crystallize. Under U.S. GAAP, as provided by Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes," full
provision must generally be made for all potential taxation liabilities and
assets (where likelihood of realization is greater than 50%).
PENSIONS. Pension costs, based on actuarial assumptions and methods, are
charged in the accounts so as to allocate the cost of providing benefits over
the service lives of employees in a consistent manner approved by the actuary.
U.S. GAAP prescribes the method of actuarial valuation and also requires assets
to be assessed at fair value and the assessment of liabilities to be based on
current interest rates.
9. SOURCES AND AMOUNTS OF FUNDS
Purchaser will require approximately $310 million to acquire all of the
Shares pursuant to the Option Agreement, the Offer and the Merger, pay cash to
holders of the Company's employee stock options and pay the fees and expenses
incurred in connection with the Offer, the Option Agreement and the Merger.
Purchaser expects to obtain the necessary funds by way of debt financing under
the loan facility agreement described below and a capital contribution from
Parent.
15
<PAGE>
Purchaser and Parent have entered into a Revolving Credit and Term Loan
Facility (the "Loan Agreement") dated April 29, 1999 under which, subject to
certain conditions, National Westminster Bank PLC (the "Bank") will make
available a L250 million facility comprising (a) a term loan facility (the "Term
Loan Facility") of L200 million the principal purpose of which is to fund the
Offer, the Option Agreement, the Merger and related fees and expenses and (b) a
revolving credit facility (the "Revolving Credit Facility" and together with the
Term Loan Facility, the "Facility") of L50 million the purpose of which is to
refinance an existing credit facility of Parent. The borrowers under the Term
Loan Facility are Purchaser and Parent and Parent is the borrower under the
Revolving Credit Facility. Parent has guaranteed the obligations of Purchaser
under the Loan Agreement. The Facility is unsecured.
The Loan Agreement contains customary representations and warranties,
financial and restrictive covenants, including limitations on creation of
security over assets, disposals and employee benefit plans, and conditions
precedent which must be satisfied before any loan under the Facility may be
drawn down. In addition, there are conditions precedent which must also be
satisfied before any loan can be drawn down under the Term Loan Facility. In
respect of term loans to be used to purchase Shares pursuant to the Option
Agreement, an additional condition precedent to draw down is that all such
options shall have been exercised by Parent. In respect of term loans to be used
to purchase Shares under the Offer or the Merger, draw downs are conditional on
the Placing Agreement described below having become wholly unconditional (except
as to the shares to be issued pursuant to such agreement having been admitted to
listing by the London Stock Exchange) and such agreement not having been
terminated.
The final maturity date in respect of the Term Loan Facility is six months
from the date of the Loan Agreement. The Term Loan Facility is available for
drawing until the final maturity date of the Facility and is repayable in full
on that date.
The loans under the Facility will bear interest at the rate which the Bank
quotes on the relevant rate fixing day to leading banks in the London interbank
market for the offering of deposits in the currency of the relevant loan for a
period comparable to the interest period of the relevant loan plus a margin of
0.65% per annum for the first three months from the date of the Loan Agreement
and 0.80% per annum for the remaining three months together with certain
mandatory costs. The Facility must be prepaid in full in the event of a change
of control (as defined in the Loan Agreement) of Parent.
Purchaser and Parent have agreed to pay certain fees and the reasonable
costs and expenses of the Bank arising in connection with the Loan Agreement.
Purchaser and Parent have also agreed to indemnify the Bank and its directors,
officers and employees from certain liabilities except such as may result from
the wilful default or gross negligence of any such person.
In addition to the debt financing described above, L114 million is expected
to be made available as a capital contribution to Purchaser from Parent,
directly or indirectly via other subsidiaries of Parent. Purchaser has
undertaken to use such contribution to prepay amounts it has drawn down under
the Term Loan Facility.
Parent expects such funds to be made available for the capital contribution
to Purchaser through an issue of its shares pursuant to a Placing Agreement
dated as of April 30, 1999 (the "Placing Agreement"), between Parent and Hoare
Govett Limited ("HG"). Under the Placing Agreement, subject to certain
conditions, HG has agreed to procure persons to accept the allotment of those
shares, failing which itself to accept the allotment of those shares. Parent has
agreed to pay certain commissions, costs and expenses of HG and has also agreed
to indemnify HG, its directors, employees and officers against certain
liabilities arising in connection with the placing.
THE OFFER DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO PURCHASE ANY SHARES OR OTHER SECURITIES OF PARENT. The shares of Parent to be
issued under the Placing Agreement have not been and will not be registered
under the Securities Act, and they may not, as part of their distribution, be
offered, sold, taken up, renounced or delivered, directly
16
<PAGE>
or indirectly, in the United States, except pursuant to an exemption from, or in
transactions not subject to, the registration requirements of the Securities
Act.
It is expected that amounts outstanding under the Facility on the final
maturity date will be refinanced through a new syndicated loan facility but,
other than appointing the Bank as the arranger, no specific plans with respect
thereto have yet been made.
THE OFFER IS NOT CONDITIONED UPON PURCHASER OBTAINING FINANCING.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
The Company has informed Parent that, on January 8, 1999, the Company
engaged Schroder & Co. Inc. ("Schroders") to assist it in reviewing its
strategic alternatives. On January 12, 1999, Schroders met with Company
management and together identified a list of six companies that they considered
possible candidates for a strategic alliance or transaction based upon apparent
business synergies or previously expressed interest in acquiring the Company. At
this meeting, it was decided that Schroders would contact Parent, along with
certain other companies.
On March 15, 1999, Crispin Davis, Parent's Chief Executive Officer, and Pat
Doble of Parent met with Verne Churchill, Thomas Payne, Lawrence Labash and
Timothy Sullivan of the Company in Arlington Heights, Illinois, at which meeting
each company gave a presentation to the other regarding its business, and the
parties discussed potential business opportunities.
On March 23, 1999, Parent and the Company executed a
confidentiality/standstill agreement. A proposed form of merger agreement was
sent to Parent's legal counsel on March 25, 1999, and on or about that date,
Schroders orally advised Parent that final proposals were due by April 9, 1999.
On March 26, 1999, a second meeting was held between Crispin Davis of Parent
and Thomas Payne, Sanford Schwartz, Lawrence Labash and Timothy Sullivan of the
Company in Arlington Heights, Illinois, at which meeting Parent discussed its
business and the parties further discussed potential business opportunities.
On March 30 and 31, 1999, Pat Doble and Sunil Garga of Parent met with
Michael Freehill, Stephen Weber and Peter LaSalle of the Company primarily to
discuss the types of products and services offered by the Company. On March 30
and 31, Parent's financial staff and legal counsel also conducted due diligence
meetings with Company representatives in Arlington Heights, Illinois.
By letter dated April 8, 1999, Parent submitted a non-binding offer to
acquire 100% of the Company's capital stock for $31.00 per share in cash. The
offer was conditioned upon Parent receiving an irrevocable "lock-up" agreement
from the Company's major stockholder and the Company's five management directors
and completion of its due diligence investigation, and was not subject to
financing. The offer also sought a two-week exclusivity period to negotiate and
sign a definitive merger agreement.
On April 14, 1999, the Company and Parent entered into an exclusivity
agreement (the "Exclusivity Letter") pursuant to which the parties agreed to
commence negotiation of a definitive merger agreement for Parent's proposed
acquisition of the Company on the terms set forth in Parent's preliminary
proposal dated April 8, 1999, and, thereafter, the parties and their counsel
negotiated the Merger Agreement and the Option Agreement. Under the terms of the
Exclusivity Letter, the Company agreed until 12:00 midnight on April 27, 1999 to
negotiate exclusively with Parent and to not solicit any offer or engage in any
negotiations other than with Parent for the merger or sale of the business or
assets of the Company or any material part thereof or for any tender or exchange
offer for the Company's capital stock. Subject to certain conditions, the
Exclusivity Letter provided that the Company had the right to terminate
negotiations with Parent in the event that the Company received an unsolicited
proposal for the acquisition of the Company from another party which in the
opinion of the Company's financial advisors was, or was
17
<PAGE>
reasonably likely to lead to, a proposal that was more favorable to the
Company's stockholders than Parent's proposal (a "Superior Bid"). The
Exclusivity Letter required the Company to promptly notify Parent of its receipt
of any Superior Proposal, and the terms thereof, and Parent thereafter had two
business days within which to amend its proposal to cause such third party
proposal to no longer be a Superior Proposal or the exclusivity provisions of
the Exclusivity Letter would cease to apply. In the event the Company terminated
or abandoned negotiations with Parent due to its receipt of a Superior Bid prior
to the end of the exclusivity period, the Company agreed to reimburse Parent
within five days of termination an amount up to $150,000 for its reasonable
out-of-pocket expenses and fees. In addition, if the Company became obligated to
make the $150,000 reimbursement and entered into a definitive agreement with the
party submitting such Superior Bid within six months and consummated such
transaction within 12 months of the termination of the Exclusivity Letter, the
Company would be required to pay Parent a $9,000,000 termination fee and to
reimburse it for up to $750,000 of its expenses and fees. On April 27, the
exclusivity period under the Exclusivity Letter was extended until April 30,
1999.
Commencing shortly after the Exclusivity Letter was executed and continuing
to the date of the execution of the Merger Agreement, Parent and Purchaser
conducted additional due diligence reviews of the Company, both financial and
legal.
On April 16, 1999, Crispin Davis and Frank Law, the Chief Executive Officer
and Non-Executive Chairman of Parent, respectively, met with Verne Churchill,
Thomas Payne, Sanford Schwartz, Lawrence Labash and Timothy Sullivan of the
Company in Arlington Heights, Illinois to discuss the Company's business and its
business plans and strategies.
On April 20, 1999, Thomas Payne, Sanford Schwartz and Lawrence Labash of the
Company met with Crispin Davis at Parent's offices in London, England to discuss
Parent's business and the operation of its subsidiaries.
The Company has informed Parent that, on April 28, 1999, the Company's Board
met to review and discuss Parent's proposed acquisition of the Company. At the
meeting, Schroders delivered its written opinion to the Board that, as of such
date and based upon and subject to certain matters stated therein, the
consideration to be received by the holders of the Shares pursuant to the Merger
Agreement with Parent was fair, from a financial point of view, to such holders.
The Company's legal counsel gave a presentation to the Board on the terms of the
Merger Agreement and related documents, the structure of the Offer and the
Merger and the Board's fiduciary duties to its stockholders. The Board discussed
the terms of the proposed acquisition and asked questions of Schroders and the
Company's legal counsel. Following this discussion, the Board (i) determined
that each of the Merger Agreement, the Offer and the Merger are fair to and in
the best interests of the Company's stockholders, (ii) approved the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, and (iii) recommended acceptance of the Offer, approval and adoption of
the Merger Agreement and approval of the Merger by the Company's stockholders.
The Board also approved the Option Agreement for purposes of Section 203 of the
DGCL.
On April 29, 1999, Schroders contacted Parent to inform it of the existence
of a proposal from another party to acquire the Company. Parent advised
Schroders that it was not willing to raise its offer to a price above $31.00 per
Share or delay the execution of the Merger Agreement, which was scheduled for
later that day, and indicated that if the Merger Agreement was not executed as
scheduled that it would withdraw its offer. The Company's Board of Directors, at
a meeting convened on that day, reaffirmed its approval of the Merger Agreement
with Parent and Purchaser and Schroders reaffirmed its written opinion of April
28, 1999.
On April 29, 1999, the Company, Parent and Purchaser executed the Merger
Agreement, and, simultaneously therewith, Parent and certain of the Company's
stockholders executed the Option Agreement. The transaction was publicly
announced in the U.S. prior to the opening of the Nasdaq National Market on
April 30, 1999.
18
<PAGE>
11. THE OFFER AND MERGER; MERGER AGREEMENT; OPTION AND VOTING AGREEMENT
THE MERGER AGREEMENT.
The following summary of certain provisions of the Merger Agreement is
presented only as a summary and is qualified in its entirety by reference to the
Merger Agreement, a copy of which has been filed as an exhibit to Purchaser's
and Parent's Schedule 14D-1.
THE OFFER. The Merger Agreement provides that as soon as practicable after
the date of execution of the Merger Agreement, but in no event later than five
business days after the day on which the Purchaser's intention to make the Offer
is announced, Purchaser will commence the Offer for all of the outstanding
Shares at a price of not less than $31.00 per share in cash, net to the seller,
subject to the satisfaction of the conditions set forth in Section 15 and,
subject only to the terms and conditions of the Offer, will consummate the Offer
as soon as legally permissible. Purchaser may waive any condition to the Offer,
increase the price per Share payable in the Offer and make any other changes in
the terms and conditions of the Offer. However, no change may be made which
decreases the price per Share or changes the form of consideration payable in
the Offer, or which amends any of the conditions described in Section 15 or
which imposes conditions to the Offer other than those described in Section 15
or which extends the Offer (except as set forth in the following sentence),
without the consent of the Company. Purchaser may, without the consent of the
Company, (i) extend the Offer beyond the scheduled expiration date (the initial
scheduled expiration date being 20 business days following the commencement of
the Offer) in its sole discretion from time to time, if on the initial scheduled
or any extended expiration date of the Offer, any of the conditions to
Purchaser's obligation to accept for payment, and to pay for, the Shares, shall
not be satisfied or waived, or (ii) extend the Offer for a period not to exceed
10 business days, notwithstanding that all conditions to the Offer are satisfied
as of such expiration date of the Offer, if, immediately prior to the expiration
date of the Offer (as it may be extended), the Shares tendered and not withdrawn
pursuant to the Offer, together with the Shares subject to the Option Agreement,
without duplication, equal less than 90% of the outstanding Shares and Purchaser
expressly irrevocably waives any condition (other than the Minimum Condition)
that subsequently may not be satisfied during such extension of the Offer, or
(iii) extend the Offer for any period required by any rule, regulation or
interpretation of the Commission or the staff thereof applicable to the Offer;
provided that, unless agreed to by the Company, any extended expiration date
pursuant to the immediately preceding clause (i) may not be later than 90 days
from the date of commencement of the Offer, or 120 days from such date if within
such 90 day period a tender offer for at least 20% of the outstanding Shares is
commenced by any person who is not an affiliate (as defined under the rules
promulgated pursuant to the Securities Act of 1933) of Parent or Purchaser (an
"Intervening Tender Offer").
In the event that (i) the Minimum Condition shall not have been satisfied or
(ii) the other conditions described in Section 15 shall not have been satisfied
or waived at the scheduled or any extended expiration date of the Offer, at the
request of the Company, the Purchaser has agreed to extend the expiration date
of the Offer in increments of five (5) business days each until the earliest to
occur of (x) the satisfaction or waiver of the Minimum Condition or such other
condition, (y) the termination of the Merger Agreement in accordance with its
terms, and (z) ninety (90) days from commencement of the Offer or one hundred
twenty (120) days from such date in the event of an Intervening Tender Offer
(unless extended by agreement of the parties).
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions thereof, at the Effective Time, the Purchaser will be merged with and
into the Company and the separate corporate existence of Purchaser will cease.
At the election of Parent exercised prior to the filing of any proxy statement
pursuant to the Merger Agreement, the Company will be merged with and into
Purchaser and the separate corporate existence of the Company will cease. At the
Effective Time, by virtue of the Merger and without any action on the part of
Purchaser, the Company, the surviving corporation or the holder of Shares, (i)
each Share issued and outstanding immediately prior to the Effective Time (other
than Shares
19
<PAGE>
owned by Purchaser, Parent or any direct or indirect subsidiary of Parent or
owned by the Company or any direct or indirect subsidiary of the Company and
Shares that are outstanding immediately prior to the Effective Time and which
are held by stockholders who shall have not voted in favor of the Merger or
consented thereto in writing and who shall have demanded properly in writing
appraisal for such Shares in accordance with Section 262 of the DGCL) will be
converted into the right to receive $31.00 per Share, or such higher amount as
may be paid if the Offer is amended, without interest (the "Merger
Consideration"), and (ii) each share of Series B Preferred Stock which is issued
and outstanding immediately prior to the Effective Time shall be canceled and
retired, and no payment shall be made with respect thereto. Pursuant to the
Merger Agreement, all shares of common stock of Purchaser issued and outstanding
immediately prior to the Effective Time will be converted into and exchanged for
a sole validly issued, fully paid and nonassessable share of common stock of the
surviving corporation (the "Surviving Corporation").
STOCKHOLDERS MEETING. The Merger Agreement provides that the Company will
take all action necessary, in accordance with the DGCL and its Certificate of
Incorporation and By-Laws to convene a meeting of its stockholders to consider
and vote upon the approval of the Merger Agreement and the Merger, if necessary
to comply with applicable law, as promptly as practicable after the consummation
of the Offer. The Merger Agreement provides that, if Company stockholder
approval is required by law in order to consummate the Merger, the Company and
Parent shall prepare and file with the Commission as soon as is reasonably
practicable a preliminary proxy or information statement relating to the Merger
and the Merger Agreement and, as promptly as practicable thereafter, subject to
compliance with the rules and regulations of the Commission, shall mail a
definitive proxy statement or information statement to stockholders of the
Company. The Board will recommend such approval and the Company will use its
best efforts to solicit such approval; provided, however, that the Board at any
time prior to the Effective Time, may withdraw, modify or change any such
recommendation or refrain from soliciting proxies in favor of the Merger to the
extent that the Board determines in good faith after consultation with and based
upon the advice of outside legal counsel that the failure to so withdraw, modify
or change its recommendation or refrain from soliciting proxies would cause the
Board to breach its fiduciary duties to the Company's stockholders under
applicable law. In any event, the Board is obligated under the Merger Agreement
to submit the Merger Agreement to the stockholders of the Company.
Parent and its affiliates will vote all Shares over which they exercise
voting control in favor of the Merger Agreement and the Merger. Under the DGCL,
if Purchaser acquires at least 90% of the outstanding Shares, Purchaser will be
able to approve the Merger without a vote of the Company's stockholders. See
Section 12 for a further discussion of certain provisions of the DGCL applicable
to the Merger.
CONDUCT OF BUSINESS. Pursuant to the Merger Agreement, prior to the
Effective Time, except to the extent that Purchaser shall otherwise consent, the
Company and its subsidiaries shall conduct their businesses in the ordinary
course of business and will not take any material action except in the ordinary
course of business and consistent with past practice. The Company and its
subsidiaries will use their respective best efforts to maintain and preserve
their respective business organizations, assets and advantageous business
relationships.
Without Parent's prior written consent, neither the Company nor any of its
subsidiaries will directly or indirectly do any of the following:
(a) amend its charter or by-laws (or comparable charter documents);
(b) except for Shares the Company may be obligated to issue in
connection with a prior acquisition, authorize for issuance, issue, sell,
deliver or agree or commit to issue, sell or deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase or otherwise) any stock of any class or any other
securities, except in the case of Shares of the Company, as required by
employee options outstanding on the date of the execution of the Merger
Agreement or Company employee benefit plans as in effect on the date of the
execution of
20
<PAGE>
the Merger Agreement, or amend any of the terms of any such securities or
agreements outstanding on the date of the execution of the Merger Agreement;
(c) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, or redeem or otherwise acquire any securities of the Company
or any of the subsidiaries;
(d) (i) incur or assume any long-term debt, except in the ordinary
course of business under existing facilities or required refinancings or
replacements thereof, or incur or assume any short-term debt, except in the
ordinary course of business, or issue or sell any debt securities or rights
to acquire any debt securities of the Company or any subsidiary; (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person except wholly owned subsidiaries of the Company in the ordinary
course of business and consistent with past practice; or (iii) make any
loans, advances or capital contributions to, or investments in, any person
other than a wholly owned subsidiary of the Company in the ordinary course
of business (except for customary loans or advances to directors, officers
or employees in accordance with past practice or as required by existing
contractual arrangements or agreements);
(e) other than as required by ERISA enter into, adopt or amend any
bonus, profit sharing, compensation, severance, termination, stock option,
stock appreciation right, restricted stock, performance unit, pension,
retirement, deferred compensation, employment, severance or other employee
benefit agreements, trusts, plans, funds or other arrangements for the
benefit or welfare of any director, officer or employee, or (except (i) in
the case of persons whose compensation has been established by the
Compensation Committee of the Board of Directors, for increases in amounts
previously approved by such Committee, and (ii) in the case of all other
directors, officers or employees, for normal increases in the ordinary
course of business that are consistent with past practices and that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to the Company), increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit or make any
distribution or award not required by any existing plan or arrangement
(including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units) or
enter into any contract, agreement, commitment or arrangement to do any of
the foregoing;
(f) except pursuant to existing contractual arrangements or agreements
disclosed pursuant to the Merger Agreement, acquire, sell, lease, license,
dispose of, mortgage or otherwise encumber any assets outside the ordinary
course of business or any assets which are material, in the aggregate, to
the Company and its subsidiaries, taken as a whole, or enter into any
material commitment or transaction outside the ordinary course of business;
(g) except as may be required by law, take any action to terminate or
amend or accelerate the vesting of any benefits under any of its employee
benefit plans;
(h) waive or release any rights material to the Company and its
subsidiaries, taken as a whole, or make any payment, direct or indirect, of
any material liability of the Company or any of its subsidiaries before the
same comes due in accordance with its terms;
(i) acquire or agree to acquire, including, without limitation, by
merging or consolidating with, or by purchasing a substantial equity
interest in or substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof without Parent's prior written consent;
(j) except as set forth on a schedule to the Merger Agreement, make any
capital expenditure or expenditures which exceed $250,000 in the aggregate;
and
21
<PAGE>
(k) take, or agree in writing or otherwise to take, any of the foregoing
actions or any action which would make any representation or warranty of the
Company contained in this Agreement untrue or incorrect as of the date when
made or as of a future date.
NO SOLICITATION. Pursuant to the Merger Agreement, the Company agreed to
immediately cease and cause to be terminated all existing discussions or
negotiations relating to a Competing Transaction (as defined below) with any
parties conducted prior thereto. The Company has agreed not to, directly or
indirectly, and to instruct its representatives not to, directly or indirectly,
(i) initiate, solicit or encourage (including by way of furnishing information
or assistance), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Competing Transaction or (ii) enter into or maintain discussions or
negotiate with any person in furtherance of or relating to such inquiries or to
obtain a Competing Transaction or (iii) agree to or endorse any Competing
Transaction or (iv) authorize or permit any representative of the Company or any
of its subsidiaries to take any such action. The Company also agreed to promptly
notify Parent if any such inquiries or proposals are made regarding a Competing
Transaction and inform Purchaser in reasonable detail of any such inquiry or
proposal. The Company also agreed to keep Parent informed, on a current basis,
of the significant developments and changes in status of any such proposals;
provided, however, that prior to consummation of the Offer, the Merger Agreement
will not prohibit the Board from (i) furnishing information to, or entering into
discussions or negotiations with, any person that after the date of the Merger
Agreement makes an unsolicited proposal regarding a Competing Transaction or
agreeing to or endorsing any Competing Transaction, if, and only to the extent
that, (A) the Board, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is required
for the Board to comply with its fiduciary duties to the Company's stockholders
imposed by Delaware law, (B) prior to furnishing such information to, or
entering into discussions or negotiations with such person or agreeing to or
endorsing any Competing Transaction, the Board determines in good faith, after
consultation with and based upon the advice of a financial advisor of nationally
recognized reputation, that such Competing Transaction is a Superior Proposal
(as defined below), (C) prior to furnishing such information to, or entering
into discussions or negotiations with, such person, the Company provides written
notice to Purchaser to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person, and (D) such
information to be so furnished has been previously delivered to Purchaser; or
(ii) complying with Rule 14e-2 promulgated under the Exchange Act with regard to
a Competing Transaction. The Company further agreed that if it determines that a
Competing Transaction is a Superior Proposal, it will immediately notify
Purchaser of such determination, and will not take any action with respect to
such Competing Transaction or the Merger Agreement for at least 48 hours after
such notification.
For purposes of the Merger Agreement, "Competing Transaction" means any of
the following involving the Company or any of its subsidiaries: (a) any merger,
consolidation, share exchange, business combination, or other similar
transaction; (b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 20% or more of the assets of the Company and its subsidiaries,
taken as a whole, in a single transaction or series of transactions; (c) any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of the outstanding shares of capital stock of
the Company or the filing of a registration statement under the Securities Act,
in connection therewith; (d) any solicitation of proxies in opposition to
approval by the Company's stockholders of the Merger; (e) the adoption by the
Company of a plan of liquidation, the declaration or payment by the Company of
an extraordinary dividend on any of its shares of capital stock or the
effectuation by the Company of a recapitalization or other type of transaction
that would involve either a change in the Company's outstanding capital stock or
a distribution of assets of any kind to the holders of such capital stock; (f)
the repurchase by the Company or any subsidiary of the Company of 20% or more of
the outstanding shares of Company Common Stock; or (g) any agreement to, or
public announcement by the Company or any other person, entity or group of a
proposal, plan or intention to do any of the foregoing.
22
<PAGE>
For purposes of the Merger Agreement, a "Superior Proposal" means any
proposal relating to a Competing Transaction made by a third party on terms
which if consummated the Board determines in its good faith judgment (based upon
the advice of a financial advisor of nationally recognized reputation) to be
more financially favorable to the Company's stockholders than the Offer and the
Merger and for which financing, to the extent required, is then committed or
which, in the good faith judgment (based upon the advice of a financial advisor
of nationally recognized reputation) of the Board, is reasonably capable of
being financed by such third party.
THE COMPANY'S BOARD OF DIRECTORS. The Merger Agreement provides that
promptly upon the acceptance for payment and purchase by Purchaser pursuant to
the Offer and the Option Agreement of such number of Shares which represents at
least a majority of the outstanding Shares (on a fully diluted basis), and from
time to time thereafter, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors as
will give the Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, representation on the Board of Directors equal to at least that
number of directors which equals the product of the total number of directors on
the Board of Directors (giving effect to the directors designated by Parent)
multiplied by the percentage that such number of Shares so accepted for payment
and paid for by the Purchaser bears to the number of Shares outstanding. The
Company shall, at such time, cause the Purchaser's designees to be so elected,
provided that (i) until the Effective Time the Board of Directors will have at
least two directors who are directors as of the date of execution of the Merger
Agreement who are not employees of the Company and who have not been designated
as directors of the Company by Parent and its affiliates (the "Independent
Directors") and (ii) if the number of Independent Directors is reduced below two
because of disability or resignation, the remaining Independent Director will be
entitled to designate one person to fill such vacancy who will be deemed to be
an Independent Director for purposes of the Merger Agreement.
Subject to applicable law, the Company agreed to take all action necessary
to effect any such election, including mailing to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, and the Company agreed to include in the Schedule 14D-9
mailed to stockholders such information. The Merger Agreement also provides that
prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors shall be required to (i) amend or terminate the Merger
Agreement on behalf of the Company, (ii) exercise or waive any of the Company's
rights or remedies under the Merger Agreement, (iii) extend the time for
performance of the Purchaser's obligations under the Merger Agreement, or (iv)
take any other action by the Company in connection with the Merger Agreement
required to be taken by the Board of Directors.
DIRECTORS' AND OFFICERS' INDEMNIFICATION. The Merger Agreement requires
that for a period of six years after the Effective Time, the Surviving
Corporation will maintain, without modification or amendment that would
adversely affect the rights thereunder of any current or former director or
officer of the Company or any of its subsidiaries (an "Indemnified Party"), the
provisions of the Company's certificate of incorporation and bylaws with respect
to indemnification and liability of officers, directors and employees. In
addition, the Merger Agreement provides that the Surviving Corporation will
honor the Company's existing indemnification agreements that have been executed
by certain of the Company's present and former directors.
The Merger Agreement further provides that from and after the Effective
Time, the Surviving Corporation shall indemnify, defend and hold harmless the
Indemnified Parties against all losses, expenses, claims, damages, liabilities,
judgments or amounts that are paid in settlement of (with approval of Parent and
the Surviving Corporation) in connection with, any claim, action, suit,
proceeding or investigation, based in whole or in part on the fact that such
person is or was such a director or officer and arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by the Merger Agreement), in each case
to the fullest extent permitted under the DGCL (and shall pay expenses in
advance of the final disposition of any such action or proceeding to
23
<PAGE>
each Indemnified Party to the fullest extent permitted under the DGCL, upon
receipt from the Indemnified Party to whom expenses are advanced of the
undertaking to repay such advances contemplated by Section 145(e) of the DGCL).
The Surviving Corporation has agreed to maintain in effect for not less than
six years after the Effective Time officers' and directors' liability insurance
covering the Indemnified Parties who are currently covered by the Company's
officers' and directors' liability insurance policy on terms no less favorable
than those of such policy in terms of coverage and amounts; provided, however,
that the Surviving Corporation is not required to pay for such insurance in
excess of 200% of the rates paid at the date of the Merger Agreement but in such
case shall purchase as much coverage as possible for such amount.
COMPANY OPTIONS. The Merger Agreement provides that, at the Effective Time,
each holder of an Employee Option, whether or not then vested or exercisable
shall, in settlement thereof, receive for each Share subject to such Employee
Option an amount (subject to any applicable withholding tax) in cash equal to
the difference between the Offer Consideration and the per Share exercise price
of such Employee Option to the extent such difference is a positive number (such
amount being hereinafter referred to as, the "Option Consideration"). Upon
receipt of the Option Consideration, the Employee Option shall be canceled.
Prior to the Effective Time, the Company will obtain all necessary consents or
releases from holders of Employee Options under the Company's stock option plan
and will take all such other lawful action as may be necessary to effectuate the
foregoing. Except as otherwise agreed to between the Company and the Parent, (i)
all stock option plans of the Company will terminate as of the Effective Time
and the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any subsidiary thereof, will be canceled as of the Effective Time,
and (ii) the Company shall ensure that following the Effective Time no
participant in any stock option plan or other plans, programs, arrangements or
agreements will have any right thereunder to acquire equity securities of the
Company, the Surviving Corporation or any subsidiary thereof and to terminate
all such plans. Prior to the Effective Time, the Company will not take any
action to accelerate the vesting of any unvested stock options as a result of
the Offer or the Merger.
EMPLOYEE STOCK OWNERSHIP PLAN. The Merger Agreement provides that all
accounts in the Company's Employee Stock Ownership Plan (the "ESOP") will become
100% vested as of the Effective Time. The Company will take all steps necessary
to terminate, as of or as promptly as practicable after the Effective Time, the
ESOP, and the balance of each participant's account in the ESOP will be
delivered to such participant on or as promptly as practicable after the
termination of the ESOP.
EMPLOYEES. Following the Effective Time, the Surviving Corporation has
agreed to pay all benefits due under the terms of all contracts, agreements,
arrangements, policies and commitments of the Company and its subsidiaries with
or with respect to its current or former employees, officers and directors which
benefits are vested on or prior to the Effective Time or which become vested
thereafter or as a result of the transactions contemplated hereby. Parent has
agreed to provide, for a period ending on the first anniversary of the Effective
Time, or cause the Surviving Corporation to provide employees of the Company and
its subsidiaries with employee benefits (other than stock options and other
equity-based benefits) in the aggregate substantially no less favorable than
those benefits provided at the Effective Time.
CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The Merger Agreement provides
that the respective obligations of each party to consummate the Merger are
subject to the satisfaction of a number of conditions, including, but not
limited to, (i) the approval and adoption of the Merger Agreement by the
stockholders of the Company (if required), (ii) the expiration of any waiting
period applicable to the consummation of the Merger under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and any required
approvals in connection with any premerger notification filing with any relevant
non-US antitrust authority shall have been obtained and shall remain in full
force
24
<PAGE>
and effect, (iii) no preliminary or permanent injunction or other order, decree
or official action issued by any United States Federal or state or foreign court
or regulatory or administrative agency or commission of competent jurisdiction,
nor any statute, rule, regulation or executive order promulgated or enacted by
any United States Federal or state or foreign governmental authority of
competent jurisdiction, shall be in effect, which would (A) make the acquisition
or holding by Parent or its subsidiaries or affiliates of the shares of Common
Stock of the Surviving Corporation illegal or otherwise prevent the consummation
of the Merger, or (B) impose any limitations on the ability of Parent
effectively to control, directly or indirectly through its subsidiaries, in any
material respect the business and operations of the Company, and (iv) the
Purchaser shall have accepted for payment and paid for Shares tendered pursuant
to the Offer; provided that this condition shall be deemed waived by the
Purchaser and Parent if the failure to accept for payment and purchase Shares
pursuant to the Offer is for any reason other than the failure to satisfy the
conditions to the Offer set forth in the Merger Agreement.
CONDITIONS TO THE OBLIGATIONS OF PARENT AND PURCHASER. The Merger Agreement
provides that the obligations of Parent and Purchaser to consummate the Merger
are subject to the satisfaction of a number of further conditions, including but
not limited to, (i) the accuracy of representations and warranties of the
Company as of the times, and subject to the qualifications, specified in the
Merger Agreement, (ii) the performance by the Company of its agreements and
covenants contained in the Merger Agreement unless such failures together in
their entirety would not have a material adverse effect on the Company and its
subsidiaries taken as a whole ("Material Adverse Effect") and (iii) all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and other third parties as are necessary in
accordance with the transactions contemplated by the Merger Agreement shall have
been obtained and be in full force and effect, except such licenses, permits,
consents, approvals, authorizations, qualifications and orders, the failure to
deliver which would not have a Material Adverse Effect with respect to the
Company.
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The Merger Agreement provides
that the obligations of the Company to effect the Merger are subject to the
satisfaction of the following further conditions: (i) the accuracy of
representations and warranties of Parent and Purchaser as of the times, and
subject to the qualifications, specified in the Merger Agreement, and (ii) the
performance by Parent and Purchaser of their agreements and covenants contained
in the Merger Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including, but
not limited to, representations by the Company as to corporate organization and
qualification, subsidiaries, capitalization, authority to enter into the Merger
Agreement, filings with the Commission and other governmental authorities, the
absence of certain changes or events, intellectual property, material contracts,
compliance with law, environmental matters, employee benefit matters, the
opinion of the Company's financial advisor, labor relations, the Rights
Agreement, the application of Delaware law, tax returns, audits, brokers and
litigation.
EXPENSES. The Merger Agreement provides that, if (i) Purchaser terminates
the Merger Agreement because, prior to the consummation of the Offer, (A) the
Board of Directors of the Company withdraws, modifies or changes in a manner
adverse to Purchaser, its approval or recommendation of the Offer, the Merger
Agreement or Merger or presents to the stockholders of the Company a Competing
Transaction or resolves to do so or (B) the Company deliberately fails to
perform in any material respect any of its material obligations under the Merger
Agreement; (ii) the Company terminates the Merger Agreement because, prior to
the consummation of the Offer, (A) the Board of Directors of the Company
withdraws, modifies or changes in a manner adverse to Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger or (B) the Board
of Directors recommends a Superior Proposal or resolves to do so; (iii)
Purchaser terminates the Offer because the Minimum Condition is not satisfied
and at or prior to such time the Company has received one or more proposals for
a Competing Transaction which at the time of such occurrence has not been
absolutely and unconditionally withdrawn or abandoned
25
<PAGE>
and within six months after the date of termination of the Merger Agreement a
Competing Transaction is entered into by the Company, and within twelve months
of such termination a Competing Transaction is consummated, then promptly after
such termination (or, with respect to item (iii), upon the consummation of such
Competing Transaction) by Parent or the Company, the Company shall pay to
Purchaser or its designee an amount equal to $9,000,000 (the "Break-up Fee") and
shall reimburse Purchaser or its designee for all of its out-of-pocket costs and
expenses up to an amount equal to $1,500,000.
The Merger Agreement further provides that if the Company terminates the
Merger Agreement because Purchaser shall have failed to commence this Offer
within five business days of the day on which Purchaser's intention to make this
Offer is announced or, prior to the purchase of any Shares pursuant to the
Offer, Purchaser deliberately fails to perform in any material respect any of
its obligations under the Merger Agreement, Purchaser shall pay to the Company
$4,500,000.
Except as set forth in the preceding two paragraphs, all expenses incurred
in connection with the Merger Agreement and the transactions contemplated by the
Merger Agreement will be paid by the party incurring such expenses, whether or
not the Offer or the Merger is consummated.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated
at any time prior to the Effective Time, whether prior to or after approval by
the stockholders of the Company, as follows:
(i) by mutual written consent duly authorized by the Boards of Directors
of each of Parent and the Company;
(ii) by Purchaser if, due to an occurrence which would result in the
failure to satisfy the Minimum Condition or any of the other conditions set
forth in Section 15 of this Offer to Purchase, Purchaser shall have (A)
failed to commence the Offer within five business days after the day on
which Purchaser's intention to make the Offer is announced or (B) terminated
the Offer after compliance with the terms of the Merger Agreement without
any purchase of Shares thereunder;
(iii) by Purchaser, if the Effective Time shall not have occurred on or
before October 31, 1999, unless prior thereto Parent, Purchaser and their
affiliates have acquired beneficial ownership of at least a majority of the
then outstanding Shares;
(iv) by Purchaser, if prior to the consummation of the Offer, the
Company deliberately fails to perform in any material respects any of its
material obligations under the Merger Agreement;
(v) by Purchaser, if prior to the consummation of the Offer, the Board
(a) withdraws, modifies or changes, in a manner adverse to Parent or
Purchaser, its approval or recommendation of the Offer, the Merger Agreement
or the Merger, (b) presents to the stockholders of the Company any Competing
Transaction or (c) resolves to do any of the foregoing;
(vi) by the Company, if Purchaser shall have failed to commence the
Offer within five business days after the day on which Purchaser's intention
to make the Offer is announced.
(vii) by the Company, if the Offer is terminated in accordance with its
terms without the purchase of any Shares thereunder;
(viii) by the Company, if the Offer has not been consummated within the
time period set forth in the Merger Agreement;
(ix) by the Company, if prior to the purchase of any Shares pursuant to
the Offer, the Purchaser deliberately fails to perform in any material
respect any of its obligations under the Merger Agreement;
(x) by the Company, if prior to the purchase of any Shares by Purchaser
pursuant to the Offer, Purchaser deliberately fails to perform in any
material respect any of its obligations under the Merger Agreement; and
26
<PAGE>
(xi) by the Company, if prior to the purchase of any Shares by Purchaser
pursuant to the Offer, the Board of Directors of the Company (A) withdraws,
modifies or changes in a manner adverse to Purchaser its approval or
recommendation of the Offer, the Merger Agreement or the Merger or (B)
recommends to the stockholders of the Company any Superior Proposal, which
is then pending, or resolved to do so; provided that any termination of the
Merger Agreement by the Company pursuant to this provision shall not be
effective until the close of business on the second full business day after
notice of such termination has been given to Purchaser.
OPTION AND VOTING AGREEMENT.
Parent and Verne B. Churchill, Lawrence W. Labash, Jeffery A. Oyster, Thomas
H. Payne, Sanford M. Schwartz, Ned L. Sherwood, Timothy J. Sullivan and MFI
Investors, L.P. have entered into the Option and Voting Agreement, dated April
29, 1999, pursuant to which, among other things, each such stockholder (the
"Selling Stockholders") has agreed (i) to vote the Shares and the Series B
Shares then owned by such stockholder for the Merger and in favor of the
approval and adoption of the transactions contemplated by the Merger Agreement
and against (A) any action or agreement that could reasonably be expected to
impede, interfere with or otherwise materially adversely affect the Merger or
inhibit the timely consummation of the Merger, (B) any action or agreement that
could reasonably be expected to result in a breach any covenant, representation
or warranty or any other obligation of the Company under the Merger Agreement,
and (C) except for the Merger, against any merger, consolidation, business
combination, reorganization, recapitalization, liquidation or sale or transfer
of any material assets of the Company or its subsidiaries; (ii) to grant Parent
an irrevocable proxy to vote such Shares and (iii) not to tender any Shares then
owned by such Selling Stockholder into the Offer, without the consent of Parent.
Additionally, under the Option Agreement, (i) each Selling Stockholder has
granted to Parent, or its permitted assign, an irrevocable option to purchase
all Shares then owned by such Selling Stockholder at a price of $31.00 per Share
at any time on or prior to the expiration date of the Option if after the date
of the Option Agreement a proposal or an offer for a Competing Transaction is
made (which Shares, in the aggregate, represent 30.07% of the Shares on a fully
diluted basis, after giving effect to the exercise of vested employee options);
and (ii) Aegis has agreed to purchase at a price of $31.00 per Share all Shares
held by each Selling Stockholder by 11:59 p.m. on the first business day
immediately following the consummation of the Offer. The Option Agreement
terminates upon the earliest to occur of (i) the closing of the Merger, (ii)
11:59 p.m. on the first business day immediately following the expiration or
consummation of the Offer, (iii) in the event that the Merger Agreement is
terminated prior to any offer or proposal for a Competing Transaction having
been made, the termination date of the Merger Agreement, (iv) the date specified
in a written agreement executed by Parent and each of the Selling Stockholders,
and (v) November 2, 1999; provided that if Parent has exercised the Option on or
before the date that the Option Agreement would otherwise have terminated, the
Option Agreement will terminate on the date of the purchase by Parent of the
Shares of the Selling Stockholders.
The foregoing is a summary of certain provisions of the Option Agreement, is
presented only as a summary and is qualified in its entirety by reference to the
Option Agreement, a copy of which has been filed as an exhibit to Purchaser's
and Parent's Schedule 14D-1.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY; RIGHTS AGREEMENT
PURPOSE. The purpose of the Offer and the Option Agreement is for Parent to
acquire control of all outstanding Shares of the Company. The purpose of the
Merger is for Parent to acquire all Shares, Series B Shares, and other equity
interests not purchased pursuant to the Offer or the Option Agreement. Upon
consummation of the Merger, the Company will become a wholly owned indirect
subsidiary of Parent. The Offer is being made pursuant to the Merger Agreement.
27
<PAGE>
APPROVAL. Under the DGCL, the approval of the Board of Directors of the
Company and the affirmative vote of the holders of a majority of the outstanding
Shares are required to approve and adopt the Merger Agreement. The Board of
Directors of the Company has unanimously approved the Merger Agreement and the
transactions contemplated thereby and, unless the Merger is consummated pursuant
to the short-form merger provisions under the DGCL described below, the only
remaining required corporate action of the Company is the approval and adoption
of the Merger Agreement and the transactions contemplated thereby by the
affirmative vote of the holders of a majority of the Shares and the Series B
Shares, voting as a class. Under the Option Agreement, Parent has obtained from
MFI Investors L.P., the holder of all outstanding Series B Shares its agreement
and irrevocable proxy to vote such Series B Shares for the Merger and in favor
of the approval and adoption of the transactions contemplated by the Merger
Agreement. Accordingly, if the Minimum Condition is satisfied, Parent will have
sufficient voting power to cause the approval and adoption of the Merger
Agreement and the transactions contemplated thereby without the affirmative vote
of any other stockholders.
STOCKHOLDER MEETINGS. In the Merger Agreement, the Company has agreed to
take all action necessary to convene a meeting of its stockholders as soon as
practicable after the consummation of the Offer for the purpose of considering
and taking action on the Merger Agreement, if such meeting is required by the
DGCL. Parent has agreed that all Shares owned by it or any of its subsidiaries
(including Purchaser) will be voted in favor of the Merger Agreement
BOARD REPRESENTATION; SERIES B SHARES. If Parent purchases a majority of
the outstanding Shares pursuant to the Offer and the Option Agreement, the
Merger Agreement provides that Parent will be entitled to designate
representatives to serve on the Board in the same proportion as the proportion
of Shares beneficially owned by Parent, subject to the obligation to retain at
least two independent directors until the Merger has taken place. See Section
11. Parent currently intends to designate not less than a majority of the
directors of the Company following consummation of the Offer. It is currently
anticipated that Parent will designate Crispin Davis, Colin Day, Eleonore
Sauerwein, David Verklin, Pat Doble and Stig Karlsen, or such other persons
listed on Schedule I as Parent shall determine, to serve as directors of the
Company following consummation of the Offer. While Parent has no plans to
designate any persons other than those listed on Schedule I, it may do so from
time to time. Parent expects that such representation will permit Parent to
exert substantial influence over the Company's conduct of its business and
operations.
MFI Investors L.P. (the "Partnership") owns all 100 Series B Shares that are
issued and outstanding. The terms of the Series B Shares provide that as long as
the Partnership continues to beneficially own at least 20% of the total combined
voting power of all Shares and any other class of securities of the Company
entitled to vote generally in the election of directors then outstanding
("Voting Securities"), the Partnership shall be entitled to elect three
directors to the Company's Board of Directors. The number of directors which the
Partnership is entitled to elect decreases to two if the Partnership's
beneficial ownership of Voting Securities is below 20% but at least 10%, and to
one if such beneficial ownership of Voting Securities is below 10% but at least
5%. If the amount of Voting Securities beneficially owned by the Partnership
should fall below 5%, the Partnership's right to elect directors pursuant to the
provisions of the Series B Shares terminates. As long as the Partnership
beneficially owns at least 15% of the total combined voting power of all
outstanding Voting Securities, it shall also be entitled to have one of its
directors appointed to each of the audit and compensation committees of the
Board. In addition, as long as any Series B Shares are outstanding, the Company
shall not, without the vote of the Partnership as the holder of the outstanding
Series B Shares, expand the Board of Directors to more than 11 directors.
The terms of the Series B Shares provide shall be redeemed, at a redemption
price of $1.00 per share, at any time that the holders thereof shall not be
entitled to elect any directors as described above. From and after the date set
by the Company for such redemption, unless the Company shall fail to make
available sufficient funds to effect the redemption, such shares shall no longer
be deemed to be outstanding shares for any purpose, and the holders of such
shares shall not have any rights with respect
28
<PAGE>
thereto, except the right to receive the redemption price upon surrender to the
Company of the certificates therefor. Accordingly, upon the purchase by Parent
or its or its permitted assign of the shares held by the Partnership pursuant to
the terms of the Option Agreement, the Partnership, as the holder of the Series
B Shares, will no longer be entitled to elect any directors, and the Series B
Shares will be redeemed.
SHORT FORM MERGER. Under the DGCL, if Purchaser acquires at least 90% of
the outstanding Shares, Purchaser will be able to approve the Merger without a
vote of the Company's stockholders. In such event, Parent and Purchaser
anticipate that they will take all necessary and appropriate action to cause the
Merger to become effective as soon as reasonably practicable after such
acquisition, without a meeting of the Company's stockholders. If, however,
Purchaser does not acquire at least 90% of the outstanding Shares pursuant to
the Offer, the Option Agreement or otherwise and a vote of the Company's
stockholders is required under the DGCL, a significantly longer period of time
will be required to effect the Merger.
APPRAISAL RIGHTS. The holders of Shares do not have appraisal rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares at
the Effective Time of the Merger will have certain rights pursuant to the
provisions of Section 262 of the DGCL ("Section 262") to dissent and demand
appraisal of their Shares. Under Section 262, dissenting stockholders who comply
with the applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of the Merger) and to
receive payment of such fair value in cash, together with a fair rate of
interest, if any. Any such judicial determination of the fair value of Shares
could be based upon factors other than, or in addition to, the price per Share
to be paid in the Merger or the market value of the Shares. In Weinberger v.
UOP, Inc., the Delaware Supreme Court stated, among other things, that "proof of
value by any techniques or methods which are generally considered acceptable in
the financial community and otherwise admissible in court" should be considered
in an appraisal proceeding. Therefore, the value so determined could be more or
less than the price per Share to be paid in the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF STOCKHOLDERS DOES NOT PURPORT TO BE A
COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO
EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE EXERCISE OF APPRAISAL RIGHTS
REQUIRES STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
RULE 13E-3. The Commission has adopted Rule 13e-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 Parent seeks to acquire the remaining Shares not held by it. Parent
believes, however, that Rule 13e-3 will not be applicable to the Merger if the
Merger is consummated within one year after the Expiration Date at the same per
Share price as paid in the Offer. If applicable, Rule 13e-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. Except as otherwise set forth in this Offer to
Purchase, it is expected that, initially following the Merger, the business and
operations of the Company will be continued by the Company substantially as they
are currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it deems
appropriate under the circumstances then existing. Parent intends to seek
additional information about the Company during this period, and to review such
information as part of a comprehensive review of the Company's business,
operations, capitalization and
29
<PAGE>
management with a view to optimizing exploitation of the Company's potential in
conjunction with Parent's businesses.
Except as described in this Offer to Purchase, neither Parent nor Purchaser
has any present plans or proposals that would relate to or result in an
extraordinary corporate transaction such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries, or a sale or other
transfer of a material amount of assets of the Company or any of its
subsidiaries, any material change in the capitalization or dividend policy of
the Company, or any other material change in the Company's corporate structure
or business or the composition of its Board of Directors or management.
RIGHTS AGREEMENT. The following discussion, including the summary of
certain aspects of the Rights, is based in part on information (including, as
Exhibit thereto, a copy of the Rights Agreement, as then amended) contained in
the Company's Registration Statement on Form 8-A dated July 3, 1996, and is
qualified by reference to such information. Although Purchaser and Parent do not
have any knowledge that would indicate that any statements contained herein
based upon such information are untrue, neither Purchaser nor Parent assumes any
responsibility for the accuracy or completeness of such information, or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information but which are unknown to
Purchaser and Parent.
On July 26, 1989, the Board of Directors of the Company declared a dividend
of one Right for each share of common stock outstanding on August 7, 1989 (the
"Record Date"). The holders of any additional shares of common stock issued
subsequent to the Record Date and before the earliest of the Distribution Date,
the redemption of the Rights, the exchange of the Rights or the expiration of
the Rights will also be entitled to one Right for each additional share. Each
Right currently entitles the registered holder to purchase from the Company one
four-hundredth of a share of Series A Preferred Stock, without par value (the
"Series A Shares") of the Company at a price of $5.00 per one four-hundredth of
a Series A Share (the "Purchase Price"), subject to any future adjustments.
The Rights are not exercisable until the earlier to occur of (i) 10 days
following a public announcement that a person or group of affiliated or
associated persons have acquired beneficial ownership of 20% or more of the
outstanding common stock (thereby becoming an "Acquiring Person") or (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of such outstanding common stock
(the earlier of such dates being called the "Distribution Date"). The Rights
will expire on August 7, 1999 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
The number of outstanding Rights and the number of one four-hundredths of a
Series A Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the common stock or a stock dividend
on the common stock payable in common stock or subdivisions, consolidations or
combinations of the common stock occurring, in any such case, prior to the
Distribution Date. The Purchase Price payable, and the number of Series A Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Series A Shares, (ii) upon the grant to holders of the Series A Shares of
certain rights or warrants to subscribe for or purchase Series A Shares at a
price, or securities convertible into Series A Shares with a conversion price,
less than the then current market price of the Series A Shares, or (iii) upon
the distribution to holders of the Series A Shares of evidence of indebtedness
or assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Series A Shares) or of subscription
rights or warrants (other than those referred to above).
30
<PAGE>
Series A Shares purchasable upon exercise of the Rights will not be
redeemable for a period of twenty years. Currently, each Series A Share will be
entitled to a minimum preferential quarterly dividend payment of $1 per share,
but will be entitled to an aggregate dividend of 400 times the dividend declared
per share of common stock. In the event of liquidation, the holders of the
Series A Shares will be entitled to a minimum preferential liquidation payment
of $100 per share, but will be entitled to an aggregate payment of 400 times the
payment made per share of common stock. Each Series A Share will have 400 votes,
voting together with the Common Stock. In the event of any merger, consolidation
or other transaction in which Common Stock is exchanged, each Series A Share
will be entitled to receive 400 times the amount received per share of Common
Stock.
Because of the nature of the Series A Shares' dividend, liquidation and
voting Rights, the value of the fractional interest in a Series A Share
purchasable upon exercise of each Right should approximate the value of one
share of common stock.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right. In the event that (i) any
person becomes an Acquiring Person (unless such person first acquires 20% or
more of the outstanding common stock by a purchase pursuant to a tender offer
for all of the common stock for cash, which purchase increases such person's
beneficial ownership to 85% or more of the outstanding common stock) or (ii)
during such time as there is an Acquiring Person, there shall be a
reclassification of securities or a recapitalization or reorganization of the
Company or other transaction or series of transactions involving the Company
which has the effect of increasing by more than the proportionate share of the
outstanding shares of any class of equity securities of the Company or any of
its subsidiaries beneficially owned by the Acquiring Person, proper provision
shall be made so that each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void), will thereafter
have the right to receive upon exercise that number of shares of common stock
having a market value of two times the exercise price of the Right.
At any time after any person becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the outstanding common
stock, the Board of Directors may exchange the Rights (other than Rights owned
by such person or group which have become void), in whole or in part, at an
exchange ratio of one share of common stock, or one four-hundredth of a Series A
Share (or of a share of a class or series of the Company's preferred stock
having equivalent rights, preferences and privileges), per Right (subject to any
future adjustments).
At any time prior to any person becoming an Acquiring Person, the Board of
Directors may redeem the Rights in whole, but not in part, at a price of $.01
per right (the "Redemption Price"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. In addition, if a bidder who
does not beneficially own more than 1% of the common stock who has not within
the past year owned in excess of 1% of the common stock and, at a time he held
such greater than 1% stake, disclosed, or caused the disclosure of, an intention
which relates to or would result in the acquisition or influence of control of
the Company) proposes to acquire all of the common stock (and all other shares
of capital stock of the Company entitled to vote with the common stock in the
election of directors or on mergers, consolidations, sales of all or
substantially all of the Company's assets, liquidations, dissolutions or
windings up) for cash at a price which a nationally recognized investment banker
selected by such bidder states in writing is fair, and such bidder has obtained
written financing commitments (or otherwise has financing) and complies with
certain procedural requirements, then the Company, upon the request of the
bidder, will hold a special stockholders meeting to vote on a resolution
requesting the Board of Directors to accept the bidder's proposal. If a majority
of the outstanding shares entitled to vote on the proposal vote in favor of such
resolution, then for a period of 60
31
<PAGE>
days after such meeting the Rights will be automatically redeemed at the
Redemption Price immediately prior to the consummation of any tender offer for
all of such shares at a price per share in cash equal to or greater than the
price offered by such bidder; provided, however, that no redemption will be
permitted or required after any person becomes an Acquiring Person. Immediately
upon any redemption of the Rights, the right to exercise the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price. Bidders owning in excess of 1% of the Common Stock on the date
of the adoption of the Rights Agreement are "grandfathered" with respect to such
percentage of Common Stock.
The terms of the Rights may be amended by the Board of Directors without the
consent of the holders of the Rights, except that from and after such time as
any person becomes an Acquiring Person no such amendment may adversely affect
the interests of the holders of the Rights. Until a Right is exercised, the
holder thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends.
On June 5, 1996, the Rights Agreement was amended to, among other things,
permit MFI Investors, L.P. and certain affiliated persons to purchase up to a
certain percentage of the Common Stock without becoming an Acquiring Person.
In connection with execution of the Merger Agreement, the Rights Agreement
was further amended to provide that the execution and delivery of the Merger
Agreement and the Option Agreement, and the consummation of the transactions
contemplated thereby, including the Offer and the purchase of the Shares
pursuant thereto, will not result in (i) Parent, Purchaser or any of their
affiliates becoming an Acquiring Person, or (ii) the occurrence of a
Distribution Date or a Shares Acquisition Date. In addition, the Rights
Agreement was amended to provide that the Rights will expire on the earliest of
(i) August 7, 1999, (ii) the acceptance by Parent (or a wholly owned subsidiary
of Parent) of the Shares pursuant to the Offer, or (iii) the redemption or
exchange of the Rights as provided in the Rights Agreement.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors at a time when the Rights are redeemable.
32
<PAGE>
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; EXCHANGE ACT REGISTRATION;
MARGIN REGULATIONS
The purchase of Shares pursuant to the Offer and the Option Agreement will
reduce the number of Shares that might otherwise trade publicly and may reduce
the number of holders of Shares, which could adversely affect the liquidity and
market value of the remaining Shares held by stockholders other than Purchaser.
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly will have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it will cause future
market prices to be greater or less than the Offer Price.
Depending upon the aggregate market value and per Share price of any Shares
not purchased pursuant to the Offer or the Option Agreement, following the Offer
the Shares may no longer meet the standards for continued listing on the Nasdaq
National Market, which requires an issuer to have at least 400 holders of record
of 100 shares or more and, among other things, either (i) at least 750,000
publicly held Shares with a market value of at least $5 million, or (ii) at
least 1,100,000 publicly held Shares with a market value of at least $15 million
and a market capitalization, or total assets and total revenue, of at least $50
million. Shares held directly or indirectly by directors and officers of the
Company and concentrated holdings of 10% or more of the Shares outstanding
generally will not be considered to be publicly held for the purpose of the
foregoing standards. If, as a result of the purchase of Shares pursuant to the
Offer and the Option Agreement, the Shares no longer meet the requirements of
the Nasdaq National Market for continued listing and the listing of Shares is
discontinued, the market for the Shares could be adversely affected. If the
Shares were no longer quoted on the Nasdaq National Market, it is possible that
the Shares could continue to trade in the over-the-counter market and that
quotations could continue to be reported through other sources. The extent of
the public market for the Shares and the availability of such quotations would,
however, depend upon the number of stockholders remaining at such time, the
interest in maintaining a market in the Shares on the part of securities firms,
the possible termination of registration of the Shares under the Exchange Act,
as described below, and other factors.
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 will no longer constitute "margin securities"
and therefore could no longer be used as collateral for loans made by brokers.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its stockholders and to
the Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the short-swing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders, and the requirements of Rule 13e-3 under the Exchange
Act with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or 144A under the
Securities Act may be impaired or eliminated. It is the current intention of
Parent to seek to cause the Company to deregister the Shares after consummation
of the Offer if the requirements for termination of registration are met.
32
<PAGE>
14. DIVIDENDS AND DISTRIBUTIONS
As described above, the Merger Agreement provides that, prior to the earlier
of the date on which the persons designated by Parent become directors of the
Company or the Effective Time, without Parent's prior written consent, neither
the Company nor any of its Subsidiaries will, among other things, (a) except for
Shares the Company may be obligated to issue in connection with a prior
acquisition, authorize for issuance, issue, sell, deliver or agree or commit to
issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any stock
of any class or any other securities, except in the case of Shares of the
Company, as required by employee options outstanding on the date of the
execution of the Merger Agreement or Company employee benefit plans as in effect
on the date of the execution of the Merger Agreement, or amend any of the terms
of any such securities or agreements outstanding on the date of the execution of
the Merger Agreement; (b) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, or redeem or otherwise acquire any securities of the Company or any of
the Subsidiaries; (c) issue or sell any debt securities or rights to acquire any
debt securities of the Company or any Subsidiary; or (d) other than expressly
provided for in the Merger Agreement or as required by applicable law, as now or
hereafter in effect, enter into, adopt or amend any stock option, stock
appreciation right, restricted stock, performance unit, or enter into any
contract, agreement, commitment or arrangement to do any of the foregoing.
15. CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Parent or Purchaser shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
expiration or termination of the Offer), to pay for any Shares tendered, and may
postpone the acceptance for payment or, subject to the restriction referred to
above, payment for any Shares tendered, and may amend or terminate the Offer
(whether or not any Shares have theretofore been purchased or paid for), if: (i)
the Minimum Condition shall not have been satisfied prior to the expiration of
the Offer; (ii) all material regulatory and related approvals have not been
obtained or made on terms reasonably satisfactory to Purchaser; (iii) any
applicable waiting periods under the HSR Act shall not have expired or been
terminated prior to the expiration of the Offer; or (iv) at any time on or after
the date of the Merger Agreement and before acceptance for payment of, or
payment for, such Shares any of the following events shall occur:
(A) any governmental entity or federal, state or foreign court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction
or other order which is in effect (or pending) and which (1) restricts,
prevents or prohibits the making or consummation of the Offer, the Merger or
any transaction contemplated by the Merger Agreement, (2) prohibits or
limits materially the ownership or operation by the Company, Parent or any
of their subsidiaries of all or any material portion of the business or
assets of the Company and its subsidiaries taken as a whole, or compels the
Company, Parent, or any of their subsidiaries 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, (3) imposes limitations on the ability of
Parent, Purchaser or any other subsidiary of Parent to exercise effectively
full rights of ownership of any Shares, including, without limitation, the
right to vote any Shares acquired by Purchaser pursuant to the Offer or
otherwise on all matters properly presented to the Company's stockholders,
including, without limitation, the approval and adoption of the Merger
Agreement and the transactions contemplated thereby, or (4) requires
divestitures by Parent, Purchaser or any other affiliate of Parent of any
Shares; provided that Parent shall have used all commercially reasonable
efforts to cause any such decree, judgment, injunction or other order to be
vacated or lifted;
33
<PAGE>
(B) the representations and warranties of the Company contained in the
Merger Agreement (without giving effect to any materiality or similar
qualifications contained therein) shall not be true and correct as of the
date of consummation of the Offer as though made on and as of such date
except (1) for changes specifically permitted by the Merger Agreement, (2)
that those representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date, (3) in any
case where such failure to be true and correct would not, in the aggregate,
have a material adverse effect on the financial condition, business,
operations or results of operations of the Company and its subsidiaries,
taken as a whole and will not prevent the consummation of the transactions
by the Merger Agreement (collectively, "Material Adverse Effect"), and (4)
notwithstanding anything in the Merger Agreement to the contrary, in the
event that any of the representations and warranties of the Company with
respect to any of its subsidiaries are determined to be inaccurate, and all
such inaccuracies capable of measurement in dollar amounts, in the
aggregate, exceed $3,000,000, then only the amounts in excess of $3,000,000
will be taken into account in determining whether such inaccuracies, taken
together with all other breaches of representations and warranties
generally, result in a Material Adverse Effect;
(C) the Company shall not have performed or complied with any of its
obligations, covenants and agreements under the Merger Agreement to be
performed or complied with by it unless all such failures together in their
entirety would not have a Material Adverse Effect;
(D) the Merger Agreement shall have been terminated in accordance with
its terms;
(E) prior to the purchase of Shares pursuant to the Offer, the Company
shall have received any other offer for the purchase of Shares, the purchase
of substantially all of the Company's assets, the merger of the Company or
any other transaction which would require the withdrawal or material
modification of the Offer, the Merger Agreement or the Merger and the Board
shall have withdrawn or materially modified or changed (including by
amendment of the Schedule 14D-9) in a manner adverse to Purchaser its
recommendation of the Offer, the Merger Agreement or the Merger;
(F) (1) any person or group shall have entered into a definitive
agreement or agreement in principle with the Company with respect to a
merger, consolidation, sale of a material portion of the assets of the
Company, or other business combination with the Company; or (2) (A) the
Board of Directors of the Company or any committee thereof shall have
withdrawn, modified or changed in a manner adverse to Parent or Purchaser
its approval or recommendation of the Offer, the Merger Agreement or Merger
or approved or recommended any Competing Transaction, or (B) the Board of
Directors of the Company or any committee thereof shall have resolved to do
any of the foregoing;
(G) there shall have occurred any change, condition event or development
that has a Material Adverse Effect (excluding any change, condition, event
or development arising out of or attributable to general economic
conditions);
(H) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange, the NASDAQ\NMS or the London Stock Exchange for a period in excess
of 24 hours (excluding any coordinated trading halt triggered solely as a
result of a specified decrease in a market index and suspensions or
limitations resulting solely from physical damage or interference with such
exchange or association not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States or the United Kingdom or (iii) any material
limitation (whether or not mandatory) by any government or governmental
authority of the United States or the United Kingdom on the extension of
credit by banks or other lending institutions,
(I) the Stockholders shall have failed to comply in any material respect
with their obligations pursuant to the Option Agreements,
34
<PAGE>
which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payments.
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS
GENERAL. Except as described in this Section 16, neither Parent nor
Purchaser is aware of any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a whole,
that might be adversely affected by the acquisition of Shares by Purchaser or
Parent pursuant to the Offer, the Option Agreement, the Merger or otherwise or,
except as set forth below, of any filing, approval or other action by or with
any governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required prior to the acquisition of Shares by Purchaser
or Parent pursuant to the Offer, the Merger or otherwise. Should any such
approval or other action be required, Purchaser and Parent currently contemplate
that it will be sought, except as described below under "State Takeover
Statutes." 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 business of the Company or Parent might not have to be
disposed of or held separate, or other material conditions complied with, in
order to obtain such approvals or other actions or, in the event that such
approvals were not obtained or any other actions were not taken, any of which
could cause Purchaser to elect (subject to the terms of the Merger Agreement) to
terminate the Offer without the purchase of Shares thereunder. Purchaser's
obligation under the Offer to accept for payment and pay for Shares is subject
to certain conditions, including conditions relating to certain of the legal
matters discussed in this Section 16. See Section 15.
STATE TAKEOVER STATUTES. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of DGCL prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the date such person became an interested stockholder
unless, among other things, prior to such date the Board of Directors of the
corporation approved either the business combination or the transaction in which
the interested stockholder became an interested stockholder. In connection with
the review of the proposed transaction, the Company's Board of Directors prior
to the execution of the Merger Agreement or the Option Agreement (i) unanimously
determined that each of the Merger Agreement, the Offer and the Merger are fair
to and in the best interests of the stockholders of the Company, (ii) approved
the Merger Agreement and the transactions contemplated thereby, including the
Offer and the Merger, and (iii) recommended that the stockholders of the Company
accept the Offer, approve and adopt the Merger Agreement and approve the Merger.
Additionally, the Board of Directors of the Company has unanimously approved the
Option Agreement for purposes of Section 203 of the DGCL. Accordingly, the
Purchaser and Parent believe that Section 203 of Delaware Law is inapplicable to
the Merger Agreement, the Offer, the Merger or the Option Agreement because its
provisions have been satisfied.
A number of other states have also adopted takeover laws and regulations
which purport to varying degrees to be applicable to attempts to acquire
securities of corporations which are incorporated in such states or which have
or whose business operations have substantial economic effects in such states,
or which have substantial assets, security holders, principal executive offices
or principal places of business therein. In 1982, the Supreme Court of the
United States, in Edgar v. MITE Corp., invalidated on constitutional grounds the
Illinois Business Takeovers Act which, as a matter of state securities law, made
takeovers of corporations meeting certain requirements more difficult. However,
in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court of the
United States held that the State of Indiana could, as a matter of corporate law
and in particular those aspects of corporate law concerning corporate
35
<PAGE>
governance, constitutionally disqualify a potential acquiror from voting on the
affairs of a target corporation without the prior approval of the remaining
stockholders, provided that such laws were applicable only under certain
conditions. Subsequently, a number of federal courts have ruled that various
state takeover statutes were unconstitutional insofar as they apply to
corporations incorporated outside the state of enactment.
The Company has its headquarters in Illinois and, directly or through
subsidiaries, conducts business in a number of states throughout the United
States, some of which have enacted takeover laws. The Purchaser does not know
whether any of these laws will, by their terms, apply to the Option Agreement,
the Offer or the Merger and, except as described herein, has not taken any
action to comply with any such laws. Should any person seek to apply any state
takeover law, the Purchaser may resist such application, 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 Option Agreement, the Offer or the Merger, and an
appropriate court does not determine that it is inapplicable or invalid,
Purchaser or Parent might be required to file certain information with, or
receive approvals from, the relevant state authorities, and might be unable to
accept for payment or pay for any Shares tendered pursuant to the Offer, or sold
to Purchaser pursuant to the Option Agreement, or be delayed in continuing or
consummating the Offer, the Option Agreement, and the Merger. In such case, the
Purchaser may not be obligated to accept for payment, or pay for, any Shares
tendered. See Section 15.
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-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent receives
a request for additional information or documentary material from the Antitrust
Division of the Department of Justice (the "Antitrust Division") or the Federal
Trade Commission (the "FTC") or unless early termination of the waiting period
is granted. If, within the initial 15-calendar day waiting period, either the
Antitrust Division or the FTC requests additional information or material from
Parent concerning the Offer, the waiting period will be extended and would
expire at 11:59 p.m., New York City time, on the tenth calendar day after the
date of substantial compliance by Parent with such request. Only one extension
of the waiting period pursuant to a request for additional information is
authorized by the HSR Act. Thereafter, such waiting period may be extended only
by court order or with the consent of Parent. In practice, complying with a
request for additional information or material can take a significant amount of
time.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as Purchaser's acquisition of the Shares
pursuant to the Offer and the Merger Agreement. At any time before or after
Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the acquisition of Shares pursuant
to the Offer or otherwise or seeking divestiture of Shares acquired by Purchaser
or divestiture of substantial assets of Parent or its subsidiaries. Private
parties and state attorneys general may also bring legal action under the
antitrust laws in certain circumstances. There can be no assurance that a
challenge to the Offer or other acquisition of Shares by Purchaser or Parent on
antitrust grounds will not be made or, if such challenge is made, of the result.
See Section 15 for certain conditions to the Offer, including conditions with
respect to litigation and certain governmental actions.
FEDERAL RESERVE BOARD REGULATIONS. Federal Reserve Board regulations T, U
and X restrict the extension or maintenance of credit for the purpose of buying
or carrying margin stock, including the Shares, if the credit is secured
directly or indirectly thereby. Such secured credit may not be extended or
36
<PAGE>
maintained in an amount that exceeds the maximum loan value of the margin stock.
Under such regulations, the Shares are presently margin stock and the maximum
loan value thereof is generally 50% of their current market value. The
definition of "indirectly secured" contained in such regulations provides that
the term does not include an arrangement with a customer if the lender in good
faith has not relied upon margin stock as collateral in extending or maintaining
the particular credit. Purchaser and Parent believe that the financing of the
acquisition of the Shares will not be subject to the margin regulations.
FOREIGN LAWS. The Company's 1998 Annual Report to Stockholders indicates
that the Company and certain of its subsidiaries conduct business in certain
foreign countries where regulatory filings or approvals may be required in
connection with the consummation of the Offer. Certain of such filings, if
required, may not be completed and certain of such approvals, if required, may
not be obtained, prior to the expiration of the Offer. However, there is no
present intention to delay the acceptance for payment of or the payment for
Shares pursuant to the Offer pending the completion of such filings and the
obtaining of such approvals. There is no assurance that any such approvals would
be obtained or that adverse consequences to Parent's or the Company's business
might not result from a failure to obtain such approvals or conditions that
might be imposed in connection therewith.
17. FEES AND EXPENSES
Purchaser and Parent have retained Morgan Stanley to act as the Dealer
Manager and to provide certain financial advisory services in connection with
the proposed acquisition of the Company. In connection with such services Parent
has agreed to pay Morgan Stanley (i) a monthly retainer of $75,000, (ii) a fee
of $750,000 upon Parent's announcement of an agreement to acquire the Company
(against which the monthly retainer will be credited), and (iii) a transaction
fee of $2,750,000 (against which the monthly retainer and the announcement fee
will be credited) if an acquisition of all or part of the Company is concluded.
The transaction fee will become payable in the event Purchaser acquires a
majority of the outstanding Shares. In addition, Parent has agreed to reimburse
Morgan Stanley for all reasonable expenses incurred by Morgan Stanley, including
the reasonable fees and disbursements of its legal counsel, and to indemnify
Morgan Stanley and certain related persons against certain liabilities and
expenses, including, without limitation, certain liabilities under the federal
securities laws.
Purchaser and Parent have retained D.F. King & Co., Inc. to act as the
Information Agent and First Chicago Trust Company of New York to serve as the
Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities and expenses under the federal securities laws.
Neither Purchaser nor Parent will pay any fees or commissions to any broker
or dealer or other person or entity (other than the Dealer Manager and as
described in the preceding paragraph) in connection with the solicitation of
tenders of Shares pursuant to the Offer. Brokers, dealers, banks and trust
companies will be reimbursed by Purchaser upon request for customary mailing and
handling expenses incurred by them in forwarding material to their customers.
18. MISCELLANEOUS
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal, and is being made to all holders of Shares. Purchaser is
not aware of any jurisdiction in which the making of the Offer is not in
compliance with applicable law. If Purchaser becomes aware of any jurisdiction
in which the making of the Offer would not be in compliance with applicable law,
Purchaser will make a good faith effort to comply with any such law. If, after
such good faith effort, Purchaser cannot comply with any such law, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
holders of Shares residing in such jurisdiction. In those jurisdictions whose
securities or blue sky laws require the Offer to be
37
<PAGE>
made by a licensed broker or dealer, the Offer is being made on behalf of
Purchaser by one or more registered brokers or dealers which are licensed under
the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE OR
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Purchaser and Parent have filed with the Commission a Tender Offer Statement
on Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with
exhibits, furnishing certain additional information with respect to the Offer,
and may file amendments thereto. Such Tender Offer Statement and any amendments
thereto, including exhibits, should be available for inspection and copies
should be obtainable in the manner set forth in Section 8 (except that such
material will not be available at the regional offices of the Commission).
Aegis Acquisition Corp.
May 4, 1999
38
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
AEGIS ACQUISITION CORP.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION
OR EMPLOYMENT AND
FIVE-YEAR EMPLOYMENT
NAME AND BUSINESS ADDRESS OFFICE(S) HISTORY CITIZENSHIP
- ----------------------------- ------------------------ ------------------------------------- -----------------
<S> <C> <C> <C>
Crispin Davis ............... Director/President Director/Chief Executive Officer of United Kingdom
11A West Halkin Street Aegis Group plc since 1994. Director
London, SWIX 8JL of United Distillers to April 1993.
England From 1992 to 1993 Group Managing
Director of United Distillers and a
member of the Guinness plc Board.
Colin Day ................... Director/Vice President Group Finance Director of Aegis Group United Kingdom
11A West Halkin Street (Finance) plc since February 1995. Finance
London, SWIX 8JL Director of ABB Instrumentation Group
England prior to February 1995. Non-Executive
Director of Bell Security Limited
from January 1999. Former Non-
Executive Director of Vero plc.
Eleonore Sauerwein .......... Director/Vice President Group Legal Director of Aegis/Carat France
c/o Aegis/Carat Group (Legal)/ Group since 1993.
4, Place de Saverne Secretary
Courbevoie
92971-Paris-La Defense
France
Andrew Parnes ............... Director/Treasurer Group Treasurer of Aegis Group plc United Kingdom
11A West Halkin Street since May 1995. Treasury Consultant
London, SWIX 8JL February 1994 to April 1995.
England
</TABLE>
AEGIS GROUP PLC
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION
OR EMPLOYMENT AND
FIVE-YEAR EMPLOYMENT
NAME AND BUSINESS ADDRESS OFFICE(S) HISTORY CITIZENSHIP
- ----------------------------- ------------------------ ------------------------------------- -----------------
<S> <C> <C> <C>
Francis Stephen Law, CBE Non-Executive Chairman Non-Executive Chairman of Aegis Group United Kingdom
11A West Halkin Street of the Board plc since November 1, 1987.
London SWIW 8JL Non-Executive Director Milupa Ltd.
England from 1978 until May 1997. Non-
Executive Chairman of Siemens plc
from 1984 until November 1997.
Non-Executive Chairman of Varta Group
UK from 1971 until the present.
President of Rubis & Co. from 1990
until the present and a Director for
Celab Ltd. Governor of the Royal
Shakespeare Company.
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION
OR EMPLOYMENT AND
FIVE-YEAR EMPLOYMENT
NAME AND BUSINESS ADDRESS OFFICE(S) HISTORY CITIZENSHIP
- ----------------------------- ------------------------ ------------------------------------- -----------------
<S> <C> <C> <C>
Crispin Davis ............... Chief Executive Director/Chief Executive of Aegis United Kingdom
11A West Halkin Street Officer/Director Group plc since 1994. Director of
London SWIW 8JL United Distillers to April 1993. From
England 1992 to 1993 Group Managing Director
of United Distillers and a member of
the Guinness plc Board.
Colin Day ................... Group Finance Director Group Finance Director of Aegis Group United Kingdom
11A West Halkin Street plc since February 1995. Finance
London SWIX 8JL Director of ABB Instrumentation Group
England prior to February 1995. Non-Executive
Director of Bell Security Limited
from January 1999. Former Non-
Executive Director of Vero plc.
Kai Hiemstra ................ Board Member Board member of Aegis Group plc since Germany
HMS Carat Group, Germany July 1994. Chairman of HMS Carat
Kreuzberger Ring 19 Group since 1994.
65205 Wiesbaclen
Germany
Ray Kelly ................... Board Member Chairman & CEO of Carat Group UK Ltd United Kingdom
Carat Group UK Ltd. since July 1992. Board member of
Parker Tower Aegis Group plc since September 1992.
43-49 Parker Street
London WC2B SPS
England
Bruno Kemoun ................ Board Member Joint Chairman and CEO of Carat France
Carat France France since 1995. Appointed to Aegis
4, Place de Saverne Group plc Board in September 1992.
Courbevoie
92971 Paris-La Defense
France
Eryck Rebbouh ............... Board Member Joint Chairman and CEO of Carat France
Carat France France since 1995. Appointed to Aegis
4, Place de Saverne Group plc Board in September 1992.
Courbevoie
92971 Paris-La Defense
France
John Amerman ................ Non-Executive Director Non-Executive Director of Aegis Group United States
2101 Rosecrans Avenue plc since December 1997. Chairman and
Suite 6280 CEO of Mattel Inc. from February 1987
El Segundo, CA 90245 to December 1996, and advisor to
Mattel Inc. until October 1997.
Douglas Flynn ............... Non-Executive Director Managing Director of News Australia
News International plc International plc since January 1994.
1 Virginia Street
London, E19BD
England
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
OCCUPATION
OR EMPLOYMENT AND
FIVE-YEAR EMPLOYMENT
NAME AND BUSINESS ADDRESS OFFICE(S) HISTORY CITIZENSHIP
- ----------------------------- ------------------------ ------------------------------------- -----------------
<S> <C> <C> <C>
Sir Kit McMahon ............. Non-Executive Director Non-Executive Director of Aegis Group United Kingdom
The Old House plc since May 1993. Director of
Burleigh Taylor Woodraw plc since 1991 and of
Stroud FI Group plc since 1994.
Glos GLS 2PQ
England
Sir Peter Thompson .......... Non-Executive Director Non-Executive Director of Aegis Group United Kingdom
The Mill House plc since May 1993. Chairman of FI
Mill Street Group plc and Child Base Ltd.
Newport Pagnell
Bucks, England
Philippe Villin ............. Non-Executive Director Non-Executive Director of Aegis Group France
Lehman Brother plc since October 1995. Chairman of
21 rue Balzac PH. Villin Conseil since 1994.
75406 Paris Managing director of Lehman Brothers.
Managing partner of Eurofin during
1995. Chairman BZW France from
September-December 1997.
*William Skerrett ........... Group Human Resources Group Human Resources Director of United Kingdom
11A West Halkin Street Director Aegis Group plc since November 1995.
London SWIX 8JL Group Personnel Director of Scholl
England plc from January 1984 until November
1995.
*Eleonore Sauerwein ......... Group Legal Director Group Legal Director of Aegis Carat France
c/o Aegis/Carat Group Group since 1993.
4 Place de Saverne
Courbevoie
92971 Paris-La Defense
France
*Andrew Parnes .............. Group Treasurer Group Treasurer of Aegis plc since United Kingdom
11A West Halkin Street May 1995. Treasury Consultant
London SWIX 8JL February 1994 to April 1995.
England
</TABLE>
- --------------------------
* Executive officer; not a member of the Board of Directors.
S-3
<PAGE>
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or his
broker, dealer, commercial bank or other nominee to the Depositary at one of its
addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
<S> <C>
BY MAIL: BY OVERNIGHT DELIVERY:
First Chicago Trust Company of New York First Chicago Trust Company of New York
Corporate Actions Corporate Actions, Suite 4680
Suite 4660 14 Wall Street, 8th Floor
P.O. Box 2569 New York, NY 10005
Jersey City, NJ 07303-2569
<CAPTION>
BY MAIL: BY HAND:
First Chicago Trust Company of New York First Chicago Trust Company of New York
Corporate Actions c/o Securities Transfer and Reporting
Suite 4660 Services Inc.
P.O. Box 2569 Attn: Corporate Actions
Jersey City, NJ 07303-2569 100 William Street, Galleria
New York, NY 10038
</TABLE>
Any questions or requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the Information Agent at its telephone numbers and location listed
below. You may also contact your broker, dealer, commercial bank or trust
company or nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Stockholders call toll-free: (800) 994-3227
Brokers and Banks call collect: (212) 269-5550
THE DEALER MANAGER FOR THE OFFER IS:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-7449
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF
COMMON STOCK
OF
MARKET FACTS, INC.
AT $31.00 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE
DATED MAY 4, 1999
BY
AEGIS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AEGIS GROUP PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME,
ON TUESDAY, JUNE 1, 1999, UNLESS THE OFFER IS EXTENDED.
This Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or his
broker, dealer, commercial bank or other nominee to the Depositary at one of its
addresses set forth below.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
<S> <C>
By Mail: By Overnight Delivery:
First Chicago Trust Company of New York First Chicago Trust Company of New York
Corporate Actions Corporate Actions, Suite 4680
Suite 4660 14 Wall Street, 8th Floor
P.O. Box 2569 New York, NY 10005
Jersey City, NJ 07303-2569
<CAPTION>
By Mail: By Hand:
First Chicago Trust Company of New York First Chicago Trust Company of New York
Corporate Actions c/o Securities Transfer and Reporting
Suite 4660 Services Inc.
P.O. Box 2569 Attn: Corporate Actions
Jersey City, NJ 07303-2569 100 William Street, Galleria
New York, NY 10038
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. THE
INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by holders of Shares (as
defined below) either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined in Section 3 of the Offer to Purchase (as defined
below)) is used, if delivery is to be made by book-entry transfer to the
Depositary's account at The Depository Trust Company ("DTC") (the "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase.
Stockholders whose certificates evidencing Shares ("Stock Certificates") are
not immediately available or who cannot deliver their Stock Certificates and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) or who cannot comply with the
book-entry transfer procedures on a timely basis must tender their Shares
according to the guaranteed delivery procedure set forth in
<PAGE>
Section 3 of the Offer to Purchase. See Instruction 2 as set forth below.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
--------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S)
APPEAR(S) ON STOCK CERTIFICATE(S) AND SHARE(S) STOCK CERTIFICATE(S) AND SHARE(S) TENDERED
TENDERED) (ATTACH ADDITIONAL LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
STOCK REPRESENTED NUMBER
CERTIFICATE BY OF SHARES
NUMBER(S)* CERTIFICATES* TENDERED**
<S> <C> <C> <C>
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL SHARES:
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Stock Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY SENT TO THE DEPOSITARY PRIOR TO THE DATE HEREOF AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): ____________________________________________
Window Ticket Number (if any): _____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution that Guaranteed Delivery: ______________________________
Account Number (if delivered by Book-Entry Transfer): ______________________
Transaction Code Number: ___________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Aegis Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of Aegis Group
plc, a company incorporated under the laws of England and Wales ("Parent"), the
above-described shares of Common Stock, par value $1.00 per share (the
"Shares"), of Market Facts, Inc., a Delaware corporation (the "Company"), at
$31.00 per Share, net to the seller in cash, without interest, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated May 4,
1999 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which, as amended or supplemented from time to time,
together constitute the "Offer"). Unless the context otherwise requires, all
references herein to Shares shall be deemed to refer also to the associated
preferred stock purchase rights (the "Rights") issued pursuant to the Rights
Agreement dated as of July 26, 1989, as amended (the "Rights Agreement")
<PAGE>
between the Company and First Chicago Trust Company of New York, and all
references to Rights shall be deemed to include all benefits that may inure to
the stockholders of the Company or to holders of the Rights pursuant to the
Rights Agreement. The undersigned understands that Purchaser reserves the right
to transfer or assign, in whole or in part from time to time to Parent or one or
more direct or indirect wholly owned subsidiaries of Parent, the right to
purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer or
prejudice the rights of tendering holders of the Shares ("Stockholders") to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
Subject to and effective upon acceptance for payment of the Shares tendered
herewith in accordance with the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms or conditions of any
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, Purchaser any and all right, title and
interest in and to all of the Shares that are being tendered hereby and all
other Shares or other securities or property issued or issuable in respect
thereof on or after April 29, 1999 (such other Shares, securities or property
other than the Shares being referred to herein as the "Other Securities") and
irrevocably appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares and all Other
Securities with full power of substitution (such power of attorney being deemed
to be an irrevocable power coupled with an interest), to (a) deliver Stock
Certificates evidencing such Shares and all Other Securities, or transfer
ownership of such Shares and all Other Securities on the account books
maintained by the Book-Entry Transfer Facility, together, in either case, with
all accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, upon receipt by the Depositary, as the undersigned's agent, of the
purchase price, (b) present such Shares and all Other Securities for transfer on
the books of the Company, and (c) receive all benefits and otherwise exercise
all rights of beneficial ownership of such Shares and all Other Securities, all
in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Purchaser, its officers and
designees, and each of them, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to the full extent of the
undersigned's rights with respect to all of the Shares tendered hereby which
have been accepted for payment by Purchaser (and any and all Other Securities
issued or issuable in respect thereof), including, without limitation, the right
to vote such Shares (and Other Securities) and otherwise act with respect
thereto (including taking action by written consent), in such manner as each
such attorney and proxy or his (or her) substitute shall, in his (or her) sole
discretion, deem proper. This proxy and power of attorney is coupled with an
interest in the Shares tendered hereby and is irrevocable and is granted in
consideration of, and is effective upon, the acceptance for payment of such
Shares by Purchaser in accordance with the terms of the Offer. Such acceptance
for payment shall, without further action, revoke all prior proxies and consents
granted by the undersigned with respect to such Shares (and all Other Securities
issued in respect of such Shares), and no subsequent proxy or power of attorney
or written consent shall be given (and if given or executed, shall be deemed not
to be effective) with respect thereto by the undersigned. Purchaser reserves the
right to require that, in order for Shares to be deemed validly tendered,
immediately upon Purchaser's acceptance for payment of such Shares Purchaser is
able to exercise full voting and other rights with respect to such Shares and
Other Securities (including voting at any meeting of stockholders then scheduled
or acting by written consent without a meeting).
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Other Securities, and that when the same are accepted for payment
by Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances,
including irrevocable proxies, and that none of such Shares and Other Securities
will be subject to any adverse claim. The undersigned, upon request, shall
execute and deliver any signature guarantees or additional documents deemed by
the Depositary or Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Other Securities.
In addition, the undersigned shall promptly remit and transfer to the Depositary
for the account of Purchaser all Other Securities in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and
pending such remittance or appropriate assurance thereof, Purchaser shall be
entitled to all rights and privileges as owner of such Other Securities and may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred, and any obligation
of the undersigned hereunder, shall survive the death or incapacity of the
undersigned and shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated in
the Offer to Purchase, this tender is irrevocable.
The undersigned understands that Purchaser's acceptance for payment of
Shares as described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser with respect to such Shares (and any Other Securities in respect
thereof) upon the terms and subject to the
<PAGE>
conditions of the Offer. The undersigned recognizes that under certain
circumstances set forth in the Offer to Purchase, Purchaser may not be required
to accept for payment any of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any Stock
Certificates evidencing Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
Stock Certificates evidencing Shares not tendered or accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." If both the Special
Delivery Instructions and the Special Payment Instructions are completed, please
issue the check for the purchase price and/or return any Stock Certificates
evidencing Shares not purchased (together with accompanying documents as
appropriate) in the name(s) of, and deliver said check and/or return such Stock
Certificates to, the person or persons so indicated. The undersigned recognizes
that Purchaser has no obligation pursuant to the Special Payment Instructions to
transfer any Shares from the name of the registered holder(s) thereof if
Purchaser does not accept for payment any of the Shares so tendered.
- ------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
or Stock Certificates evidencing Shares not tendered or not purchased are to
be issued in the name of someone other than the undersigned.
Issue Check and Certificate(s)
To:
____________________________________________________________________________
____________________________________________________________________________
NAME(S) (PLEASE PRINT)
Address
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAXPAYER IDENTIFICATION
OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
- ------------------------------------------------
- ------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
or Stock Certificates evidencing Shares not tendered or not purchased are to
be mailed to someone other than the undersigned, or to the undersigned at an
address other than that shown under "Description of Shares Tendered."
Mail Check and Certificate(s)
To:
____________________________________________________________________________
____________________________________________________________________________
NAME (PLEASE PRINT)
Address
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAXPAYER IDENTIFICATION
OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
- ------------------------------------------
<PAGE>
STOCKHOLDERS SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9)
X ______________________________________________________________________________
X ______________________________________________________________________________
SIGNATURE(S) OF STOCKHOLDER(S)
Dated: _____________________ 1999
(Must be signed by registered holder(s) as name(s) appear(s) on Stock
Certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by trustee, executor, administrator, guardian, attorney-in-fact,
agent, officer of a corporation or any other person acting in a fiduciary or
representative capacity, please provide the following information. See
Instruction 5.)
NAME(S):
______________________________________
______________________________________
(PLEASE PRINT)
CAPACITY (FULL TITLE):
______________________________________
ADDRESS:
______________________________________
______________________________________
(INCLUDE ZIP CODE)
DAYTIME AREA CODE AND TELEPHONE
NUMBER:
______________________________________
TAX IDENTIFICATION OR SOCIAL SECURITY
NUMBER:
______________________________________
(COMPLETE SUBSTITUTE FORM W-9 BELOW)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND
5)
X ____________________________________
AUTHORIZED SIGNATURE
______________________________________
NAME (PLEASE PRINT OR TYPE)
______________________________________
FULL TITLE
______________________________________
NAME OF FIRM
______________________________________
AREA CODE AND TELEPHONE NUMBER
______________________________________
______________________________________
______________________________________
ADDRESS
Date ______________ 1999
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a member firm of a registered national securities exchange
(registered under Section 6 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) or by a member firm of the National Association of
Securities Dealers, Inc., by a commercial bank or trust company having an office
or correspondent in the United States or by any other "Eligible Guarantor
Institution" as defined in Rule 17Ad-15 under the Exchange Act that is a
participant in the Medallion Signature Guarantee Program (each of the foregoing
constituting an "Eligible Institution"), unless (i) this Letter of Transmittal
is signed by the registered holder(s) of Shares (which term, for the purposes of
this document, shall include any participant in the Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares)
tendered hereby and such holder(s) has (have) not completed the box entitled
"Special Payment Instructions" on this Letter of Transmittal or (ii) such Shares
are tendered for the account of an Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
Stockholders if Stock Certificates are to be forwarded herewith or, unless an
Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery
of Shares is to be made pursuant to the procedures for book-entry transfer set
forth in Section 3 of the Offer to Purchase. For a Stockholder to validly tender
Shares pursuant to the Offer, either (a) a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile copy thereof), with any
required signature guarantees, or an Agent's Message in the case of a book-entry
delivery, and any other required documents, must be received by the Depositary
at one of its addresses set forth herein prior to the Expiration Date, and
either (i) Stock Certificates for tendered Shares must be received by the
Depositary at one of such addresses prior to the Expiration Date or (ii) Shares
must be delivered pursuant to the procedures for book-entry transfer set forth
in Section 3 of the Offer to Purchase and a Book-Entry Confirmation must be
received by the Depositary prior to the Expiration Date or (b) the tendering
Stockholder must comply with the guaranteed delivery procedures set forth below
and in Section 3 of the Offer to Purchase. If Stock Certificates are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile copy thereof) must accompany each
such delivery.
Stockholders whose Stock Certificates are not immediately available or who
cannot deliver their Stock Certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (i) such tender must be 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 Purchaser, must be received by the
Depositary prior to the Expiration Date, and (iii) the Stock Certificates
representing all tendered Shares in proper form for transfer, or a Book-Entry
Confirmation with respect to all tendered Shares, together with a Letter of
Transmittal (or a manually signed facsimile copy thereof), properly completed
and duly executed, with any required signature guarantees and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three Nasdaq National Market trading days after the date of
such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, STOCK CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE
SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. All
tendering stockholders, by execution of this Letter of Transmittal (or a
manually signed facsimile copy thereof), waive any right to receive any notice
of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares tendered should be listed on a separate signed schedule and attached
hereto.
4. PARTIAL TENDERS. (Not applicable to stockholders who tender by
book-entry transfer.) If fewer than all the Shares evidenced by any Stock
Certificate submitted are to be tendered, fill in the number of Shares which are
to be tendered in the box entitled "Number of Shares Tendered." In such case,
new Stock Certificate(s) evidencing the remainder of the Shares that were
evidenced by the old Stock Certificate(s) will be sent to the registered holder,
unless otherwise provided in the appropriate box on this Letter of Transmittal,
as soon as practicable after the
<PAGE>
Expiration Date. All Shares represented by Stock Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the Stock Certificate(s) without alteration, enlargement
or any change whatsoever. If any of the Shares tendered hereby are held of
record by two or more persons, all such persons must sign this Letter of
Transmittal.
If any tendered Shares are registered in different names on several Stock
Certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of such Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares evidenced by Stock Certificates listed and transmitted hereby, no
endorsements of Stock Certificates or separate stock powers are required unless
payment is to be made to, and Stock Certificates evidencing Shares not tendered
or purchased are to be issued in the name of, a person other than the registered
holder(s), in which case the Stock Certificate(s) evidencing the Shares tendered
hereby must be endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name(s) of the registered holder(s) appear(s) on such
Stock Certificate(s). Signatures on such certificates and stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Stock Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names of
the registered holder or holders appear on the Stock Certificate(s). Signatures
on such Stock Certificate(s) or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Stock Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or any person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the transfer and sale of Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price is to be made to, or Stock Certificates
evidencing Shares not tendered or purchased are to be registered in the name of,
any person other than the registered holder(s), or if Stock Certificates
evidencing tendered Shares are registered in the name of any person other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder(s) or such other
person) payable on account of the transfer to such person will be deducted from
the purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Stock Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal, or if such
check is to be sent and/or any Stock Certificates are to be returned to someone
other than the signer above, or to the signer above but at an address other than
that shown in the box entitled "Description of Shares Tendered" above, the
appropriate boxes on this Letter of Transmittal should be completed.
8. REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance may
be directed to, and additional copies of the Offer to Purchase, this Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from, the
Information Agent at the telephone numbers and address set forth below.
Stockholders may also contact their broker, dealer, commercial bank or trust
company.
9. WAIVER OF CONDITIONS. Except as otherwise provided in the Offer to
Purchase, Purchaser reserves the right in its sole discretion to waive in whole
or in part at any time or from time to time any of the specified conditions of
the Offer or any defect or irregularity in tender with regard to any Shares
tendered.
10. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"), generally
the stockholder's social security or employer identification number, on
Substitute Form W-9, which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, whether he or she is subject to
backup withholding of federal income tax. If a tendering stockholder is subject
to backup withholding, he or she must cross out item (2) of the Certification
Box on Substitute Form W-9. Failure to provide the information on Substitute
Form W-9 may subject the tendering stockholder to 31%
<PAGE>
federal income tax withholding on the payment of the purchase price for the
Shares tendered. If the tendering stockholder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future, he or
she should write "Applied For" in the space provided for the TIN in Part I, sign
and date the Substitute Form W-9 and sign and date the Certificate of Awaiting
Taxpayer Identification Number. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31% of payments for surrendered Shares thereafter until a TIN is
provided to the Depositary.
11. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. Any holder of a Stock
Certificate whose certificate(s) has (have) been mutilated, lost, stolen or
destroyed should call 201-324-0498 for instructions. This Letter of Transmittal
and related documents cannot be processed until the procedures for replacing
lost or destroyed Stock Certificate(s) have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE COPY
HEREOF), PROPERLY COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE
OF A BOOK-ENTRY DELIVERY, TOGETHER WITH CERTIFICATES (OR BOOK-ENTRY
CONFIRMATION) AND ALL OTHER REQUIRED DOCUMENTS, OR A PROPERLY COMPLETED AND DULY
EXECUTED NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY ON OR
PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal tax law, a stockholder whose tendered Shares are accepted for
payment is required to provide the Depositary (as payor) with such stockholder's
correct TIN on Substitute Form W-9 below. If such stockholder is an individual,
the TIN is such stockholder's Social Security Number. If the Depositary is not
provided with the correct TIN or an adequate basis for exemption, the
stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such stockholder with respect to
Shares purchased pursuant to the Offer may be subject to backup withholding in
an amount equal to 31% of the gross proceeds resulting from the Offer.
Certain stockholders (including, among others, certain corporations and
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit an IRS Form W-8, signed under penalties
of perjury, attesting to that individual's exempt status. Such Form can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be payable by the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his or her correct TIN by completing the
Substitute Form W-9 contained herein, certifying that the TIN provided on the
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN) and
that (1) the stockholder is exempt from backup withholding, (2) the stockholder
has not been notified by the Internal Revenue Service that he or she is subject
to backup withholding as a result of failure to report all interest or
dividends, or (3) the Internal Revenue Service has notified the stockholder that
he or she is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or TIN of the record owner of the Shares. If the Shares are in more than
one name or are not in the name of the actual owner, consult the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional guidance on which number to report. If the tendering
stockholder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future, he or she should write "Applied For" in
the space provided for the TIN in Part I, sign and date the Substitute Form W-9
and sign and date the Certificate of Awaiting Taxpayer Identification Number. If
"Applied For" is written in Part I and the Depositary is not provided with a TIN
within 60 days, the Depositary will withhold 31% of all payments of the purchase
price until a TIN is provided to the Depositary.
<PAGE>
PAYOR'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS DEPOSITARY
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN Social Security
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY ------------------------
Department of the Treasury BY SIGNING AND DATING BELOW. OR
Internal Revenue Service Employer Identification Number
--------------------------------
(IF AWAITING TIN WRITE
"APPLIED FOR")
-----------------------------------------------------------------
CHECK APPROPRIATE BOX:
Payer's Request for Taxpayer / / INDIVIDUAL/SOLE
Identification Number (TIN) and PROPRIETOR / / CORPORATION / / PARTNERSHIP / / OTHER
Certification -----------------------------------------------------------------
NAME (PLEASE PRINT)
-----------------------------------------------------------------
ADDRESS
-----------------------------------------------------------------
CITY STATE ZIP
CODE
- ---------------------------------------------------------------------------------------------------
PART II--For Payees NOT subject to backup withholding, see the enclosed Guidelines for
Certification of Taxpayer Identification Number on
Substitute Form W-9 and complete as instructed therein.
- ---------------------------------------------------------------------------------------------------
CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
1. The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for
a number to be issued to me), and
2. I am not subject to backup withholding because either (a) I am exempt from backup withholding,
(b) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to
backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS
that you are subject to backup withholding because of underreporting interest or dividends on your
tax return. However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.)
Signature: -------------------------------------------- Dated:----------------------------------,
1999
- ---------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST
COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART I OF
SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a TIN to the appropriate Internal Revenue Service Center
or Social Security Administration Office or (b) I intend to mail or deliver an
application in the near future. I understand that if I do not provide a taxpayer
identification number within sixty (60) days, 31% of all reportable payments
made to me thereafter will be withheld until I provide a number.
Signature(s): _____________________________ Dated: ____________________________
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Stockholders call toll-free: (800) 994-3227
Brokers and Banks call collect: (212) 269-5550
THE DEALER MANAGER FOR THE OFFER IS:
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-7449
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF
COMMON STOCK
OF
MARKET FACTS, INC.
TO
AEGIS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AEGIS GROUP PLC
As set forth in Section 3 of the Offer to Purchase (as defined below), this
form, or a form substantially equivalent to this form, must be used to accept
the Offer (as defined below) if the certificates representing shares of Common
Stock, par value $1.00 per share (the"Shares"), of Market Facts, Inc. are not
immediately available or time will not permit all required documents to reach
the Depositary prior to the Expiration Date (as defined in the Offer to
Purchase) or the procedures for book-entry transfer cannot be completed on a
timely basis. This form may be delivered by hand or transmitted by overnight
delivery, mail or, in the case of an Eligible Institution (as defined below)
only, facsimile transmission to the Depositary and must include a guarantee by
an Eligible Institution. See Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
<S> <C>
By Mail: By Overnight Delivery:
First Chicago Trust Company of New York First Chicago Trust Company of New York
Corporate Actions Corporate Actions, Suite 4680
Suite 4660 14 Wall Street, 8th Floor
P.O. Box 2569 New York, NY 10005
Jersey City, NJ 07303-2569
<CAPTION>
By Mail: By Hand:
First Chicago Trust Company of New York First Chicago Trust Company of New York
Corporate Actions c/o Securities Transfer and Reporting
Suite 4660 Services Inc.
P.O. Box 2569 Attn: Corporate Actions
Jersey City, NJ 07303-2569 100 William Street, Galleria
New York, NY 10038
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Facsimile Transmission Confirm Facsimile by Telephone:
(For Eligible Institutions Only) (201) 222-4707
(201) 222-4720 or (201) 222-4721
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
AS LISTED ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Aegis Acquisition Corp., a Delaware
corporation and an indirect wholly owned subsidiary of Aegis Group plc, a
company incorporated under the laws of England and Wales, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated May 4, 1999
(the "Offer to Purchase") and the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer"),
receipt of which is hereby acknowledged, the number of Shares indicated below
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. Unless the context otherwise requires, all references herein
to Shares shall be deemed to refer also to the associated preferred stock
purchase rights (the "Rights") issued pursuant to the Rights Agreement dated as
of July 26, 1989, as amended (the "Rights Agreement") between the Company and
First Chicago Trust Company of New York, and all references to Rights shall be
deemed to include all benefits that may inure to the stockholders of the Company
or to holders of the Rights pursuant to the Rights Agreement.
Number of Shares: ______________________________________________________________
Certificate Numbers (if available):
________________________________________________________________________________
________________________________________________________________________________
Account No.: ___________________________________________________________________
Date: __________________________________________________________________________
Name(s) of Record Holder(s): ___________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please Type or Print)
Address(es):
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Area Code and Tel. No(s).: _____________________________________________________
Signature(s):
________________________________________________________________________________
________________________________________________________________________________
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a participant in the Security Transfer Agents Medallion
Program or any other eligible guarantor institution as defined in Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (each, an "Eligible
Institution"), hereby guarantees that either the certificates representing the
Shares tendered hereby in proper form for transfer, or timely confirmation of a
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company (pursuant to procedures set forth in Section 3 of the
Offer to Purchase), together with a properly completed and duly executed Letter
of Transmittal (or facsimile thereof) with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message (as defined in the
Offer to Purchase)) and any other documents required by the Letter of
Transmittal, will be received by the Depositary at one of its addresses set
forth above within three (3) Nasdaq National Market trading days after the date
of execution hereof.
2
<PAGE>
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal,
certificates for Shares and any other required documents to the Depositary
within the time period shown herein. Failure to do so could result in a
financial loss to such Eligible Institution.
Name of Firm: _____________________________________________________
Address: __________________________________________________________
___________________________________________________________________
ZIP
CODE
Area Code and
Telephone Number: _________________________________________________
Authorized Signature:
___________________________________________________________________
Name: _____________________________________________________________
PLEASE TYPE OR PRINT
Title: _________________________________
Dated: ___________________________, 1999
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES ARE TO BE DELIVERED WITH THE LETTER OF
TRANSMITTAL.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
COMMON STOCK
OF
MARKET FACTS, INC.
BY
AEGIS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AEGIS GROUP PLC
AT
$31.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JUNE 1, 1999, UNLESS THE OFFER IS EXTENDED.
May 4, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Aegis Acquisition Corp., a Delaware corporation
("Purchaser") and an indirect wholly owned subsidiary of Aegis Group plc, a
company incorporated under the laws of England and Wales ("Parent"), to act as
Dealer Manager in connection with its offer to purchase all outstanding shares
of Common Stock, par value $1.00 per share (the "Shares"), of Market Facts,
Inc., a Delaware corporation (the "Company"), at $31.00 per Share, net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Purchaser's Offer to Purchase dated May 4, 1999 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"), copies of
which are enclosed herewith.
For your information and for forwarding to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 providing information relating to backup federal
income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents cannot be delivered to the Depositary by
the Expiration Date (as defined in the Offer to Purchase);
4. A form of letter which may be sent to your clients for whose accounts
you hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer; and
5. A letter to stockholders of the Company from the Company's Chairman and
Chief Executive Officer together with a Solicitation/Recommendation Statement on
Schedule 14D-9 issued by the Company.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of April 29, 1999 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. The Merger Agreement provides that, among other things,
following the consummation of the Offer and the satisfaction or (other than the
Minimum Condition, as defined in the Merger Agreement) waiver of the other
conditions set forth in the Merger Agreement, Purchaser will be merged with and
into the Company (the "Merger"). At the effective time of the Merger, each
outstanding Share (other than Shares held in the treasury of the Company, owned
by Parent, Purchaser or any other wholly owned subsidiary of Parent or held by
stockholders who perfect their dissenters' rights under Delaware law) will be
converted into the right to receive the per Share price paid in the Offer,
without interest.
<PAGE>
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT EACH
OF THE MERGER AGREEMENT, THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST
INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
RECOMMENDED ACCEPTANCE OF THE OFFER, APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND APPROVAL OF THE MERGER BY THE STOCKHOLDERS OF THE COMPANY.
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), Purchaser will be deemed to have accepted for payment, and will pay
for, all Shares validly tendered and not properly withdrawn by the Expiration
Date (as defined in the Offer to Purchase) if, as and when the Purchaser gives
oral or written notice to the Depositary of the Purchaser's acceptance of the
tenders of such Shares for payment pursuant to the Offer. Payment for Shares
purchased pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates evidencing such Shares or timely confirmation of
a book-entry transfer of such Shares into the Depositary's account at the
Book-Entry Transfer Facility (as defined in the Offer to Purchase), (ii) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) or, in the case of a book-entry transfer, an Agent's Message (as
defined in the Offer to Purchase), and (iii) any other documents required by the
Letter of Transmittal.
In order to tender Shares pursuant to the Offer, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or an Agent's Message (in the case of any book-entry
transfer), and any other documents required by the Letter of Transmittal, should
be sent to the Depositary, and either certificates representing the tendered
Shares should be delivered or such Shares must be delivered to the Depositary
pursuant to the procedures for book-entry transfers, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender their Shares, but it is impracticable
for them to deliver their certificates on or prior to the Expiration Date or to
comply with the book-entry transfer procedures on a timely basis, a tender may
be effected by following the guaranteed delivery procedures specified in Section
3 of the Offer to Purchase.
Neither Parent nor Purchaser will pay any fees or commissions to any broker,
dealer or other person (other than the Dealer Manager, as described in the Offer
to Purchase) in connection with the solicitation of tenders of Shares pursuant
to the Offer. Purchaser will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for reasonable expenses incurred by them in
forwarding the enclosed materials to their customers. Purchaser will pay any
stock transfer taxes applicable to its purchase of Shares pursuant to the Offer,
subject to Instruction 6 of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JUNE 1, 1999, UNLESS THE OFFER IS
EXTENDED.
Any inquiries you may have with respect to the Offer may be addressed to the
Information Agent or the undersigned at the addresses and telephone numbers set
forth on the back cover page of the Offer to Purchase. Requests for additional
copies of the enclosed materials may be directed to the Information Agent.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
<PAGE>
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY
PERSON THE AGENT OF PURCHASER, PARENT, THE COMPANY, ANY AFFILIATE OF THE
COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS
ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
COMMON STOCK
OF
MARKET FACTS, INC.
BY
AEGIS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AEGIS GROUP PLC
AT
$31.00 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, JUNE 1, 1999, UNLESS THE OFFER IS EXTENDED.
May 4, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated May 4, 1999
(the "Offer to Purchase") and the related Letter of Transmittal (which, as
amended or supplemented from time to time, together constitute the "Offer") and
other materials relating to the Offer by Aegis Acquisition Corp., a Delaware
corporation ("Purchaser") and an indirect wholly owned subsidiary of Aegis Group
plc, a company incorporated under the laws of England and Wales ("Parent"), to
purchase all of the outstanding shares of Common Stock, par value $1.00 per
share (the "Shares"), of Market Facts, Inc., a Delaware corporation (the
"Company"), at $31.00 per Share, net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer. Also
enclosed is the letter to stockholders of the Company from the Chairman and
Chief Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. This material is being
sent to you as the beneficial owner of Shares held by us for your account but
not registered in your name. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS
THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF
TRANSMITTAL ACCOMPANYING THIS LETTER IS FURNISHED TO YOU FOR YOUR INFORMATION
ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender any or all
of the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $31.00 per Share, net to the seller in cash, without
interest, upon the terms and subject to the conditions of the Offer.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New York
City time, on Tuesday, June 1, 1999, unless the Offer is extended.
3. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of April 29, 1999 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. The Merger Agreement provides that, among other
things, following the consummation of the Offer and the satisfaction or waiver
of certain conditions set forth in the Merger Agreement, Purchaser will be
merged with and into the Company (the "Merger"). At the effective time of the
Merger, each outstanding Share (other than Shares held in the treasury of the
Company, owned by Parent, Purchaser or any other wholly owned subsidiary of
Parent or held by stockholders who perfect their dissenters' rights under
Delaware law) will be converted into the right to receive the per Share price
paid in the Offer, without interest.
4. The Board of Directors of the Company has unanimously determined that
each of the Merger Agreement, the Offer and the Merger are fair to and in the
best interests of the stockholders of the
<PAGE>
Company, approved the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and recommended acceptance of the
Offer, approval and adoption of the Merger Agreement and approval of the Merger
by the stockholders of the Company.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration or termination of the Offer,
a number of Shares which will constitute a majority of the total number of
Shares outstanding on a fully diluted basis, less the number of Shares Purchaser
can acquire under an Option and Voting Agreement, dated as of April 29, 1999
between Parent and the stockholders of the Company who are parties thereto (the
"Minimum Condition"). Subject to the terms of the Merger Agreement, the Offer is
also subject to other terms and conditions, including receipt of certain
regulatory approvals, set forth in the Offer to Purchase. Any or all conditions
to the Offer (other than the Minimum Condition) may be waived by Purchaser.
6. Any stock transfer taxes applicable to the sale of Shares to Purchaser
pursuant to the Offer will be paid by Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
In order to tender Shares pursuant to the Offer, a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, or (in the case of any book-entry transfer) an Agent's
Message (as defined in the Offer to Purchase) and any other documents required
by the Letter of Transmittal, must be sent to First Chicago Trust Company of New
York, the Depositary, and either certificates representing the tendered Shares
must be delivered or such Shares must be delivered to the Depositary pursuant to
the procedures for book-entry transfers, all in accordance with the instructions
set forth in the Letter of Transmittal and the Offer to Purchase.
The Offer is being made to all holders of Shares. The Offer is not being
made to, nor will tenders be accepted from or on behalf of, holders of Shares in
any jurisdiction in which the making of the Offer or acceptance thereof would
not be in compliance with the 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
Purchaser by Morgan Stanley Dean Witter or one or more registered brokers or
dealers licensed under the laws of such jurisdictions.
If you wish to have us tender any or all of the Shares held by us for your
account, please so instruct us by completing, executing and returning to us the
instruction form set forth below. Please forward your instructions to us in
ample time to permit us to submit a tender on your behalf prior to the
expiration of the Offer. If you authorize the tender of your Shares, all such
Shares will be tendered unless otherwise specified on the instruction form set
forth below.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
COMMON STOCK
OF
MARKET FACTS, INC.
BY
AEGIS ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AEGIS GROUP PLC
AT
$31.00 NET PER SHARE
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase dated May 4, 1999 and the related Letter of Transmittal in
connection with the offer by Aegis Acquisition Corp., a Delaware corporation and
an indirect wholly owned subsidiary of Aegis Group plc, a company incorporated
under the laws of England and Wales, to purchase for cash all outstanding shares
of Common Stock, par value $1.00 per share (the "Shares"), of Market Facts,
Inc., a Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or if
no number is indicated below, all Shares) that are held by you for the account
of the undersigned, upon the terms and subject to the conditions set forth in
the Offer and the related Letter of Transmittal.
Dated: _________ __, 1999
NUMBER OF SHARES TO BE TENDERED:
______ SHARES*
------------------------------------------------
Signature(s)
------------------------------------------------
Please Print Name(s)
------------------------------------------------
------------------------------------------------
Please Print Address(es)
------------------------------------------------
Area Code and Telephone Number(s)
------------------------------------------------
Tax Identification or Social Security Number(s)
* I (We) understand that if I (we) sign this instruction form without
indicating a lesser number of Shares in the space above, all Shares held by
you for my (our) account will be tendered.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER
Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF--
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined
funds, any one of the individuals(1)
3. Husband and wife (joint account) The actual owner of the account or, if joint funds,
either person(1)
4. Custodian account of a minor (Uniform Gift to Minors The minor(2)
Act)
5. Adult and minor (joint account) The adult or, if the minor is the only contributor,
the minor(1)
6. Account in the name of guardian or committee for a The ward, minor, or incompetent person(3)
designated ward, person(3) minor, or incompetent
7. a. The usual revocable savings trust account The grantor-trustee(1)
(grantor is also trustee)
b. So-called trust account that is not a legal or The actual owner(1)
valid trust under State law
8. Sole proprietorship account The owner(4)
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER IDENTIFICATION NUMBER OF--
- ---------------------------------------------------------------- -----------------------------------------------------
<C> <S> <C>
9. A valid trust, estate, or pension trust The legal entity (Do not furnish the identifying
number of the personal representative or trustee
unless the legal entity itself is not designated in
the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or educational organization The organization
account
12. Partnership account held in the name of the business The partnership
13. Association, club, or other tax-exempt organization The organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of Agriculture in the The public entity
name of a public entity (such as a State or local
government, school district, or prison) that receives
agricultural program payments
</TABLE>
- ------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on all payments include
the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any political subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1). An entity registered at all times under the
Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident alien partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE FORM W-9 TO AVOID POSSIBLE ERRONEOUS
BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6042, 6044, 6045, 6049, 6050A and 6050N.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1993, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
FORM OF SUMMARY ANNOUNCEMENT
EXHIBIT (a)(7)
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE, DATED
MAY 4, 1999, AND THE RELATED LETTER OF TRANSMITTAL AND IS NOT BEING
MADE TO, AND TENDERS WILL NOT BE ACCEPTED FROM, OR ON BEHALF OF,
HOLDERS OF SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF
THE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN
COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IF
THE SECURITIES LAWS OF ANY JURISDICTION REQUIRE
THE OFFER TO BE MADE BY A LICENSED BROKER OR
DEALER, THE OFFER SHALL BE DEEMED TO BE MADE
ON BEHALF OF AEGIS ACQUISITION CORP. BY MORGAN
STANLEY & CO. INCORPORATED OR ONE OR MORE
REGISTERED BROKERS OR DEALERS LICENSED
UNDER THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF
COMMON STOCK
OF
MARKET FACTS, INC.
AT
$31.00 NET PER SHARE IN CASH
BY
AEGIS ACQUISITION CORP.
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
AEGIS GROUP PLC
Aegis Acquisition Corp., a Delaware corporation (the "Purchaser") and an
indirect wholly-owned subsidiary of Aegis Group plc, a corporation incorporated
under the laws of England and Wales ("Parent"), is offering to purchase all
outstanding shares of Common Stock, par value $1.00 per share (the "Shares"), of
Market Facts, Inc., a Delaware corporation (the "Company"), at a purchase price
of $31.00 per share (such amount, or any greater amount per Share paid pursuant
to the Offer, being hereinafter referred to as the "Offer Price"), net to the
seller in cash, without interest thereon, less any required withholding taxes,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated May 4, 1999, and the related Letter of Transmittal (which together
constitute the "Offer"). See the Offer to Purchase for capitalized terms used
but not defined herein.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, JUNE 1, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined below) a
number of Shares which will constitute a majority of the total number of Shares
outstanding on a fully diluted basis, less the number of Shares Purchaser can
acquire under an Option and Voting Agreement (the "Option Agreement"), dated as
of April 29, 1999 between the Parent and the stockholders of the Company who are
parties thereto (the "Minimum Condition"), and (ii) the expiration or
termination of any applicable waiting periods imposed by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended. See Sections 1 and 15 of the
Offer to Purchase.
<PAGE>
The Offer is not conditioned on obtaining financing.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of April 29, 1999 (the "Merger Agreement"), by and among Parent, Purchaser
and the Company. The Merger Agreement provides, among other things, for the
commencement of the Offer by Purchaser and further provides that, after the
purchase of Shares pursuant to the Offer and subject to the satisfaction or
waiver of certain conditions set forth therein, Merger Sub will be merged with
and into the Company (the "Merger"), with the Company surviving the Merger as an
indirect wholly-owned subsidiary of Parent. Pursuant to the Merger, each
outstanding Share (other than (i) Shares held by Purchaser, Parent or the
Company or any direct or indirect subsidiary of the Purchaser, Parent or the
Company and (ii) Shares held by holders who have not voted in favor of the
Merger or consented thereto in writing and who have demanded properly in writing
appraisal for such shares in accordance with the Delaware General Corporation
Law ("DGCL")) immediately prior to the Effective Time (as defined in the Merger
Agreement), will be converted into the right to receive the Offer Price in cash,
without interest thereon, less any required withholding of taxes, upon the
surrender of certificates formerly representing such Shares.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT EACH
OF THE MERGER AGREEMENT, THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST
INTERESTS OF THE STOCKHOLDERS OF THE COMPANY, APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
RECOMMENDED ACCEPTANCE OF THE OFFER, APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND APPROVAL OF THE MERGER BY THE STOCKHOLDERS OF THE COMPANY.
ADDITIONALLY, THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
OFFER, THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND THE
OPTION AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY FOR PURPOSES OF
SECTION 203 OF THE DGCL.
For purposes of the Offer, Purchaser will be deemed to have accepted
tendered Shares for payment if, as and when Purchaser gives oral or written
notice to First Chicago Trust Company of New York (the "Depositary") of its
acceptance of the tenders of such Shares. Payment for Shares purchased pursuant
to the Offer will be made by deposit of the Offer Price with the Depositary,
which will act as agent for tendering stockholders for the purpose of receiving
payment from Purchaser and transmitting such payments to tendering stockholders.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Tuesday, June 1, 1999, unless and until Purchaser, in its sole discretion, but
subject to the terms of the Merger Agreement, shall have extended the period of
time during which the Offer is open, in which event the term "Expiration Date"
shall refer to the latest time and date at which the Offer, as so extended by
Purchaser, shall expire. The Merger Agreement provides that the Offer shall be
made by means of an offer to purchase containing the Minimum Condition, and no
other conditions except those set forth in the Merger Agreement, and shall not
be amended with respect to any condition, with respect to a reduction in the
price or change in the form of consideration to be paid in the Offer, or with
respect to an extension of the Offer (except as provided below) without the
consent of the Company; provided, however, that Purchaser may extend the
expiration date: (x) in its sole discretion from time to time, if on the initial
scheduled or any extended expiration date of the Offer the Minimum Condition has
not been satisfied, or any of the other conditions set forth in the Merger
Agreement shall not have been satisfied or waived
<PAGE>
(provided, however, that, unless agreed to by the Company, any extended
expiration date pursuant to this clause (x) may not be later than ninety days
from the date of commencement of the Offer or, if within such ninety day period
a tender offer for at least 20% of the outstanding Shares is commenced by any
person who is not an affiliate of Parent or Purchaser (an "Intervening Tender
Offer"), one hundred-twenty days from such date); (y) for a period not to exceed
ten business days, notwithstanding that all conditions to the Offer are
satisfied as of such expiration date of the Offer, if, immediately prior to the
expiration date of the Offer (as it may be extended), the Shares tendered and
not withdrawn pursuant to the Offer, together with the Shares that are subject
to the Option Agreement, without duplication, equal less than 90% of the
outstanding Shares and Purchaser expressly irrevocably waives any condition
(other than the Minimum Condition) that subsequently may not be satisfied during
such extension of the Offer; or (z) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "Commission") or the staff thereof applicable to the Offer. Without
limiting the right of Purchaser to extend the Offer pursuant to the provisions
of the Merger Agreement, in the event that (i) the Minimum Condition shall not
have been satisfied or (ii) the conditions set forth in the Merger Agreement
shall not have been satisfied or waived at the scheduled or any extended
expiration date of the Offer, at the request of the Company, the Purchaser has
agreed that it will extend the expiration date of the Offer in increments of
five business days each until the earliest to occur of (x) the satisfaction or
waiver of the Minimum Condition or such other condition, (y) the termination of
this Agreement in accordance with its terms, and (z) unless extended by
agreement of the parties, ninety days from the date of commencement of the Offer
or, in the event of an Intervening Offer, one hundred-twenty days from such
date. Subject to the foregoing, Purchaser reserves the right (but will not be
obligated), in its sole discretion, to extend the period during which the Offer
is open by giving oral or written notice of such extension to the Depositary and
by making a public announcement of such extension.
Subject to the provisions of the Merger Agreement and the applicable rules
and regulations of the Commission, Purchaser reserves the right, in its sole
discretion, to waive any or all conditions to the Offer and otherwise to modify
the terms of the Offer in any respect. Without limiting the preceding sentence,
if any condition to the Offer is not satisfied prior to the expiration of the
Offer, Purchaser reserves the right, in its sole discretion, subject to the
terms of the Merger Agreement and such rules and regulations, to (i) terminate
the Offer and return all tendered Shares to tendering stockholders, (ii) extend
the Offer and, subject to withdrawal rights as set forth in Section 4 of the
Offer to Purchase, retain all such Shares until the expiration of the Offer as
so extended, or (iii) waive such condition and, subject to any requirement to
extend the period of time during which the Offer is open, purchase all Shares
validly tendered and not withdrawn by the Expiration Date. Any extension,
amendment or termination will be followed as promptly as practicable by public
announcement thereof, the announcement in the case of an extension to be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date in accordance with Rules 14d-4(c), 14d-6(d)
and 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
The Purchaser shall not have any obligation to pay interest on the purchase
price for tendered Shares whether or not the Purchaser exercises its right to
extend the Offer.
Tenders of Shares made pursuant to the Offer are irrevocable, except as
otherwise provided in Section 4 of the Offer to Purchase. Shares tendered
pursuant to the Offer may be withdrawn pursuant to the procedures set forth in
Section 4 of the Offer to Purchase at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer, may
also be withdrawn at any time after July 2, 1999. For a withdrawal to be
effective, a written, telegraphic or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set
<PAGE>
forth on the back cover of the Offer to Purchase. Any notice of withdrawal 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 that of the person who tendered such Shares. If Stock
Certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution (except in the case of Shares tendered by
an Eligible Institution) must be submitted prior to the release of such
certificates. In addition, such notice must specify, in the case of Shares
tendered by delivery of Stock Certificates, the name of the registered holder
(if different from that of the tendering stockholder) and the serial numbers
shown on the particular Stock Certificates evidencing the Shares to be
withdrawn, or, in the case of Shares tendered by book-entry transfer, the name
and number of the account at one of the Book-Entry Transfer Facilities to be
credited with the withdrawn Shares. An Eligible Institution is a member firm of
a registered national securities exchange or a member firm of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or any other "Eligible
Guarantor Institution" as defined in Rule 17Ad-15 under the Exchange Act.
THE INFORMATION REQUIRED TO BE DISCLOSED BY RULE 14d-6(e)(1)(vii) OF THE
GENERAL RULES AND REGULATIONS UNDER THE EXCHANGE ACT IS CONTAINED IN THE OFFER
TO PURCHASE AND IS INCORPORATED HEREIN BY REFERENCE.
The Company has agreed to provide Purchaser with its stockholder list and
security position listings for the purpose of disseminating the Offer to
stockholders. The Offer to Purchase, the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares 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 Company's
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.
STOCKHOLDERS ARE URGED TO READ THE OFFER TO PURCHASE AND THE RELATED LETTER
OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR SHARES PURSUANT
TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent at their respective addresses and telephone numbers set
forth below. Requests for copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery or other related materials may be
directed to the Information Agent at its address and telephone number set forth
below, and copies will be furnished promptly at Purchaser's expense. Holders of
Shares may also contact brokers, dealers, commercial bankers and trust companies
for additional copies of the Offer to Purchase, the Letter of Transmittal, the
Notice of Guaranteed Delivery and other related materials.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Stockholders call toll-free: (800) 994-3227
Brokers and Banks call collect: (212) 269-5550
The Dealer Manager for the Offer is:
<PAGE>
MORGAN STANLEY DEAN WITTER
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
(212) 761-7239
May 4, 1999
<PAGE>
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN THE UNITED STATES, CANADA,
AUSTRALIA OR JAPAN
30 APRIL 1999
AEGIS GROUP PLC
RECOMMENDED TENDER OFFER FOR MARKET FACTS INC.
- - Aegis announces a recommended tender offer to acquire Market Facts, for
approximately $297 million (L185 million). Market Facts is listed
on NASDAQ.
- - Market Facts is one of the leading customised research companies in the
US. Based in Chicago, it has a strong list of US clients including a
majority of the largest 100 multinational consumer product and service
companies. Since 1946, it has supplied clients with tailor made
measurements and evaluation services of consumer habits, attitudes and
behaviour towards products, services and advertising.
- - The acquisition represents a further step in Aegis' strategic objective of
expanding the range of services it can offer to its clients on a global
basis, in a closely related sector.
- - The tender offer is $31.00 in cash per share, a 20 per cent premium to the
closing price on 29 April 1999. It would represent an after tax multiple
of 26 times broker forecasts for 1999 earnings per share.
- - The acquisition will be financed partly through a vendor placing of 96
million new Aegis shares representing approximately 10 per cent of the
current issued share capital of Aegis to raise not less than L114 million,
with the balance being financed by bank debt.
- - Aegis has received irrevocable options to acquire approximately 30 per
cent of Market Facts issued share capital, including executive
management's interests.
- - Market Facts has grown rapidly in the last five years, with average annual
revenue and profit growth rates above 25%. It had revenues of $137 million
(L82 million) in 1998 and profit before tax of $14.7 million
(L8.8 million).
- - The Board of Aegis believes that the acquisition of Market Facts will
enhance Aegis' fully diluted earnings per share from the first full year
of ownership, before any goodwill amortisation.
<PAGE>
Commenting on today's announcement, Aegis' Chief Executive, Crispin Davis, said:
"Market Facts will complement and enhance our existing media service capability.
It will provide a broader base of client revenue for the company, and an
additional platform for growth. The skill base and client fit is excellent. We
are buying a leading player in the key US customised research market with an
excellent track record, a strong service capability, and a blue chip client
list. We see significant opportunities for growth both inside and outside the
US".
There will be an analyst presentation at 9.00 am at ABN Amro, 4 Broadgate, EC2,
and a press briefing at 11.30 am at Financial Dynamics, 30 Furnival Street, EC4
THIS SUMMARY SHOULD BE READ IN CONJUNCTION WITH THE FULL TEXT OF THE ATTACHED
ANNOUNCEMENT
<TABLE>
ENQUIRIES:
AEGIS GROUP PLC
<S> <C>
Crispin Davis, Chief Executive Office 0171 470 5000
Colin Day, Group Finance Director
MORGAN STANLEY & CO. LIMITED
Piers de Montfort 0171 425 5000
Dan Bailey
HOARE GOVETT
Mark Astaire 0171 601 0101
William Shaw
FINANCIAL DYNAMICS
Tim Spratt 0171 831 3113
</TABLE>
MORGAN STANLEY & CO. LIMITED, WHICH IS REGULATED IN THE UK BY THE SECURITIES AND
FUTURES AUTHORITY LIMITED, IS ACTING FOR AEGIS IN RELATION TO THE ACQUISITION OF
MARKET FACTS, AND FOR NO ONE ELSE AND WILL NOT BE RESPONSIBLE TO ANY OTHER
PERSON FOR PROVIDING THE PROTECTIONS AFFORDED TO ITS CUSTOMERS OR FOR ADVISING
ANY OTHER PERSON IN RELATION TO THE ACQUISITION OF MARKET FACTS AND THE VENDOR
PLACING.
HOARE GOVETT LIMITED, WHICH IS REGULATED IN THE UK BY THE SECURITIES AND FUTURES
AUTHORITY LIMITED, IS ACTING FOR AEGIS IN CONNECTION WITH THE VENDOR PLACING AND
WILL NOT BE RESPONSIBLE TO ANY OTHER PERSON FOR PROVIDING THE PROTECTIONS
AFFORDED TO THE CUSTOMERS OF HOARE GOVETT LIMITED OR FOR ADVISING ANY SUCH
PERSON IN CONNECTION WITH THE VENDOR PLACING.
<PAGE>
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN THE UNITED STATES, CANADA,
AUSTRALIA OR JAPAN
30 APRIL 1999
AEGIS GROUP PLC
RECOMMENDED TENDER OFFER FOR MARKET FACTS INC.
INTRODUCTION
Aegis is today announcing a recommended tender offer for the entire issued share
capital of Market Facts for approximately $297 million (L185 million).
Aegis is partly financing the acquisition through a vendor placing of new Aegis
shares to raise not less than L114 million (net of commissions) by the
issue of 96 million new ordinary shares (representing approximately 10 per cent
of the current issued share capital of Aegis) at not less than L1.20 per
share. Morgan Stanley has advised Aegis on this transaction and the placing has
been fully underwritten by Hoare Govett Limited. The balance of the
consideration of approximately L71 million will be financed through bank
debt.
The offer of $31.00 per share represents a premium of 20 per cent over the
closing price of $25.875 of a Market Facts share yesterday.
BACKGROUND TO AND REASONS FOR THE ACQUISITION OF MARKET FACTS
Aegis has been exploring opportunities to expand its range of client media
services, in closely related, complementary sectors with growth potential. The
Aegis Board believes the acquisition fits this key strategic objective for the
following reasons:
1. The global customised research market is large (estimated above $5 billion
in revenues in 1998) and has been showing strong growth (6-10% annually)
in the last 10 years, reflecting consistent and growing service
requirements from clients. Originally this was from f.m.c.g. companies,
but is now increasingly from new sectors, such as financial services,
telecommunications and healthcare.
2. Market Facts is a leading player in the key US market, with a high quality
range of services, an excellent client base and an experienced, stable
management team. The company's growth rate in recent years has been strong
and well ahead of its market.
3. Market Facts skill base is comparable to Aegis' with clear focus on client
servicing, analytical and research capabilities. The client bases are
highly complementary, offering good opportunity for cross-provision of
services and for strengthening partnership relations with key
international clients.
4. Future opportunities for growth appear significant. Market Facts
development strategy will
<PAGE>
be similar to that successfully followed by Aegis in recent years:
development of value added high margin media services, expansion towards
global capability and increasing business with major blue chip
international clients.
The Aegis Board believes that the acquisition will enhance Aegis' fully diluted
earnings per share from the first full year of ownership before any goodwill
amortisation.
INFORMATION ON MARKET FACTS
Market Facts was founded in 1946 and specialises in customised market research.
This involves proprietary research in the measurement and evaluation of consumer
beliefs, attitudes and behaviour towards particular products, services, concepts
or advertising. The services are nearly all tailored to specific client needs
and help to measure and interpret, product performance, consumer satisfaction,
price sensitivity, new product/market opportunities, advertising effectiveness
and brand strength. The company has a range of proprietary tools and products
tailored to this service. Market Facts differentiates itself from its
competition by offering clients a comprehensive range of services incorporating
elements of leading edge technology. Information is primarily collected through
an extensive proprietary consumer mail panel ("CMP") of 600,000 US and Canadian
households. In addition, information is gained through telephone, one-to-one
interviews, the internet and focus groups.
Market Facts is one of the largest customised research companies in the US.
Market share is estimated at around 5% in a highly fragmented market where the
leader is estimated to have a 7% share. Market Facts has some 900 clients,
including a strong listing of Fortune 500 companies. These include a majority of
the largest 100 US multinational consumer product and service companies. There
is a clear and complementary overlap of clients between Aegis and Market Facts.
The Company has been growing revenue at more than twice the rate of market
growth in the last 5 years. Revenue is largely project based. However, the
nature of the business, where continuity of data is important and where most
clients have tailor made systems and programmes with Market Facts, result in
fairly consistent and predictable client revenue streams. Market Facts' client
retention record is excellent.
MANAGEMENT AND ORGANISATION
Market Facts employs over 950 full-time people, including 350 researchers.
Market Facts' Head Office is in Arlington Heights, near Chicago, and the company
has offices in a number of US cities where major clients are located.
<PAGE>
Aegis attaches great importance to the skills and experience of the existing
management team and employees of Market Facts and believes that as a result of
the acquisition there will be greater opportunities to develop the business and
client base. Market Facts' existing management team, which has successfully
grown and developed the company over recent years, will remain in place.
FINANCIAL PERFORMANCE OF MARKET FACTS
Market Facts has produced a strong financial performance in recent years with
good growth in revenue, profit and operating margin. The business also has a
strong operating cash flow.
In the five years ended 31 December 1998 the compound annual growth rates of
revenue, operating profit and fully diluted earnings per share have been 25%,
45% and 51% respectively.
Set out below is a summary of key financial information for Market Facts as
reported under US GAAP, and as extracted from Market Facts published accounts.
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER
1996 1997 1998
$M $M $M
<S> <C> <C> <C>
Revenue 83.8 100.1 136.5
Gross Profit 35.6 43.7 59.5
GROSS MARGIN 42.5% 43.6% 43.6%
Operating profit 8.4 10.3 14.6
OPERATING MARGIN 10.0% 10.3% 10.7%
Profit before tax 7.4 9.5 14.7
Net cashflow from operating activities 4.5 10.4 16.1
Cash and cash equivalents 0.1 36.4 28.5
</TABLE>
Market Facts announced its first quarter results earlier this week. These
broadly maintain the strong growth rate of recent years, and were ahead of
market forecasts.
Market Facts is confident that trading for the balance of the year should remain
satisfactory and in line with internal objectives/market forecasts. Recent
acquisitions are expected to contribute to EPS progress.
<PAGE>
DEVELOPMENT OF MARKET FACTS BY AEGIS
As part of Aegis there are significant and attractive opportunities to develop
Market Facts and the customised research business. These include:
- - Further upgrading and broadening Market Facts range of proprietary
products and services, in particular the development of higher margin
services.
- - Targeting new major clients in high growth but currently under-penetrated
industries such as telecoms, financial services, healthcare, and
increasing market share with existing clients.
- - Accelerating the growth of Market Facts in the US through strategically
sound bolt-on acquisitions in a highly fragmented market.
- - Progressive international expansion, supported by Aegis' established
international network.
The strategy behind this development programme is consistent with Aegis' own
successful growth strategies over the last four years.
CURRENT TRADING AND PROSPECTS FOR AEGIS
As indicated in April, at the announcement of the preliminary results for the
year to December 1998, the Group has started 1999 with some important new
business wins that should provide good momentum for the business year. The Board
remains of the view that the full year should represent another year of
continued satisfactory progress.
PRINCIPAL TERMS OF THE ACQUISITION
The acquisition will be effected in a two stage process. A US subsidiary of
Aegis (Aegis Acquisition Corp) will make a tender offer to Market Facts
shareholders by means of a document containing an offer to purchase (the US
equivalent of an offer document) which is expected to be filed with the SEC and
mailed to Market Facts' shareholders on or before Thursday, 6 May 1999. It is
expected that the offer will initially be open until immediately after midnight
New York time on 4th June 1999.
The conditions to the tender offer will include an acceptance condition
(described in further detail below) and various other conditions, including the
expiry of applicable waiting periods under the US Hart-Scott-Rodino Act.
<PAGE>
The above arrangements are reflected in an Agreement and Plan of Merger between
Aegis, Aegis Acquisition Corp and Market Facts, which also provides that,
following the purchase of Market Facts' shares under the tender offer, a merger
between Aegis Acquisition Corp and Market Facts will be effected, with Market
Facts being the surviving entity, pursuant to which Market Facts will become a
wholly owned subsidiary of Aegis. If tenders in respect of more than 90 per cent
of the Market Facts shares are received, the merger will occur shortly after the
closing of the tender offer. It is a condition to the consummation of the tender
offer that Aegis shall have the right to acquire not less than a majority of the
common stock of Market Facts. If less than 90 per cent (but more than 50 per
cent) is achieved, Aegis Acquisition Corp will accept all such tenders following
which, to effect the merger it will be necessary to obtain approval of
shareholders holding a majority of the outstanding shares of common stock at a
special meeting of Market Facts shareholders at which Aegis Acquisition Corp
would be entitled to vote its shares. In this circumstance, it is expected that
the merger would become effective within three months after the tender offer
closes with the result that Market Facts would then become a wholly owned
subsidiary of Aegis.
Aegis has received irrevocable options from MFI Investors LP and senior
executive management of Market Facts in respect of their holdings (approximately
30% in total) to acquire these shares at a price of $31.00 per share. The
Agreement and Plan of Merger may be terminated in certain circumstances. A
break-up fee may be payable to Aegis in certain circumstances, by Market Facts,
of an amount equal to $9 million (plus out of pocket expenses up to a maximum of
$1.5 million).
<PAGE>
APPENDIX
FINANCIAL INFORMATION ON MARKET FACTS (1)
PROFIT AND LOSS ACCOUNT
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER
1996 1997 1998
$ $ $
<S> <C> <C> <C>
Revenue 83,795,562 100,064,294 136,532,924
Direct Costs:
Payroll 16,167,308 18,071,133 24,715,160
Other Expenses 32,015,577 38,321,485 52,358,850
Total 48,182,885 56,392,618 77,074,010
Gross Margin 35,612,677 43,671,676 59,458,914
Operating Expenses:
Selling 2,600,727 3,324,273 4,725,959
General and administrative 24,614,002 30,066,240 40,173,474
Total 27,214,729 33,390,513 44,899,433
Income from Operations 8,397,948 10,281,163 14,559,481
Net Interest (1,088,437) (833,779) (175,737)
Other income, net 75,145 87,714 354,205
Total (1,013,292) (746,065) 178,468
Income Before Provision for Income Taxes 7,384,656 9,535,098 14,737,949
Provision for Income Taxes 3,107,000 3,713,000 5,728,000
Net Income 4,277,656 5,822,098 9,009,949
Basic earnings per share 0.57 0.80 1.02
Diluted earnings per share 0.55 0.77 0.98
</TABLE>
(1) The financial information relating to Market Facts in this announcement has
been extracted from publicly published data provided by Market Facts. While
Aegis has taken due care in ensuring that such information has been properly
extracted, Aegis is not responsible for the accuracy or completeness of such
information. The financial information so produced is only a summary.
BALANCE SHEET
<TABLE>
<CAPTION>
AS AT 31 DECEMBER
ASSETS 1997 1998
$ $
<S> <C> <C>
Current Assets:
Cash and cash equivalents 36,444,256 28,475,066
Bank certificate of deposit 50,000 50,000
Accounts receivable 20,145,847 20,336,967
Revenue earned on contracts in progress in excess of billings 4,618,736 5,724,794
Other Current Assets 1,839,421 1,215,858
Total Current Assets 63,098,260 55,802,685
Net Property and Equipment 17,081,498 20,482,475
Goodwill and other intangibles 4,959,752 27,818,619
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Deferred income taxes, noncurrent 1,063,833 789,881
Investment in affiliated companies 688,404 560,814
Total Assets 86,891,747 105,454,474
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accrued expenses 10,052,639 14,074,491
Billings in excess of revenue earned on contracts in progress 9,267,185 9,760,679
Accounts payable 2,380,596 4,988,039
Income taxes 945,449 673,879
Current portion of long-term debt and obligations under capital leases 291,537 446,289
Total Current Liabilities 22,937,406 29,943,377
Long-term Liabilities 10,409,088 11,197,130
Total Liabilities 33,346,494 41,140,507
Stockholders' Equity:
Common stock 10,875,258 10,910,058
Capital in excess of par value 44,707,038 46,172,329
Retained earnings 12,538,528 21,448,047
68,120,824 78,530,434
Less treasury common stock at cost (13,891,966) (13,612,265)
Less other transactions involving common stock (683,605) (604,202)
Total Stockholder's Equity 53,545,253 64,313,967
Total Liabilities and Stockholders' Equity 86,891,747 105,454,474
</TABLE>
<PAGE>
The financial information relating to Market Facts in this announcement has been
extracted from publicly published data provided by Market Facts. While Aegis
has taken due care in ensuring that such information has been properly
extracted, Aegis is not responsible for the accuracy or completeness of such
information. The financial information so produced is only a summary.
<PAGE>
CASH FLOW
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER
1996 1997 1998
$ $ $
<S> <C> <C> <C>
Net Income 4,277,656 5,822,098 9,009,949
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortisation 2,495,354 2,882,935 4,065,792
Other (346,332) (41,874) 237,789
Changes in assets and liabilities, net of effects from (2,412,108) 1,404,425 2,071,413
acquisitions
Income taxes 496,878 360,188 721,975
Net cash provided by operating activities 4,511,448 10,427,772 16,106,918
Cash Flows from Investing Activities (3,938,794) (6,499,167) (23,867,022)
Cash Flows from Financing Activities:
Repayment of short-term borrowings (12,100,000) (14,237,672) (6,653,936)
Proceeds from short-term borrowings 13,850,000 12,487,672 6,503,936
Proceeds from issuance of common stock, net - 36,893,841 -
Purchase of treasury stock (12,702,937) - -
Proceeds from issuance of convertible note 8,250,000 - -
Other (1,270,068) (2,754,134) (29,510)
Net cash provided by (used in) financing activities (3,973,005) 32,389,707 (179,510)
Effect of exchange rate changes on cash (378) (3,484) (29,576)
Net increase (decrease) in cash and cash equivalents (3,400,729) 36,314,828 (7,969,190)
Cash and cash equivalent at beginning of year 3,530,157 129,428 36,444,256
Cash and cash equivalents at end of year 129,428 36,444,256 28,475,066
</TABLE>
The financial information relating to Market Facts in this announcement has been
extracted from publicly published data provided by Market Facts. While Aegis has
taken due care in ensuring that such information has been properly extracted,
Aegis is not responsible for the accuracy or completeness of such information.
The financial information so produced is only a summary.
<PAGE>
MARKET FACTS TO BE ACQUIRED BY AEGIS GROUP PLC
ARLINGTON HEIGHTS, Ill., (April 30, 1999), Market Facts, Inc., (Nasdaq: MFAC), a
leading international market research and information company, and Aegis Group
plc, one of the world's leading media communication specialists and based in
London, today announced that they have entered into a definitive merger
agreement providing for the acquisition of Market Facts by Aegis. The
approximate value of the transaction is $297 million or $31 per share in cash
for Market Facts common stock.
Thomas Payne, president and chief executive officer of Market Facts, said, "We
are very pleased to be joining the Aegis family of companies. Aegis will be a
powerful business partner for Market Facts and will help us expand the products
and services we can offer to clients. Our strategy is to be able to serve the
international research needs of our U.S.-based clients and this transaction is a
major step in executing that strategy. We feel that both our clients and our
employees will benefit from the business combination with Aegis."
Crispin Davis, chief executive of Aegis, said, "Market Facts will complement and
enhance our existing media service capability. It will provide a broader base of
client revenue for the company, and an excellent platform for growth. The skill
base and client fit is excellent. We are buying a leading player in the key US
custom research market with an excellent track record, a strong service
capability, and a blue chip client list. We see significant opportunities for
growth both inside and outside the US."
Market Facts will operate as a subsidiary of Aegis under the direction of its
current management.
Under the merger agreement, a subsidiary of Aegis will commence, within five
business days, a cash tender offer for all of Market Facts shares of common
stock at an offering price of $31.00 per share, net to the seller in cash.
Following the cash tender offer and subject to the terms and conditions of the
merger agreement, the Aegis subsidiary will be merged into Market Facts and the
remaining Market Facts shares will be converted into the right to receive $31.00
per share. As a result of the merger, Market Facts will become a wholly owned
subsidiary of Aegis. The tender offer and merger were unanimously approved by
Market Facts' Board of Directors.
In connection with the merger agreement, Aegis has entered into irrevocable
Option Agreements with certain Market Facts stockholders owning an aggregate of
approximately 30% of Market Facts' shares under which such stockholders have,
among other things, granted Aegis an irrevocable option to purchase their shares
at a price of $31.00 per share.
The transaction is subject to certain conditions, including a requirement that
the shares acquired in the tender offer, together with the shares subject to the
Option Agreements, constitute at least a majority of Market Facts' outstanding
shares. The tender offer is also subject to compliance with certain covenants,
no material adverse change with respect to Market Facts having occurred, and
<PAGE>
the expiration of all applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
Aegis is listed on the London stock exchange and is the parent of the Carat
Group of operating companies, one of the largest global media planning and
buying networks. In 1998, Aegis had revenue of approximately $6.6 billion.
Market Facts is an international organization which specializes in the
collection and processing of information intended to help its clients make
better marketing decisions. Through its network of offices across the U.S. and
Canada and its global affiliations, the Company's primary activity is the
design, execution and interpretation of market research conducted on behalf of
its clients, which include a majority of the largest 100 multinational consumer
products and service companies, as well as many government agencies.
This release contains certain forward-looking information that reflect the
current views and expectation of Aegis and Market Facts with respect to future
events. Such statements are subject to a number of risks, uncertainties and
assumptions, including those described in Market Facts' most recent annual
report and Form 10-K.
2
<PAGE>
AGREEMENT
DATED 29th April, 1999
L250,000,000
REVOLVING CREDIT AND TERM LOAN FACILITY
FOR
AEGIS GROUP PLC
AND
AEGIS ACQUISITION CORP.
PROVIDED BY
NATIONAL WESTMINSTER BANK PLC
ALLEN & OVERY
London
<PAGE>
INDEX
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
1. Interpretation...........................................................1
2. The Facilities..........................................................11
3. Purpose.................................................................11
4. Conditions Precedent....................................................12
5. Drawdown................................................................13
6. Repayment...............................................................14
7. Prepayment and Cancellation.............................................14
8. Interest Periods........................................................16
9. Interest................................................................17
10. Selection of Optional Currencies........................................18
11. Amount of Optional Currencies for Term loans............................19
12. Payments................................................................20
13. Taxes...................................................................21
14. Market Disruption.......................................................23
15. Increased Costs.........................................................24
16. Illegality..............................................................25
17. Guarantee...............................................................25
18. Representations and Warranties..........................................27
19. Undertakings............................................................30
20. Default.................................................................36
21. Fees....................................................................40
22. Expenses................................................................40
23. Stamp Duties............................................................41
24. Indemnities.............................................................41
25. Evidence and Calculations...............................................42
26. Waivers and Remedies Cumulative.........................................43
27. amendments and waivers..................................................43
28. Changes to the Parties..................................................43
29. Disclosure of Information...............................................43
30. Set-Off.................................................................44
31. Severability............................................................44
32. Counterparts............................................................44
33. Notices.................................................................44
34. Jurisdiction............................................................46
35. Governing Law...........................................................47
SCHEDULES
1. Conditions Precedent Documents..........................................48
2. Calculation of the Mandatory Cost.......................................50
3. Form of Request.........................................................52
Signatories..................................................................53
</TABLE>
<PAGE>
THIS AGREEMENT is dated 29th April, 1999 between:
(1) AEGIS GROUP plc (Registered No. 1403668) and AEGIS ACQUISITION CORP.
(incorporated under the laws of the State of Delaware in the United
States of America) (each a "BORROWER" and together the "BORROWERS");
(2) AEGIS GROUP plc (Registered No. 1403668) ("AEGIS"); and
(3) NATIONAL WESTMINSTER BANK PLC as lender (the "BANK").
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"AAC"
means Aegis Acquisition Corp.
"ADMISSION"
means the admission of the shares which are the subject of the Vendor
Placing to the official List of the London Stock Exchange becoming
effective within the meaning of paragraph 7.1 of the Listing Rules.
"AFFILIATE"
means a Subsidiary or a holding company (as defined in Section 736 of
the Companies Act 1985) of a person or any other Subsidiary of that
holding company.
"BANK'S SPOT RATE OF EXCHANGE"
means the Bank's spot rate of exchange for the purchase of the relevant
Optional Currency in the London foreign exchange market with Sterling at
or about 11.00 a.m. on the relevant day.
"BUSINESS DAY"
means a day (other than a Saturday or a Sunday) on which banks are open
for general business in:
(a) London; and
(b) in relation to a transaction involving an Optional Currency (other
than euros) the principal financial centre of the country of that
Optional Currency; or
(c) in relation to a transaction involving euros, is also a Target
Business Day.
<PAGE>
2
"CODE"
means the United States Internal Revenue Code of 1986 and any rule or
regulation issued thereunder from time to time in effect.
"COMMITMENT"
means a Term Loan Commitment or a Revolving Credit Commitment.
"COMMITMENT PERIOD"
means the Term Loan Commitment Period or the Revolving Credit Commitment
Period.
"CONTROLLED GROUP"
means AAC and all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under common control
which, together with AAC, are treated as a single employer under Section
414 of the Code.
"DEFAULT"
means an Event of Default or an event which, with the giving of notice,
or if unremedied with the lapse of time (or any combination of the
foregoing), would constitute an Event of Default.
"DM"
means deutschmarks, the lawful currency for the time being of Germany.
"DRAWDOWN DATE"
means the date of the advance of a Loan.
"ERISA"
means the U.S. Employee Retirement Income Security Act of 1974 and any
rule or regulation issued thereunder from time to time in effect.
"EURO"
means the single currency of the Participating Member States.
"EVENT OF DEFAULT"
means an event specified as such in Clause 20 (Events of Default).
"EXISTING FACILITY AGREEMENT"
means the Restated Facilities Agreement dated 25th June, 1996 between,
inter alia, Aegis, HSBC Investment Bank plc and Societe Generale as
Joint Arrangers and Underwriters and Samuel Montagu & Co Limited as
Agent.
<PAGE>
3
"FACILITY"
means the Term Loan Facility or the Revolving Credit Facility and
"FACILITIES" means both of them.
"FINAL MATURITY DATE"
means the day falling six months after the date of this Agreement or
such later date as is agreed between the Bank and Aegis.
"FINANCE DOCUMENT"
means this Agreement or any other document designated as such by the
Bank and Aegis.
"FINANCIAL INDEBTEDNESS"
means:
(a) money borrowed or raised;
(b) any bond, note, loan stock, debenture, bill of exchange,
commercial paper or similar instrument;
(c) acceptance or documentary credit facilities (but excluding
acceptances of trade bills in respect of the purchase or sale of
goods in the ordinary course of trading);
(d) the amount of liability in respect of leases and hire purchase
contracts (excluding trade accounts arising in the normal course
of trading) which would, in accordance with relevant generally
accepted accounting standards be treated as finance or capital
leases;
(e) interest rate swaps, currency swaps, financial options, futures
contracts or other similar instruments;
(f) guarantees, bonds, stand-by letters of credit or other instruments
issued in connection with the performance of contracts;
(g) obligations under conditional or instalment sale agreements or any
other obligation to pay the deferred purchase or construction
price of assets or services, except trade accounts arising in the
normal course of day-to-day trading;
(h) guarantees or other assurances against financial loss in respect
of indebtedness of any person which falls within any of (a) to (g)
above; and
(i) all other indebtedness under any arrangement entered into
primarily as a method of raising finance (and not in the normal
course of, and as part of, day-to-day trading) and which is not
referred to in the foregoing paragraphs of this definition and
which would generally be classified as debt in accordance with
relevant generally accepted accounting standards
<PAGE>
4
PROVIDED THAT, for the purposes of Clause 19.15 (Financial covenants),
in the case of any debenture, note or commercial paper issued by any
member of the Group which is a relevant discounted security (within the
meaning of Schedule 13 to the Finance Act 1996), only that part of the
principal amount thereof as would be repayable if such debenture, note
or commercial paper were to become repayable at the time when this
definition is being applied or as soon thereafter as is permitted by its
terms, whether upon default or otherwise, shall be treated as Financial
Indebtedness.
"GROUP"
means Aegis and its Subsidiaries.
"INTEREST PERIOD"
means each period determined in accordance with Clause 8 (Interest
Periods).
"LIBOR"
means the rate quoted by the Bank to leading banks in the London
interbank market at or about 11.00 a.m. on the applicable Rate Fixing
Day for the offering of deposits in the currency of the relevant Loan
for a period comparable to its Interest Period.
"LISTING RULES"
means the listing rules made by the London Stock Exchange pursuant to
Part IV of the Financial Services Act 1986.
"LOAN"
means, subject to Clauses 8 (Interest Periods) and 10 (Selection of
Optional Currencies), the principal amount of each borrowing by a
Borrower under this Agreement or the principal amount outstanding of
that borrowing.
"LOCK-UP AGREEMENT"
means each and any of the agreements pursuant to which the Lock-up
Options are granted.
"LOCK-UP OPTIONS"
means the options granted in favour of Aegis to purchase in aggregate
approximately thirty per cent of the outstanding Market Facts Shares
and "LOCK-UP OPTION" is to be construed accordingly.
"MANDATORY COST"
means the cost imputed to the Bank of compliance with the mandatory
liquid assets requirements of the Bank of England and/or the banking
supervision or other costs imposed by the Financial Services Authority,
as determined in accordance with Schedule 2.
<PAGE>
5
"MARGIN"
means, up to and including the date falling three months after the date
of this Agreement, 0.65 per cent. per annum and thereafter 0.80 per
cent. per annum.
"MARKET FACTS"
means Market Facts, Inc.
"MARKET FACTS SHARES"
means the existing issued and fully paid-up shares of common stock in
Market Facts and any further shares of common stock in Market Facts
allotted or issued after the date of this Agreement.
"MATURITY DATE"
means the last day of the Interest Period of a Revolving Credit Loan.
"MERGER AGREEMENT"
means the merger agreement dated on or around the date of this Agreement
and made between the Borrowers and Market Facts.
"MULTIEMPLOYER PLAN"
means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA
to which any Borrower or any member of the Controlled Group has an
obligation to contribute.
"OFFER"
means the cash tender offer for the Market Facts Shares made or to be
made by AAC (or on its behalf) pursuant to Rule 14.1 of the United
States Securities Act of 1933, as amended, as such tender offer may from
time to time be amended, extended, added to, revised, renewed or waived.
"OFFER DOCUMENT"
means all the documents, including the circulars, to be sent by or on
behalf of AAC to shareholders in Market Facts (including the forms of
acceptance) in respect of the Offer.
"OPTIONAL CURRENCY"
means U.S. Dollars or any other currency (other than Sterling) which is
for the time being freely transferable and convertible into Sterling and
deposits of which are readily available in the London interbank market.
"OPTION TERM LOAN"
means a Term Loan, the proceeds of which are used or are to be used to
finance the acquisition of Market Facts Shares pursuant to the exercise
of the Lock-up Options and the fees, costs and expenses associated with
such acquisition.
<PAGE>
6
"ORIGINAL GROUP ACCOUNTS"
means the audited consolidated accounts of the Group for the year ended
31st December, 1998.
"ORIGINAL STERLING AMOUNT"
in relation to a Loan means:
(a) if that Loan is denominated in Sterling, the amount of that Loan;
or
(b) in relation to a Revolving Credit Loan denominated in an Optional
Currency, the equivalent in Sterling of the amount of that Loan at
the Bank's Spot Rate of Exchange on the Business Day before its
Drawdown Date; or
(c) in relation to a Term Loan denominated in an Optional Currency,
the equivalent in Sterling of the amount of that Loan if it had
first been drawn down and had remained denominated in Sterling.
"PARTICIPATING MEMBER STATE"
means a Member State of the European Union that adopts a single currency
in accordance with the Treaty.
"PARTY"
means a party to this Agreement.
"PBGC"
means the Pension Benefit Guaranty Corporation.
"PLACEES"
means the persons who are nominated by Hoare Govett Limited to have
ordinary shares in Aegis allotted to them pursuant to the Vendor
Placing.
"PLACING AGREEMENT"
means the Placing Agreement between Aegis and Hoare Govett Limited under
which Hoare Govett Limited places those shares which are the subject of
the Vendor Placing.
"PLAN"
means an "employee benefit plan" (as defined in Section 3(3) of ERISA)
which either:
(a) is maintained, or contributed to, by any member of the Controlled
Group for employees of any member of the Controlled Group; or
<PAGE>
7
(b) has at any time within the preceding five years been maintained,
or contributed to, by any person which was at such time a member
of the Controlled Group for employees of any person which was at
such time a member of the Controlled Group.
"PREFERENCE SHARES"
means the cumulative redeemable preference shares of L1 each in the
capital of Aegis Investments (Jersey) Limited to be subscribed by ABN
AMRO Equities Holdings (UK) Limited pursuant to the Subscription
Agreement.
"PRESS RELEASE"
means the press release issued by the Borrower or on its behalf on
announcement of the Offer.
"PRINCIPAL SUBSIDIARY"
means each of Carat France S.A., Carat Espana S.A., Carat Group UK Ltd,
Carat Scandinavia AB and Carat Espaces Deutschland GmbH.
"RATE FIXING DAY"
means:
(a) the first day of an Interest Period for a Loan denominated in
Sterling; or
(b) the Business Day before the first day of an Interest Period for a
Loan denominated in an Optional Currency (or such other day as is
generally treated as the rate fixing day for that currency by
market practice in the London interbank market).
"REGULATIONS T, U AND X"
means respectively, regulations T, U and X of the Board of Governors of
the Federal Reserve System of the United States (or any successor).
"REPORTABLE EVENT"
means a reportable event as defined in Section 4043 of ERISA and the
regulations issued under such section with respect to a Plan, excluding,
however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30
days of the occurrence of such event, provided, however, that a failure
to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the
issuance of any such waiver of the notice requirement in accordance with
either Section 4043(a) of ERISA or Section 412(d) of the Code.
"REQUEST"
means a request made by the Borrower to utilise a Facility,
substantially in the form of Schedule 3.
<PAGE>
8
"REVOLVING CREDIT COMMITMENT"
means L50,000,000 to the extent not cancelled, transferred or reduced in
accordance with this Agreement.
"REVOLVING CREDIT COMMITMENT PERIOD"
means the period from the date of this Agreement up to and including the
Final Maturity Date.
"REVOLVING CREDIT FACILITY"
means the facility referred to in Clause 2 (The Facilities).
"REVOLVING CREDIT LOAN"
means a Loan drawn down or to be drawn down under the Revolving Credit
Facility.
"REVOLVING CREDIT REPAYMENT DATE"
means, in relation to a Revolving Credit Loan, the last day of its
Interest Period.
"ROLLOVER LOAN"
means, in relation to a particular date, one or more Revolving Credit
Loans:
(a) whose Drawdown Date is the same as the Maturity Date of one or
more existing Revolving Credit Loans;
(b) where (i) the aggregate principal amount (or, if in a currency
different from the principal amount referred to in (ii) below, the
aggregate Original Sterling Amount) of the Revolving Credit Loans
is the same as or less than (ii) the aggregate outstanding
principal amount (if in a currency different from the principal
amount referred to in (i) above, translated into Sterling on the
basis of the Bank's Spot Rate of Exchange on the date of receipt
by the Bank of the Request for those Revolving Credit Loans) of
all Revolving Credit Loans whose Maturity Date is the same as that
Drawdown Date; and
(c) all of the proceeds (whether pursuant to the terms of Clause 12.6
(Netting of Payments) or otherwise) of which are to be used to
refinance all or part of the existing Revolving Credit Loans
referred to in (a) and (b) above.
"SECURITY INTEREST"
means any mortgage, pledge, lien, charge, encumbrance, or other
preferential right to assets, the commercial effect of which is to
create security or any other security interest whatsoever, howsoever
created or arising (for the avoidance of doubt, normal factoring and
discounting of debts do not constitute a Security Interest).
"STERLING"
means the lawful currency for the time being of the United Kingdom.
<PAGE>
9
"SUBSCRIPTION AGREEMENT"
means the subscription agreement to be entered into between ABN AMRO
Equities Holdings (UK) Limited and Aegis Investments (Jersey) Limited
providing for the subscription of the Preference Shares by ABN AMRO
Equities Holdings (UK) Limited.
"SUBSIDIARY"
means:
(a) a subsidiary within the meaning of Section 736 of the Companies
Act 1985; and
(b) unless the context otherwise requires, a subsidiary undertaking
within the meaning of Section 258 of the Companies Act 1985.
"TARGET BUSINESS DAY"
means, in relation to a transaction involving euros, a day on which the
Trans-European Automated Real Time Gross Settlement Express Systems
(TARGET) is operating.
"TERM LOAN COMMITMENT"
means L200,000,000 to the extent not cancelled, transferred or reduced
in accordance with this Agreement.
"TERM LOAN COMMITMENT PERIOD"
means the period from the date of this Agreement up to and including the
Final Maturity Date.
"TERM LOAN"
means a Loan drawn down or to be drawn down under the Term Loan
Facility.
"TERM LOAN FACILITY"
means the facility referred to in Clause 2 (The Facilities).
"TOTAL COMMITMENTS"
means the aggregate of the Term Loan Commitment and the Revolving Credit
Commitment, being L250,000,000 at the date of this Agreement.
"TREATY"
means the Treaty Establishing the European Community, being the Treaty
of Rome of 25th March, 1957, as amended by the Single European Act 1986
and the Maastricht Treaty (which was signed at Maastricht on 7th
February, 1992 and came into force on 1st November, 1993), as amended
from time to time.
<PAGE>
10
"U.K."
means the United Kingdom.
"UNCONDITIONAL DATE"
means the date on which AAC accepts for payment pursuant to the terms of
the Offer and/or acquires or has acquired pursuant to the terms of any
Lock-up Agreements in aggregate not less than 50 per cent. of the
outstanding Market Facts Shares.
"UNITED STATES"
means the United States of America.
"U.S. DOLLARS" OR "U.S.$"
means the lawful currency for the time being of the United States of
America.
"VENDOR PLACING"
means the placing of shares in Aegis with Placees to be effected by
Hoare Govett Limited.
1.2 CONSTRUCTION
(a) In this Agreement, unless the contrary intention appears, a reference
to:
(i) an "AMENDMENT" includes a supplement, novation or re-enactment and
"AMENDED" is to be construed accordingly;
"ASSETS" includes present and future properties, revenues and
rights of every description;
an "AUTHORISATION" includes an authorisation, consent, approval,
resolution, licence, exemption, filing, registration and
notarisation;
a "MATERIAL ADVERSE EFFECT" means:
(1) a material adverse effect on the financial condition of the
Group as a whole; or
(2) a material adverse effect on the ability of either Borrower
to perform its payment obligations under any of the Finance
Documents.
a "MONTH" is a reference to a period starting on one day in a
calendar month and ending on the numerically corresponding day in
the next calendar month, except that:
(1) if there is no numerically corresponding day in the month in
which that period ends, that period shall end on the last
Business Day in that calendar month; or
<PAGE>
11
(2) if an Interest Period commences on the last Business Day of
a calendar month, that Interest Period shall end on the last
Business Day in the calendar month in which it is to end;
a "PERSON" includes any individual, company, unincorporated
association or body of persons (including a partnership, joint
venture or consortium), government, state, agency, international
organisation, or other entity;
a "REGULATION" includes any regulation, rule, official directive,
request or guideline (whether or not having the force of law, but
if not having the force of law, being of a type which the person
to whom it applies is accustomed to comply) of any governmental,
inter-governmental or supernational body, agency, department or
regulatory, self-regulatory or other authority or organisation;
(ii) a provision of a law is a reference to that provision as amended
or re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a schedule
to this Agreement;
(iv) a person includes its successors and assigns;
(v) a Finance Document or another document is a reference to that
Finance Document or that other document as amended; and
(vi) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance
Document has the same meaning in that Finance Document or notice as in
this Agreement.
(c) The index to and the headings in this Agreement are for convenience only
and are to be ignored in construing this Agreement.
2. THE FACILITIES
(a) Subject to the terms of this Agreement, the Bank agrees to make
available to the Borrowers the following facilities:
(i) a committed multicurrency term loan facility under which the Bank
agrees to make Term Loans to the Borrowers up to an Original
Sterling Amount not exceeding the Term Loan Commitment; and
(ii) a committed multicurrency revolving credit facility under which
the Bank agrees to make Revolving Credit Loans to Aegis (but not
AAC) up to an Original Sterling Amount not exceeding the Revolving
Credit Commitment.
(b) The aggregate Original Sterling Amount of all outstanding Loans shall
not exceed the Total Commitments.
3. PURPOSE
(a) Each Borrower shall apply each Loan towards:
<PAGE>
12
(i) in the case of Term Loans, financing the acquisition of the Market
Facts Shares acquired by AAC pursuant to the Offer or pursuant to
the terms of the Lock-up Options, cancellation of Employee Options
(as defined in the Merger Agreement), the payment of Merger
Consideration in respect of Certificates surrendered to the Paying
Agent and the payment of the appraised value of Dissenting Shares
(each such term as defined in the Merger Agreement) and the
consummation of all other transactions contemplated by the Offer,
the Lock-up Options, the Merger Agreement, the Placing Agreement
and the Subscription Agreement and the fees, costs and expenses
associated with such acquisition, cancellation and consummation;
or
(ii) in the case of Revolving Credit Loans, financing the general
corporate purposes of Aegis and its subsidiaries (including
refinancing its existing Financial Indebtedness under the Existing
Facility Agreement).
(b) Without affecting the obligations of either Borrower in any way, the
Bank is not bound to monitor or verify the application of any Loan.
4. CONDITIONS PRECEDENT
4.1 DOCUMENTARY CONDITIONS PRECEDENT
(a) The obligation of the Bank to make a Loan is subject to the
conditions precedent that the Bank has notified Aegis that it has
received all of the documents set out in paragraphs 1, 2 and 7 of
Schedule 1 and those set out in:
(i) (in the case of an Option Term Loan, paragraph 4 of that
Schedule;
(ii) (in the case of a Term Loan which is not an Option Term
Loan), paragraphs 3 and 5 of that Schedule; or
(iii) (in the case of a Revolving Credit Loan), paragraph 6 of
that Schedule,
in each case, in form and substance reasonably satisfactory to the
Bank.
(b) The Lock-up Agreements, the Press Release and the Offer Documents
shall be deemed to be satisfactory in form and substance to the
Bank if their terms (except as to price) are consistent with the
terms of the Offer, the Merger Agreement or the Lock-up Options as
at the date of this Agreement and the Bank shall not be entitled
to withhold notification of satisfaction under this Clause 4.1 by
reason only of a change in the price offered by AAC for any Market
Facts Shares from that disclosed to the Bank as at the date of
this Agreement.
4.2 FURTHER CONDITIONS PRECEDENT
The obligations of the Bank to make a Loan are subject to the further
conditions precedent that:
(a) on the Drawdown Date for that Loan:
(i) the representations and warranties in Clauses 18.2 (Status),
18.3 (Powers and authority), 18.4 (Legal Validity), 18.5(a)
and (b) (Non-conflict), 18.6(b) (No
<PAGE>
13
default) and 18.9 (Litigation) (inclusive), are correct
and will be correct immediately after the Loan is made; and
(ii) (A) (in the case of a Revolving Loan) no Event of Default,
or, (in the case of any Loan other than a Rollover
Loan), no Default is outstanding or would result from
the Loan;
(B) in the case of a Term Loan, no Default is outstanding
or would result from the Loan, provided that for the
purposes of this sub-paragraph (B), only, the words in
brackets in the first line of Clause 20.3 (b)(ii)
(Breach of other obligations) shall be deemed deleted;
and
(b) the making of (and application of the proceeds of) the Loan would
not cause Clause 2 (The Facilities) or Clause 3 (Purpose) to be
contravened.
5. DRAWDOWN
5.1 COMMITMENT PERIOD
A Borrower may borrow a Term Loan during the Term Commitment Period and
may borrow a Revolving Credit Loan during the Revolving Credit
Commitment Period if the Bank receives, not later than 9.00 a.m. on the
Business Day before the proposed Drawdown Date, a duly completed
Request. Each Request is irrevocable.
5.2 COMPLETION OF REQUESTS
A Request will not be regarded as having been duly completed unless:
(a) it specifies whether the Loan is a Term Loan (and if it is a Term
Loan, whether it is an Option Term Loan) or a Revolving Credit
Loan;
(b) the Drawdown Date is a Business Day falling on or before the final
day of the relevant Commitment Period;
(c) if the currency selected is Sterling, the amount of the Loan is:
(i) a minimum of L1,000,000 and an integral multiple of
L1,000,000;
(ii) the balance of the relevant undrawn Commitment; or
(iii) such other amount as the Bank may agree;
(d) if the currency selected is an Optional Currency, the amount of
the Loan is:
(i) a minimum of the equivalent of L1,000,000 in that Optional
Currency; or
(ii) the balance of the relevant undrawn Commitment; or
(iii) such other amount as the Bank may agree;
<PAGE>
14
(e) the amount selected under paragraph (c) or (d) above does not
cause Clause 2(b) (The Facilities) to be contravened;
(f) the currency selected complies with Clause 10 (Selection of
Optional Currencies);
(g) in the case of a Term Loan the first Interest Period selected
complies with Clause 8 (Interest Periods) and in the case of a
Revolving Credit Loan the Interest Period selected complies with
Clause 8 (Interest Periods) and does not extend beyond the Final
Maturity Date; and
(h) the payment instructions comply with Clause 12 (Payments).
Each Request must specify one Loan only, but each Borrower may, subject
to the other terms of this Agreement, deliver more than one Request on
any one day. Unless otherwise agreed by the Bank, no more than ten Term
Loans and ten Revolving Credit Loans may be outstanding at any time and,
in respect of Option Term Loans, the aggregate principal amount of all
Option Term Loans outstanding were the Option Term Loan specified in the
Request to be drawn down, would not exceed in aggregate
U.S.$100,000,000.
5.3 ADVANCE OF LOAN
Subject to the terms of this Agreement, the Bank shall make each Loan
available to that Borrower on the Drawdown Date requested.
6. REPAYMENT
6.1 TERM LOAN REPAYMENT
Each Borrower shall repay each Term Loan made to it in full on the Final
Maturity Date.
6.2 REVOLVING CREDIT LOAN REPAYMENT
Aegis shall repay each Revolving Credit Loan made to it in full on its
Maturity Date to the Bank.
6.3 RE-BORROWING
Subject to the other terms of this Agreement, any amounts repaid under
Clause 6.2 (Revolving Credit Loan Repayment) may be re-borrowed.
7. PREPAYMENT AND CANCELLATION
7.1 AUTOMATIC CANCELLATION
The Total Commitments shall be automatically cancelled at close of
business in London on the Final Maturity Date.
7.2 VOLUNTARY CANCELLATION
Aegis may, by giving not less than 5 days' prior notice (or such shorter
period as the Bank may agree) to the Bank, cancel the unutilised portion
of
<PAGE>
15
(i) the Term Loan Commitment in whole or in part (but, if in part, in
a minimum of L1,000,000 and an integral multiple of L1,000,000)
before the Final Maturity Date; and
(ii) the Revolving Credit Commitments in whole or in part (but, if in
part, in a minimum of L1,000,000 and an integral multiple of
L1,000,000) before the Final Maturity Date.
7.3 VOLUNTARY PREPAYMENT
A Borrower may, by giving not less than 5 days' prior notice to the Bank
and subject to Clause 24.2 (Other indemnities), prepay any Loan made to
it on any Business Day in whole or in part (but, if in part, in a
minimum Original Sterling Amount of L1,000,000 and an integral multiple
of L1,000,000).
7.4 PREPAYMENT ON CHANGE OF CONTROL
If any change in ownership of any of the equity share capital (as
defined in the Companies Act 1985) of Aegis results in any single person
or group of persons acting in concert (as defined in the City Code on
Takeovers and Mergers) acquiring more than 50 per cent. in nominal value
of the same Aegis shall consult with the Bank and, unless the Bank
agrees otherwise with Aegis, the Borrowers shall forthwith on demand of
the Bank repay all Loans together with all accrued interest and other
sums payable under this Agreement (but excluding any such sums to the
extent unaccrued) and upon such demand being made, the Total Commitments
shall be cancelled in full and reduced to zero.
7.5 ADDITIONAL RIGHT OF PREPAYMENT AND CANCELLATION
If:
(a) either Borrower is required to pay to the Bank any additional
amounts under Clause 13 (Taxes); or
(b) either Borrower is required to pay to the Bank any amount under
Clause 15 (Increased costs); or
(c) interest on a Loan is being calculated in accordance with
Clause 14.3 (Alternative basis),
then, without prejudice to the obligations of the Borrowers under those
Clauses, a Borrower may, whilst the circumstances giving rise to the
requirement continue, serve a notice of prepayment and cancellation on
the Bank. On the date falling five Business Days after the date of
service of the notice:
(i) that Borrower shall prepay all the Loans made to it; and
(ii) if both Borrowers give notice under this Clause 7.5, the Total
Commitments shall be cancelled.
7.6 MISCELLANEOUS PROVISIONS
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable.
<PAGE>
16
(b) All prepayments under this Agreement shall be made together with accrued
interest on the amount prepaid and, subject to Clause 24.2 (Other
indemnities), without premium or penalty.
(c) No prepayment or cancellation is permitted except in accordance with the
express terms of this Agreement.
(d) No amount of the Total Commitments cancelled under this Agreement may
subsequently be reinstated.
(e) Without prejudice to the right of the Borrowers to re-borrow under
Clause 6.3 (Re-borrowing), no amount prepaid under this Agreement may
subsequently be re-borrowed.
8. INTEREST PERIODS
8.1 SELECTION
(a) A Borrower may select an Interest Period for a Term Loan in either the
relevant Request or, if the Term Loan has been borrowed, a notice
received by the Bank (in the case of a Loan denominated in an Optional
Currency) not later than 9 a.m. on the Business Day before the
commencement of that Interest Period or, (in the case of a Loan
denominated in Sterling), 9 a.m. on the first day of that Interest
Period. Each Interest Period for a Term Loan will commence on its
Drawdown Date or the expiry of its preceding Interest Period.
(b) Each Revolving Credit Loan has one Interest Period only. Aegis may
select an Interest Period for a Revolving Credit Loan in the relevant
Request. Each Interest Period for a Revolving Credit Loan will commence
on its Drawdown Date.
(c) Subject to the following provisions of this Clause 8, each Interest
Period will be one, two, three or four weeks or any other such period
agreed by Aegis and the Bank.
(d) If the Borrower fails to select an Interest Period for an outstanding
Term Loan in accordance with paragraph (a) above, that Interest Period
will, subject to the other provisions of this Clause 8, be one week (or,
if shorter, the period ending on the Final Maturity Date).
8.2 NON-BUSINESS DAYS
If an Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall instead end on the next
Business Day in that calendar month (if there is one) or the preceding
Business Day (if there is not).
8.3 CONSOLIDATION FOR TERM LOANS
Notwithstanding Clause 8.1 (Selection), the first Interest Period for
each Term Loan shall end on the same day as the current Interest Period
for any other Term Loan denominated in the same currency as that Term
Loan. On the last day of those Interest Periods, those Term Loans shall
be consolidated and treated as one Term Loan.
8.4 COINCIDENCE
If an Interest Period would otherwise overrun the Final Maturity Date,
it shall be shortened so that it ends on the Final Maturity Date.
<PAGE>
17
8.5 OTHER ADJUSTMENTS
The Bank and Aegis may enter into such other arrangements as they may
agree for the adjustment of Interest Periods and the consolidation
and/or splitting of Loans.
8.6 NOTIFICATION
The Bank shall notify the relevant Borrower of the duration of each
Interest Period promptly after ascertaining its duration.
9. INTEREST
9.1 INTEREST RATE
The rate of interest on each Loan for its Interest Period is the rate
per annum determined by the Bank to be the aggregate of the applicable:
(a) Margin;
(b) LIBOR; and
(c) in the case of a Loan denominated in Sterling, Mandatory Cost.
9.2 DUE DATES
Except as otherwise provided in this Agreement, accrued interest on each
Loan is payable by the relevant Borrower on the last day of each
Interest Period for that Loan.
9.3 DEFAULT INTEREST
(a) If a Borrower fails to pay any amount payable by it under the Finance
Documents, it shall forthwith on demand by the Bank pay interest on the
overdue amount from the due date up to the date of actual payment, as
well after as before judgment, at a rate (the "DEFAULT RATE") determined
by the Bank to be one per cent. per annum above:
(i) the rate on the overdue amount under Clause 9.1 (Interest rate)
immediately before the due date (if of principal and for so long
as the Interest Period for which that rate applies continues); and
(ii) if sub-paragraph (i) does not apply, the rate which would have
been payable if the overdue amount had, during the period of
non-payment, constituted a Loan in the currency of the overdue
amount for such successive Interest Periods of such duration as
the Bank may determine (each a "DESIGNATED INTEREST PERIOD").
(b) The default rate will be determined on each Business Day or the first
day of, or two Business Days before the first day of, the relevant
Designated Interest Period, as appropriate.
(c) If the Bank determines that deposits in the currency of the overdue
amount are not at the relevant time being made available by it to
leading banks in the London interbank market, the default rate will be
determined by reference to the cost of funds to the Bank from whatever
sources it selects.
<PAGE>
18
(d) Default interest will be compounded at the end of each Designated
Interest Period.
9.4 NOTIFICATION OF RATES OF INTEREST
The Bank shall promptly notify each relevant Borrower of the
determination of a rate of interest under this Agreement.
10. SELECTION OF OPTIONAL CURRENCIES
10.1 SELECTION FOR TERM LOAN
(a) A Borrower may select the currency of a Term Loan for an Interest Period
in either the relevant Request or, if the Term Loan is outstanding, a
notice received by the Bank not later than 9 a.m. on the Business Day
before the commencement of that Interest Period. In the latter case, a
Borrower may specify whether that Term Loan is to be denominated in more
than one currency, and, if so, the amount in Sterling of each such
currency (being a minimum Original Sterling Amount of L1,000,000 or an
integral multiple of L1,000,000 or the balance of the Term Loan, if
more).
(b) The currency of each Term Loan must be Sterling or an Optional Currency.
(c) If a Borrower fails to give a notice in respect of an outstanding Term
Loan in accordance with paragraph (a) above, that Term Loan will remain
denominated for its next Interest Period in the same currency in which
it is then denominated.
(d) Each part of a Term Loan which is to be denominated in a different
currency from any other part of that Loan shall be treated as a separate
Term Loan.
(e) No Borrower may choose a currency if as a result the Term Loans would be
denominated at any one time in more than five currencies.
10.2 SELECTION FOR A REVOLVING CREDIT LOAN
(a) A Borrower shall select the currency of a Revolving Credit Loan in the
relevant Request.
(b) The currency of each Revolving Credit Loan must be Sterling or an
Optional Currency.
(c) A Borrower may not choose a currency if as a result the Revolving Credit
Loans would be denominated at any one time in more than five currencies.
10.3 REVOCATION OF CURRENCY
If, before 9.30 a.m. on any Rate Fixing Day, the Bank determines that,
in relation to any Optional Currency other than U.S. Dollars:
(a) it is impracticable for the Bank to fund the Loan in the relevant
Optional Currency during that Interest Period in the ordinary
course of business in the London interbank market; and/or
(b) the use of the proposed Optional Currency would be reasonably
likely to contravene any law or regulation,
<PAGE>
19
the Bank shall give notice to the relevant Borrower to that effect
before 10.00 a.m. on that day. In this event:
(i) the Borrower and the Bank may agree that the Loan shall not be
made; or
(ii) in the absence of agreement:
(1) the Loan shall be denominated in Sterling during that
Interest Period; and
(2) in the definition of "LIBOR" (insofar as it applies to that
Loan) in Clause 1.1 (Definitions) there shall be substituted
for the time "11.00 a.m." the time "1.00 p.m.".
11. AMOUNT OF OPTIONAL CURRENCIES FOR TERM LOANS
11.1 DRAWDOWNS
If a Term Loan is to be drawn down in an Optional Currency, the amount
of that Term Loan will be determined by converting the Original Sterling
Amount into that Optional Currency of that Term Loan on the basis of the
Bank's Spot Rate of Exchange one Business Day before its Drawdown Date.
11.2 CHANGE OF CURRENCY
(a) If a Term Loan is to be continued during its next Interest Period in a
different currency (the "NEW CURRENCY") from that in which it is
currently denominated, the Term Loan shall be repaid by the relevant
Borrower in full at the end of its current Interest Period in the
currency in which it is then denominated and, subject to the terms of
this Agreement, shall forthwith be re-advanced by the Bank in the new
currency.
(b) If the new currency is Sterling, the amount of that Term Loan will be
the Original Sterling Amount of that Term Loan for that Interest Period.
(c) If the new currency is an Optional Currency, the amount of that Term
Loan will be determined by converting into the new currency the Original
Sterling Amount of that Term Loan on the basis of the Bank's Spot Rate
of Exchange three Business Days before the commencement of that Interest
Period.
11.3 SAME OPTIONAL CURRENCY
(a) If a Term Loan is to be continued during its next Interest Period in the
same Optional Currency as that in which it is denominated during its
current Interest Period, there shall be calculated the difference
between the amount of the Term Loan (in that Optional Currency) for the
current Interest Period and for the next Interest Period. The amount of
the Term Loan for the next Interest Period will be determined by
notionally converting into that Optional Currency the Original Sterling
Amount of the Term Loan on the basis of the Bank's Spot Rate of Exchange
three Business Days before the commencement of that Interest Period.
(b) At the end of the current Interest Period (but subject always to
paragraph (c) below):
<PAGE>
20
(i) if the amount of the Term Loan (in that Optional Currency) for the
next Interest Period is less than for the preceding Interest
Period, the Borrower shall repay the difference; or
(ii) if the amount of the Term Loan for the next Interest Period is
greater, the Bank shall forthwith make available to that Borrower
the difference.
(c) If the Bank's Spot Rate of Exchange for the next Interest Period shows
an appreciation or depreciation of the Optional Currency against
Sterling of less than five per cent. when compared with the Original
Exchange Rate, no amounts are payable in respect of the difference. In
this Clause 11 (Amount of Optional Currencies for Term Loans) "ORIGINAL
EXCHANGE RATE" means the Bank's Spot Rate of Exchange used for
determining the amount of the Optional Currency for the Interest Period
which is the later of the following:
(i) the Interest Period during which the Term Loan was first
denominated in that Optional Currency if the Term Loan has since
then remained denominated in that Optional Currency; and
(ii) the most recent Interest Period immediately prior to which a
difference was required to be paid under this Clause 11.3.
11.4 PREPAYMENTS AND REPAYMENTS
If a Term Loan is to be repaid or prepaid by reference to an Original
Sterling Amount, the Optional Currency amount to be repaid or prepaid
shall be determined by reference to the Bank's Spot Rate of Exchange
last used for determining the Optional Currency amount of that Term Loan
under Clause 11 or, if applicable, the Original Exchange Rate.
11.5 NOTIFICATION
The Bank shall notify the Borrower of Optional Currency amounts (and the
applicable Bank's Spot Rate of Exchange) promptly after they are
ascertained.
12. PAYMENTS
12.1 PLACE
All payments by a Party under the Finance Documents shall be made to the
relevant Party to its account at such office or bank:
(a) in the principal financial centre of the country of the relevant
currency; or
(b) in the case of euros, in London or such other financial centre as
the payee may notify to the payer for this purpose.
12.2 FUNDS
Payments under the Finance Documents to the Bank shall be made for value
on the due date at such times and in such funds as the Bank may specify
as being customary at the time for the settlement of transactions in the
relevant currency in the place for payment.
<PAGE>
21
12.3 CURRENCY
(a) A repayment or prepayment of a Loan or any part of a Loan is payable in
the currency in which the Loan is denominated on its due date.
(b) Interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated.
(c) Amounts payable in respect of costs, expenses, taxes and the like are
payable in the currency in which they are incurred.
(d) Any other amount payable under the Finance Documents is, except as
otherwise provided in this Agreement, payable in Sterling.
12.4 SET-OFF AND COUNTERCLAIM
All payments made by a Borrower under the Finance Documents shall be
made without set-off or counterclaim.
12.5 NON-BUSINESS DAYS
(a) If a payment under the Finance Documents is due on a day which is not a
Business Day, the due date for that payment shall instead be the next
Business Day in the same calendar month (if there is one) or the
preceding Business Day (if there is not).
(b) During any extension of the due date for payment of any principal under
this Agreement interest is payable on the principal at the rate payable
on the original due date.
12.6 NETTING OF PAYMENTS
(a) Notwithstanding Clauses 5.2(h) (Completion of Requests), 6.2 (Revolving
Credit Loan Repayment) and 12.1 (Place) to 12.3 (Currency) (inclusive)
if on any date an amount (the "FIRST AMOUNT") is to be advanced or paid
by the Bank under this Agreement and an amount (the "SECOND AMOUNT") is
due from a Borrower to the Bank under this Agreement in the same
currency, the relevant Borrower instructs the Bank to apply the first
amount in or towards payment of the second amount; and
(b) The Bank shall remain obliged to advance any excess (or, as the case may
be, the Borrowers shall remain obliged to pay any shortfall) in
accordance with this Clause 12. Nothing in this Clause 12.6 shall be
effective to create a charge.
13. TAXES
13.1 GROSS-UP AND MITIGATION
(a) All payments by a Borrower under the Finance Documents shall be made
without any deduction and free and clear of and without any deduction
for or on account of any taxes, except to the extent that the Borrower
is required by law to make payment subject to any taxes. If, pursuant to
any law or regulation, any tax or amounts in respect of tax must be
deducted, or any other deductions must be made, from any amounts payable
or paid by a Borrower under the Finance Documents, the Borrower shall
(subject to sub-paragraph (b) below) pay such additional amounts as may
be necessary to ensure that the Bank receives a
<PAGE>
22
net amount equal to the full amount which it would have received had
payment not been made subject to tax or any other deduction.
(b) AAC shall not be required to pay any additional amount under this Clause
13.1 to the extent that such additional amount results from the Bank
failing to file duly completed and signed copies of Form 1001 in
accordance with Clause 13.4 (US Taxes) within 13 days of the date of
this Agreement.
(c) If circumstances arise which would, or would upon the giving of notice,
result in a Borrower being obliged to pay additional amounts pursuant to
this Clause 13 then, without in any way limiting, reducing or otherwise
qualifying the Borrowers' obligations under this Clause the Bank shall,
upon written request from Aegis, take such reasonable steps as may be
open to it to mitigate the effects of such circumstances, provided
always that the Bank shall not be under any obligation to take such
steps if, in the Bank's reasonable opinion, it would or might have an
adverse effect upon its business, operations or financial condition or
the management of its tax affairs or its return in relation to a Loan.
13.2 TAX RECEIPTS
All taxes required by law to be deducted or withheld by a Borrower from
any amounts paid or payable under the Finance Documents shall be paid to
the appropriate authority by the relevant Borrower when due and the
Borrower shall, as soon as reasonably practicable following the payment
being made, deliver to the Bank evidence (including all relevant tax
receipts) that the payment has been duly remitted to the appropriate
authority.
13.3 TAX CREDITS
(a) If:
(i) a Borrower makes a payment under this Clause 13 (a "TAX PAYMENT")
in respect of any payment to or for the account of the Bank under
this Agreement; and
(ii) the Bank obtains a refund of tax or obtains and uses a credit
against tax on its overall net income (a "TAX CREDIT") which the
Bank is able to identify as attributable to that Tax payment,
then the Bank shall reimburse that Borrower such amount as the Bank
reasonably determines to be the proportion of that Tax Credit which will
leave the Bank (after that reimbursement) in no better or worse position
than it would have been in if no Tax Payment had been required.
(b) Subject to Clause 13.1(c) (Gross-up and mitigation) the Bank has an
absolute discretion as to whether to claim any Tax Credit (and, if it
does claim, the extent, order and manner in which it does so) and
whether any amount is due from it under this Clause 13.3 (and, if so,
what amount and when). The Bank is not obliged to disclose to a
Borrower any information regarding its tax affairs and computations.
13.4 US TAXES
The Bank shall submit, as soon as reasonably practicable after the date
of this Agreement and in any event within 13 days of this Agreement in
duplicate to AAC duly completed and
<PAGE>
23
signed copies of either Form 1001 (or, in the case of payment made after
31st December, 1999, Form W-8, if applicable under then current law) of
the United States Internal Revenue Service (relating to the Bank and
claiming complete exemption from withholding on all amounts (to which
such withholding would otherwise apply) to be received by Bank,
including fees, pursuant to this Agreement in connection with any
borrowing by AAC) as a result of a tax treaty concluded with the United
States or Form 4224 of the United States Internal Revenue Service
(relating to all amounts (to which such withholding would otherwise
apply) to be received by the Bank, including fees, pursuant to this
Agreement in connection with any borrowing by AAC. Thereafter and from
time to time upon the reasonable request of AAC, the Bank shall (if and
to the extent that it is entitled to do so under applicable law) submit
to AAC such additional duly completed and signed copies of one or the
other such forms (or such successor forms as shall be adopted from time
to time by the relevant United States taxation authorities) or any
additional information, in each case as may be required under then
current United States law or regulations to claim the inapplicability of
or exemption from United States withholding taxes on payments in respect
of all amounts (to which such withholding would otherwise apply) to be
received by the Bank, including fees, pursuant to this Agreement in
connection with any borrowing by AAC. Nothing in this Clause 13.3
obliges the Bank to disclose to AAC any information relating to its tax
affairs and computations or any other confidential information.
14. MARKET DISRUPTION
14.1 ABSENCE OF QUOTATIONS
If, in relation to any proposed Loan, the Bank determines that, by
reason of circumstances affecting the London interbank market generally,
adequate and fair means do not exist for ascertaining the applicable
LIBOR it shall promptly notify Aegis of the fact and that this Clause 14
is in operation.
14.2 MARKET DISRUPTION
If a notification under Clause 14.1 (Absence of quotations) applies to a
Loan which has not been made, that Loan shall, notwithstanding such
notification, still be made. However, within five Business Days of
receipt of the notification, Aegis and the Bank shall enter into
negotiations for a period of not more than 14 days with a view to
agreeing a substitute basis for determining the rate of interest and/or
funding applicable to that (and to the extent required) any future Loan
to be denominated in the currency of the affected Loan. Any substitute
basis agreed shall be binding on all the Parties.
14.3 ALTERNATIVE BASIS
If a notification under Clause 14.1 (Absence of quotations) applies to a
Loan which is outstanding, then, for the purpose of calculating the rate
of interest on that Loan pursuant to Clause 9.1 (Interest rate):-
(a) within five Business Days of receipt of the notification, Aegis
and the Bank shall enter into negotiations for a period of not
more than 30 days with a view to agreeing an alternative basis for
determining the rate of interest and/or funding applicable to that
Loan and/or any other Loans denominated or to be denominated in
the currency of that Loan;
<PAGE>
24
(b) any alternative basis agreed under paragraph (a) above shall be
binding on all the Parties;
(c) if no alternative basis is agreed, the Bank shall certify on or
before the last day of the Interest Period to which the
notification relates an alternative basis for maintaining that
Loan;
(d) any such alternative basis may include an alternative method of
fixing the interest rate, or alternative Interest Periods but it
must reflect the cost to the Bank of funding the Loan from
whatever sources it may reasonably select plus the Margin plus, in
the case of a Loan denominated in Sterling, any applicable
Mandatory Cost; and
(e) each alternative basis so certified shall be binding on the
Borrowers and the Bank and treated as part of this Agreement.
15. INCREASED COSTS
15.1 INCREASED COSTS
(a) Subject to Clause 15.2 (Exceptions), Aegis shall forthwith on demand by
the Bank pay the Bank the amount of any increased cost incurred by it or
any of its Affiliates as a result of
(iii) the introduction of, or any change in, or any change in the
interpretation or application of, any law or regulation; or
(iv) compliance with any regulation made after the date of this
Agreement,
(including any law or regulation relating to taxation or reserve asset,
special deposit, cash ratio, liquidity or capital adequacy requirements
or any other form of banking or monetary control).
(b) in this agreement "INCREASED COST" means:
(i) an additional cost incurred by the Bank or any of its Affiliates
as a result of it having entered into, or performing, maintaining
or funding its obligations under, this Agreement; or
(ii) that portion of an additional cost incurred by the Bank or any of
its Affiliates in making, funding or maintaining all or any
advances comprised in a class of advances formed by or including
the Loans made or to be made under this Agreement as is
attributable to it making, funding or maintaining the Loans; or
(v) a reduction in any amount payable to the Bank or any of its
Affiliates or the effective return to the Bank or any of its
Affiliates under this Agreement or (to the extent that it is
attributable to this Agreement) on its capital; or
(vi) the amount of any payment made by the Bank or any of its
Affiliates, or the amount of interest or other return foregone by
the Bank or any of its Affiliates, calculated by reference to any
amount received or receivable by the Bank or any of its Affiliates
from any other Party under this Agreement.
<PAGE>
25
15.2 EXCEPTIONS
Clause 15.1 (Increased costs) does not apply to any increased cost:
(a) compensated for by the payment of the Mandatory Cost;
(b) compensated for by the operation of Clause 13 (Taxes);
(c) attributable to any change in the rate of, or change in the basis
of calculating, tax on the overall net income of the Bank (or the
overall net income of a division or branch of the Bank) imposed in
the jurisdiction in which its principal office is situate.
16. ILLEGALITY
If it is or becomes unlawful in any jurisdiction for the Bank to give
effect to any of its obligations as contemplated by this Agreement or to
fund or maintain any Loan, then:
(a) the Bank may notify Aegis accordingly; and
(b) (i) each Borrower shall forthwith prepay all the Loans made to
it; and
(ii) the Total Commitments shall forthwith be cancelled.
17. GUARANTEE
17.1 GUARANTEE
Aegis irrevocably and unconditionally:
(a) as principal obligor, guarantees to the Bank prompt performance by
AAC of all its obligations under the Finance Documents;
(b) undertakes with the Bank that whenever AAC does not pay any amount
when due under or in connection with any Finance Document, Aegis
shall forthwith on demand by the Bank pay that amount as if Aegis
instead of AAC were expressed to be the principal obligor; and
(c) indemnifies the Bank on demand against any loss or liability
suffered by it if any obligation guaranteed by Aegis is or becomes
unenforceable, invalid or illegal.
17.2 CONTINUING GUARANTEE
This guarantee is a continuing guarantee and will extend to the ultimate
balance of all sums payable by AAC under the Finance Documents,
regardless of any intermediate payment or discharge in whole or in part.
17.3 REINSTATEMENT
(a) Where any discharge (whether in respect of the obligations of either
Borrower or any security for those obligations or otherwise) is made in
whole or in part or any arrangement is made on the faith of any payment,
security or other disposition which is avoided or must be restored
<PAGE>
26
on insolvency, liquidation or otherwise without limitation, the
liability of Aegis under this Clause 17 shall continue as if the
discharge or arrangement had not occurred.
(b) The Bank may concede or compromise any claim that any payment, security
or other disposition is liable to avoidance or restoration.
17.4 WAIVER OF DEFENCES
The obligations of Aegis under this Clause 17 will not be affected by
any act, omission, matter or thing which, but for this provision, would
reduce, release or prejudice any of its obligations under this Clause 17
or prejudice or diminish those obligations in whole or in part,
including (whether or not known to it or the Bank):
(a) any time or waiver granted to, or composition with, AAC or other
person;
(b) the release of AAC or any other person under the terms of any
composition or arrangement with any creditors of any member of the
Group;
(c) the taking, variation, compromise, exchange, renewal or release
of, or refusal or neglect to perfect, take up or enforce, any
rights against, or security over assets of, AAC or other person or
any non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to realise
the full value of any security;
(d) any incapacity or lack of powers, authority or legal personality
of or dissolution or change in the members or status of AAC or any
other person;
(e) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to
that Finance Document in this Clause 17 shall include each
variation or replacement;
(f) any unenforceability, illegality or invalidity of any obligation
of any person under any Finance Document or any other document or
security, to the intent that Aegis's obligations under this Clause
17 shall remain in full force and its guarantee be construed
accordingly, as if there were no unenforceability, illegality or
invalidity;
(g) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of AAC under a
Finance Document resulting from any insolvency, liquidation or
dissolution proceedings or from any law, regulation or order so
that each such obligation shall for the purposes of Aegis's
obligations under this Clause 17 shall be construed as if there
were no such circumstance.
17.5 IMMEDIATE RECOURSE
Aegis waives any right it may have of first requiring the Bank (or any
trustee or agent on its behalf) to proceed against or enforce any other
rights or security or claim payment from any person before claiming from
Aegis under this Clause 17.
<PAGE>
27
17.6 APPROPRIATIONS
Until all amounts which may be or become payable by the Borrowers under
or in connection with the Finance Documents have been irrevocably paid
in full, the Bank (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by the Bank (or any trustee or agent on
its behalf) in respect of those amounts, or apply and enforce the
same in such manner and order as it sees fit (whether against
those amounts or otherwise) and Aegis shall not be entitled to the
benefit of the same; and
(b) hold in a suspense account bearing interest at normal commercial
rates any moneys received from Aegis or on account of Aegis's
liability under this Clause 17, without liability to pay interest
on those moneys.
17.7 NON-COMPETITION
Until all amounts which may be or become payable by the Borrowers under
or in connection with the Finance Documents have been irrevocably paid
in full, Aegis shall not, after a claim has been made or by virtue of
any payment or performance by it under this Clause 17:
(a) be subrogated to any rights, security or moneys held, received or
receivable by the Bank (or any trustee or agent on its behalf) or
be entitled to any right of contribution or indemnity in respect
of any payment made or moneys received on account of Aegis's
liability under this Clause 17;
(b) claim, rank, prove or vote as a creditor of AAC or its estate in
competition with the Bank (or any trustee or agent on its behalf);
or
(c) receive, claim or have the benefit of any payment, distribution or
security from or on account of AAC, or exercise any right of
set-off as against AAC,
unless the Bank otherwise directs. Aegis shall hold in trust for and
forthwith pay or transfer to the Bank any payment or distribution or
benefit of security received by it contrary to this Clause 17.7 or as
directed by the Bank.
17.8 ADDITIONAL SECURITY
This guarantee is in addition to and is not in any way prejudiced by any
other security now or hereafter held by the Bank.
18. REPRESENTATIONS AND WARRANTIES
18.1 REPRESENTATIONS AND WARRANTIES
Each Borrower makes the representations and warranties set out in this
Clause 18 to the Bank.
<PAGE>
28
18.2 STATUS
(a) In the case of Aegis it is a limited liability company and, in the case
of AAC, it is a corporation, each of which is duly incorporated and
validly existing under the laws of the jurisdiction of its
incorporation; and
(b) it has the power to own its assets and carry on its business as it is
being conducted and to own its respective property and other assets.
18.3 POWERS AND AUTHORITY
It has the power to execute, deliver and perform its respective
obligations under, and has taken all necessary corporate action to
authorise the execution and delivery of and the performance of its
respective obligations under this Agreement (including the utilisation
of the Facilities), each other Finance Document to which it is a party
and no limitation on the powers of such Borrower to borrow will be
exceeded as a result of any borrowing or utilisation under this
Agreement.
18.4 LEGAL VALIDITY
Each Finance Document to which it is or will be a party constitutes, or
when executed in accordance with its terms will constitute, its legal,
valid and binding obligation.
18.5 NON-CONFLICT
The entry into and performance by it of, and the transactions
contemplated by, the Finance Documents do not and will not:
(a) breach any law, regulation, statute, order, decree or obligation
to which it or any of its assets is subject; or
(b) breach any provision of its Memorandum and Articles of
Association, statutes or other relevant constitutional documents;
or
(c) give cause for acceleration of any of its other indebtedness or
result in the existence of or oblige it to create any Security
Interest over all or any of its present or future revenues or
assets.
18.6 NO DEFAULT
(a) No Default is outstanding or would result from the making of any Loan;
and
(b) Neither Borrower is in default under any agreement, instrument,
arrangement, obligation or duty to which it is a party or by which it is
or may be bound which in any such case could reasonably be expected to
result in a material adverse effect.
18.7 AUTHORIZATIONS
All actions, licences, consents, exemptions, registrations and filings
with all governmental or any other regulatory body, authority, bureau or
agency necessary for the validity, performance or enforceability of the
Finance Documents have been or will be obtained and are and will be in
full force and effect.
<PAGE>
29
18.8 ACCOUNTS
In the case of Aegis, the audited consolidated accounts of the Group
most recently delivered to the Bank (which, at the date of this
Agreement, are the Original Group Accounts):
(i) have been prepared in all material respects in accordance with
accounting principles and practices generally accepted in the U.K.
consistently (save to the extent of changes in those generally
accepted accounting principles and basis or as disclosed in such
financial statements) applied; and
(ii) (together with the notes to such accounts) give a true and fair
view of the consolidated financial condition of the Group as at
the date to which they were drawn up.
18.9 LITIGATION
Save for matters disclosed to the Bank in writing prior to the date of
this Agreement there is no action, litigation, lawsuit or proceeding
taking place or to the best of its knowledge and belief pending or
threatened against or affecting it or any other member of the Group
before any court, judicial, administrative, arbitral or governmental
body or agency which in any such case could reasonably be expected to
result in a material adverse effect.
18.10 INFORMATION
The assumptions underlying the pro-forma cashflow forecasts for the
Group both before and after the completion of the acquisition of the
Market Facts Shares for the financial years 1999, 2000 and 2001 provided
to the Bank by Aegis prior to the date of this Agreement were made or
held in good faith and were based on reasonable grounds.
18.11 ERISA
(a) Each member of the Controlled Group has fulfilled its obligations under
the minimum funding standards of ERISA and the Code with respect to each
Plan to which such minimum funding standards apply.
(b) Each member of the Controlled Group is in compliance in all material
respects with the presently applicable provisions of ERISA, and the Code
with respect to each Plan.
(c) Each Plan complies in all respects with all applicable requirements of
law and regulations. No Reportable Event has occurred with respect to
any Plan, and no steps have been taken to reorganise or terminate any
Plan or by the Borrowers or any member of the Controlled Group to effect
a complete or partial withdrawal from any Multiemployer Plan.
(d) No member of the Controlled Group has:
(i) sought a waiver of the minimum funding standard under Section 412
of the Code in respect of any Plan;
(ii) failed to make any contribution or payment to any Plan, or made
any amendment to any Plan, and no other event, transaction or
condition has occurred which has result
<PAGE>
30
or could result in the imposition of a lien or the posting of a
bond or other security under ERISA or the Code; or
(iii) incurred any liability under Title IV of ERISA other than a
liability to the PBGC for premiums under Section 4007 of ERISA.
18.12 U.S. REGULATORY REQUIREMENTS
(a) AAC is not an investment company under the United States Investment
Company Act of 1940, nor is it exempt from the provisions of that Act
pursuant to an exemption under that Act, all of the conditions of which
have been and are being fulfilled.
(b) None of the transactions contemplated in this Agreement (including,
without limitation, the borrowings hereunder and the use of the proceeds
thereof) will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934 (or any regulations issued pursuant
thereto, including, without limitation, Regulations T, U and X).
18.13 PUBLIC UTILITY HOLDING COMPANY ACT
Neither AAC nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a
"holding company", within the meaning of the United States of America
Public Utility Holding Company Act of 1935.
18.14 MATERIAL ADVERSE CHANGE
There has been no material adverse change in the financial condition,
business or operations of the Group, taken as a whole, since the date to
which the accounts referred to in Clause 18.8 (Accounts) were drawn up.
18.15 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES
The representations and warranties set out:
(a) in Clauses 18.2 (Status) to 18.14 (Material Adverse Change)
(inclusive) are made on the date of this Agreement; and
(b) in Clauses 18.2 (Status), 18.3 (Powers and authority), 18.4 (Legal
validity), 18.5(a) and (b) (Non-conflict), 18.6(b) (No default),
18.7 (Authorisations) and 18.11 (ERISA) to 18.13 (Public Utility
Holding Company Act) (inclusive) are deemed to be repeated by each
Borrower on the first day of each Interest Period and in respect
of the Clauses referred to in Clause 4.2(a)(i) on each Drawdown
Date in each case with reference to the facts and circumstances
then existing.
19. UNDERTAKINGS
19.1 DURATION
The undertakings in this Clause 19 remain in force from the date of this
Agreement for so long as any amount is or may be outstanding under this
Agreement or any Commitment is in force.
<PAGE>
31
19.2 FINANCIAL INFORMATION
Aegis shall supply to the Bank:
(a) as soon as the same are available (and in any event within 90 days
of 30th June,1999, the unaudited consolidated accounts of the
Group for that half-year; and
(b) together with the accounts specified in paragraph (a) above, a
certificate signed by two of its senior officers setting out in
reasonable detail computations establishing compliance with Clause
19.15 (Financial covenants) as at the date to which those accounts
were drawn up.
19.3 INFORMATION - MISCELLANEOUS
Aegis shall supply to the Bank:
(a) promptly upon becoming aware of them, details of any litigation,
arbitration or administrative proceedings which are current,
threatened or pending, and which would reasonably be expected, if
adversely determined, to have a material adverse effect.
(b) promptly, such further information in the possession or control of
any member of the Group regarding its financial condition and
operations as the Bank may reasonably request; and
(c) if any member of the Controlled Group:-
(i) gives or is required to give notice to the PBGC of any
Reportable Event with respect to any Plan which might
constitute grounds for a termination of that Plan under
Title IV of ERISA, or knows that the plan administrator of
any Plan has given notice of that Reportable Event, a copy
of the notice of that Reportable Event given or required to
be given to the PBGC;
(ii) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer
Plan is in reogranization, is insolvent or has been
terminated, a copy of that notice;
(iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer, any Plan, a copy of that
notice;
(iv) applies for a waiver of the minimum funding standard under
Section 412 of the Code, a copy of that application;
(v) gives notice of intent to terminate any Plan under Section
4041(c) of ERISA, a copy of that notice and any other
information filed with the PBGC;
(vi) gives notice of withdrawal from any Plan pursuant to Section
4063 of ERISA, a copy of that notice; or
<PAGE>
32
(vii) fails to make any payment or contribution to any Plan or
makes any amendment to any Plan which has resulted or could
result in the imposition of a Security Interest or the
posting of a bond or other security, a certificate of the
chief financial officer or the chief accounting officer of
AAC setting forth details of that occurrence and action, if
any, which AAC or applicable member of the Controlled Group
is required or proposes to take.
19.4 NOTIFICATION OF DEFAULT
Each Borrower shall notify the Bank of any Default (and the steps, if
any, being taken to remedy it) promptly upon its occurrence.
19.5 COMPLIANCE CERTIFICATES
Aegis shall supply to the Bank:
(a) together with the accounts specified in Clause 19.2 (Financial
information); and
(b) as soon as reasonably practicable following a request by the Bank,
a certificate signed by two of its senior officers on its behalf
certifying that no Default is outstanding or, if a Default is
outstanding, specifying the Default and the steps, if any, being taken
to remedy it.
19.6 AUTHORIZATIONS
Each Borrower shall promptly:
(a) obtain, maintain and comply with the terms of; and
(b) supply certified copies to the Bank of,
any authorization required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability of,
any Finance Document.
19.7 PARI PASSU RANKING
Each Borrower shall procure that its obligations and liabilities under
the Finance Documents do and will rank at least PARI PASSU with all its
other present and future unsecured indebtedness other than indebtedness
which is mandatorily preferred solely by applicable law and which
preference does not arise as a result of Security Interests created
pursuant to an agreement.
19.8 NEGATIVE PLEDGE
(a) Neither Borrower shall, and Aegis shall procure that no other member of
the Group will, create or permit to subsist any Security Interest on any
of its assets.
(b) Paragraph (a) does not apply to:
<PAGE>
33
(i) any Security Interest disclosed to the Bank and permitted by the
Bank in writing or any Security Interest which exists at the date
of this Agreement and which secures amounts due under the Existing
Facility Agreement; or
(ii) any lien arising by operation of law in the ordinary course of
business; or
(iii) any title retention arrangements arising in the ordinary course of
business; or
(iv) any finance leases entered into in the ordinary course of the
business; or
(v) any Security Interest created in substitution for any Security
Interest permitted by this Clause 19.8 provided such Security
Interest is over the same asset and the principal amount so
secured does not exceed the principal amount secured on such asset
immediately prior to such substitution; or
(vi) netting arrangements arising in the ordinary course of banking
business; or
(vii) any Security Interest where the total amount of indebtedness
secured by Security Interests not otherwise permitted by this
Clause 19.8(b) does not exceed L20,000,000 or the equivalent in
Optional Currencies at the time such Security Interest is created
and provided that (A) no Security Interest of the type referred to
in paragraph (vi) above shall be permitted by this paragraph (vii)
and (B) the aggregate of indebtedness secured by Security
Interests permitted by this paragraph (vii) does not exceed
L20,000,000. Aegis shall notify the Bank in writing in advance of
the creation of any such Security Interest specifying that such
Security Interest is to be created in accordance with this
paragraph (vii); or
(viii) any Security Interest affecting, or over, assets acquired by any
member of the Group which is in existence prior to such
acquisition provided that (a) such Security Interest was not
entered into in contemplation of such acquisition and (b) the same
are discharged and unconditionally released within 6 months of the
date of such acquisition; or
(ix) any Security Interest required to secure the provision by third
parties (other than the Bank) of guarantees in respect of media
space purchased or booked by members of the Group from media
owners or associations outside the United Kingdom; or
(x) Security Interests where the total amount of indebtedness secured
does not exceed DM 16,000,000 to Commerzbank AG Frankfurt branch
or any other bank in Germany in each case which provides
facilities to any member of the Group incorporated in Germany.
19.9 DISPOSALS
(a) Neither Borrower shall, and Aegis shall procure that no Principal
Subsidiary will, either in a single transaction or in a series of
transactions, whether related or not and whether voluntarily or
involuntarily, sell, transfer, grant or lease or otherwise dispose of or
part with possession of all or any substantial part of its assets.
(b) Paragraph (a) does not apply to:
<PAGE>
34
(i) disposals made in the ordinary course of business of the disposing
entity; or
(ii) disposals of assets in exchange for other assets comparable or
superior as to type, value and quality; or
(iii) disposals with the prior consent of the Bank; or
(iv) disposals which are bona fide and on an arm's length basis;
Provided that the following shall not be treated as a disposition or
parting with possession or ownership for these purposes:
(1) any payment of cash in the ordinary course of business or as
consideration for any acquisition or capital expenditure permitted
by this Agreement;
(2) any disposition or parting with possession or ownership to the
extent that the same is effected by one member of the Group to
another member of the Group (provided that if such member of the
Group is a Principal Subsidiary, the same shall be to another
Principal Subsidiary);
(3) any disposition or parting with possession or ownership to the
extent that the same occurs pursuant to any solvent winding up,
dissolution or other similar process of a member of the Group
(made with the prior consent of the Bank (such consent not to be
unreasonably withheld or delayed)) or any distribution to the
shareholders of a member of the Group in accordance with their
rights;
(4) granting of any security permitted by this Agreement;
(5) any dissolution, voluntary liquidation, winding-up, striking-off
or removal from the register (or other event analogous to any of
the same in any relevant jurisdiction) of any member of the Group
(other than a Principal Subsidiary) where such event occurs at the
instigation of one of the relevant member's parent undertakings.
19.10 CHANGE OF BUSINESS
Aegis shall procure that no substantial change is made to the general
nature or scope of the business of Aegis or any Principal Subsidiary
from that carried on at the date of this Agreement which would be
reasonably likely to have a material adverse effect on the ability of
Aegis to perform its obligations under this Agreement.
19.11 MERGERS AND ACQUISITIONS
Neither Borrower shall enter into any amalgamation, demerger, merger or
reconstruction.
19.12 ERISA
No Borrower will, and Aegis will procure that no member of the
Controlled Group will:
(a) fail to make payment when due of all amounts due as a contribution
to any Plan; or
<PAGE>
35
(b) engage in any transaction in connection with which a Borrower or
any member of the Controlled Group could be subjected to either a
civil penalty assessed pursuant to Section 502(i) of ERISA, a tax
imposed by Section 4975 of the Code or breach of fiduciary duty
liability damages,
if, the failure to make such payment or such penalty, tax or liability,
as the case may be, would have a material adverse effect.
19.13 THE OFFER
(a) Neither Borrower shall issue any press release or make any statement
during the course of the Offer which contains any information or
reference concerning this Agreement or the Bank without first obtaining
prior approval of the information or reference to the Bank, in each case
such approval not to be unreasonably withheld or delayed except that
such prior approval of the Bank will not be required if a Borrower is
required by law or regulation to make a public disclosure, statement or
filing in respect of the Offer and is unable, after having made all
reasonable efforts to do so, to obtain the prior approval of the Bank in
relation to the contents of such disclosure or statement; and
(b) Each Borrower shall provide the Bank with such information regarding the
progress of the Offer and the Vendor Placing as it may reasonably
request.
19.14 APPLICATION OF PROCEEDS
Aegis shall procure that within four Business Days of the Placing
Agreement becoming wholly unconditional, AAC shall be capitalised or
otherwise placed in funds of an amount which is not less than
L100,000,000 and AAC shall apply such amount within two Business Days
of its receipt to prepay all or part of the Term Loans made to it.
19.15 FINANCIAL COVENANTS
(a) In this Clause 19.15:
"CONSOLIDATED ADJUSTED CASH FLOW"
means in respect of any period, Consolidated Profits before Interest and
Tax after adding back the depreciation charge and amortisation for
goodwill for such periods and adjusting for capital expenditure, tax
payable and, minority and ordinary dividends paid in such periods, in
each case as determined from the relevant consolidated financial
statements of Aegis delivered or to be delivered pursuant to this
Agreement for such period;
"CONSOLIDATED GROSS FINANCE CHARGES"
means in respect of any period, the aggregate amount of the interest,
commission, fees and other finance charges of whatsoever nature
(excluding any front end fee, agency fee, syndication fee, participation
fee or any similar one off or recurring fee payable) in each case in
respect of Financial Indebtedness (which expression shall not include,
for the avoidance of doubt, any rentals on operating leases) payable by
the Group in respect of such period including, without limitation,
capitalised interest in each case as determined from the relevant
<PAGE>
36
consolidated financial statements of Aegis delivered or to be delivered
pursuant to this Agreement for such period;
"CONSOLIDATED PROFITS BEFORE INTEREST AND TAX"
means in respect of any period, the profit on ordinary activities before
taxation of the Group for that period (including, without limitation,
interest receivable) after adding back amortisation for goodwill and
adding back or before providing for the Consolidated Gross Finance
Charges for such period, in each case as determined from the relevant
consolidated financial statements of Aegis delivered or to be delivered
pursuant to this Agreement for such period;
(b) Aegis will procure that:-
(1) the ratio of Consolidated Profits before Interest and Tax to
Consolidated Gross Finance Charges in respect of the half year
ended 30 June, 1999 of the Group shall not be less than 4:1; and
(2) the ratio of Consolidated Adjusted Cash Flow to Consolidated Gross
Finance Charges in respect of half year ended 30 June, 1999 of the
Group shall not be less than 1.50:1.
20. DEFAULT
20.1 EVENTS OF DEFAULT
Each of the events set out in Clauses 20.2 to 20.16 (inclusive) is an
Event of Default (whether or not caused by any reason whatsoever outside
the control of either Borrower or any other person).
20.2 NON-PAYMENT
(a) A Borrower fails to pay any amount of principal on the due date thereof.
(b) A Borrower fails to pay any amount of interest or other sum required to
be paid under this Agreement within three Business Days of the due date.
20.3 BREACH OF OTHER OBLIGATIONS
(a) A Borrower does not comply with any provision of Clause 19.8 (Negative
pledge), Clause 19.9 (Disposals), Clause 19.15 (Financial covenants).
(b) Either Borrower does not comply with any provisions of the Finance
Documents (other than those referred to in paragraph (a) above or in
Clause 20.2 (Non-payment)) and such failure:
(i) (if capable of remedy before the expiry of such period) continues
unremedied for a period of 30 days from the earlier of the date on
which (A) such Borrower has become aware of the failure to comply
or (B) the Bank gives notice to Aegis requiring the same to be
remedied; and
<PAGE>
37
(ii) (to the extent that this paragraph (b) applies to any provision of
this Agreement other than a provision set out in Clause 19
(Undertakings) the relevant failure) would have a material adverse
effect.
20.4 MISREPRESENTATION
A representation, warranty or statement made or repeated in or in
connection with any Finance Document or in any document delivered by or
on behalf of either Borrower is incorrect in any material respect when
made or deemed to be made or repeated.
20.5 CROSS-DEFAULT
(a) Any amount of Financial Indebtedness in excess of L3,000,000 (or the
equivalent thereof in any other currency) of a Borrower or any Principal
Subsidiary shall by reason of breach or default become due and payable
or capable of being declared due and payable prior to its stated
maturity or due date therefor; or
(b) any Financial Indebtedness is not paid at the maturity thereof or on the
due date therefor (or within any originally stated applicable grace
period therefor) or, if payable on demand, is not paid on demand; or
(c) a Borrower or any Principal Subsidiary is required pursuant to any
agreement to make any deposit by way of collateral security (in breach
of Clause 19.8 (Negative Pledge)) for its obligations thereunder of any
amount in excess of L3,000,000 (or the equivalent thereof in any other
currency) which in the opinion of the Bank would be likely materially to
adversely affect the ability of either Borrower to comply with its
obligations under or in connection with this Agreement or, as the case
may be, any other Finance Document; or
(d) a Borrower or any Principal Subsidiary fails to pay when due (or within
any originally stated applicable grace period thereafter) any amount in
excess of L3,000,000 (or the equivalent thereof in any other currency)
payable by it under any present or future guarantee or indemnity in
respect of Financial Indebtedness; or
(e) if any Security Interest in respect of Financial Indebtedness created by
either Borrower or any Principal Subsidiary becomes enforceable and
steps are taken to enforce the same (for the avoidance of doubt any
set-off or similar right exercised in the ordinary course of business
and otherwise than as a consequence of a default shall not be regarded
as an enforcement).
20.6 INSOLVENCY AND APPOINTMENT OF LIQUIDATORS
(a) A Borrower or a Principal Subsidiary becomes insolvent or applies for or
consents to or suffers the appointment of a liquidator (other than
pursuant to a solvent reconstruction approved in advance by the Bank or
pursuant to a voluntary liquidation on a solvent basis), receiver,
administrative receiver, administrator, guardian, encumbrancer, trustee
in bankruptcy or similar official of the whole or substantially the
whole of its respective assets, business, property, revenues or
undertaking; or
(b) a Borrower or a Principal Subsidiary takes any proceedings under any law
for adjustment, deferment or rescheduling of its indebtedness or any
part thereof or makes or enters or any proposal is made by a Borrower or
a Principal Subsidiary to make or enter into a general assignment or
arrangement (including without limitation any voluntary arrangement
pursuant to Part I of the Insolvency Act 1986) or composition with or
for the benefit of its creditors or
<PAGE>
38
a moratorium shall be declared on any of its indebtedness or any part
thereof; or
(c) any creditor of a Borrower or a Principal Subsidiary exercises a
contractual right in the capacity of creditor to take over the financial
management of a Borrower or a Principal Subsidiary; or
(d) a Borrower or Principal Subsidiary is unable generally to pay its debts
as and when they fall due or shall stop or suspend payment of its debts
generally or any material class of debts or the equivalent of any of the
foregoing shall occur in relation to any a Borrower or a Principal
Subsidiary under the laws of any jurisdiction to which it or any of its
rights, property or assets are subject.
20.7 PRESENTATION OF PETITIONS
Subject to the provisions of this Agreement, a petition is presented or
a meeting is convened or an order is made or resolution is passed or
other action or proceedings are taken with a view to the winding-up,
liquidation, appointment of an administrator or dissolution of a
Borrower or a Principal Subsidiary (except in any such case pursuant to
a voluntary liquidation on a solvent basis of the relevant company) or,
if the equivalent of any of the foregoing shall occur in relation to a
Borrower or a Principal Subsidiary under the laws of any jurisdiction to
which it or any of its rights, property or assets are subject, which in
the case of any petition for the winding-up, liquidation dissolution or
equivalent under the laws of any other such jurisdiction of a Borrower
or a Principal Subsidiary is not withdrawn within 11 Business Days of
the occurrence of such event.
20.8 LITIGATION
Any litigation, arbitration or administrative proceedings are current
or, to the knowledge of a Borrower or Principal Subsidiary, pending or
threatened in which it is reasonably likely that there will be a
determination adverse to the interests of the relevant Borrower or
Principal Subsidiary and which would, if adversely determined, have a
material adverse effect.
20.9 CESSATION OF BUSINESS
Aegis ceases, or threatens to cease, to carry on all or a substantial
part of its business.
20.10 UNLAWFULNESS
It is or becomes unlawful for either Borrower to perform any of its
material obligations under the Finance Documents.
20.11 OWNERSHIP OF AAC
AAC is not or ceases to be a Subsidiary of Aegis.
20.12 MATERIAL ADVERSE CHANGE
Any event or series of events (including without limitation any adverse
change in the Borrowers' business, assets or financial condition) occurs
with respect to a Borrower which would be reasonably likely materially
and adversely to affect the ability of either Borrower to comply with
any of its material obligations under or in connection with this
Agreement.
<PAGE>
39
20.13 ERISA
(a) Any member of the Controlled Group fails to pay when due any amount
which it is required to pay under Title IV of ERISA (including, without
limitation, the amount of any contributions required under any Plan or
to meet the minimum funding standard set forth in ERISA with respect to
the Plans) and such amount or such amount when aggregated with any other
such amounts, exceeds U.S. $1,000,000;
(b) notice of intent to terminate a Plan is filed under Title IV of ERISA by
any member of the Controlled Group, any Plan administrator or any
combination of the foregoing if that termination results in an unfunded
liability in excess of U.S. $1,000,000;
(c) the PBGC institutes proceedings under Title IV or ERISA to terminate, to
impose liability (other than for premiums under Section 4007 of ERISA)
in an amount in excess of U.S. $1,000,000 in respect of, or to cause a
trustee to be appointed to administer, any Plan;
(d) there occurs any event, series of events or condition by reason of which
the PBGC would be entitled to obtain a decree adjudicating that any Plan
must be terminated; or
(e) there occurs a complete or partial withdrawal from, or a default (within
the meaning of Section 4219(c)(5) of ERISA) with respect to, one or more
Multiemployer Plans which could cause one or more members of the
Controlled Group to incur a current payment obligation in excess of U.S.
$1,000,000.
20.14 ACCELERATION
Subject to Clause 20.15 (Clean-Up Period) and at any time after the
occurrence of an Event of Default and if such event is continuing, the
Bank may, by notice to Aegis:
(a) cancel the Total Commitments (provided that, prior to the
Unconditional Date, the Bank shall not cancel any part of the Term
Loan Commitment); and/or
(b) demand that all or part of the Loans, together with accrued
interest, and all other amounts accrued under the Finance
Documents be immediately due and payable, whereupon they shall
become immediately due and payable; and/or
(c) demand that all or part of the Loans be payable on demand,
whereupon they shall immediately become payable on demand.
20.15 CLEAN-UP PERIOD
During the period up to and including 180 days after the Unconditional
Date:
(a) a breach of any provision of Clause 19 (Undertakings); or
(b) a representation or warranty set out in Clause 18
(Representations and warranties) which is incorrect when made; or
(c) a Default arises,
which in any such case applies only in relation to Market Facts or the
member of the Group which exists as a result of the merger of AAC and
Market Facts (or the respective
<PAGE>
40
subsidiaries of such companies), shall be deemed not to be a breach of
Clause 19, an incorrect representation or warranty or a Default, as the
case may be. During such 180 day period the Bank may not exercise any
of the rights referred to in Clause 20.14 (a) to (c) (Acceleration)
which arise as a result of an Event of Default which would not have
arisen but for the foregoing provisions of this Clause 20.15 unless the
relevant event continues to subsist unremedied and unwaived at the end
of that period.
21. FEES
21.1 ARRANGEMENT FEE
Either Borrower shall pay to the Bank an arrangement fee of L125,000, of
which L65,000 shall be paid on the date of this Agreement and the
balance shall be paid on the first Drawdown Date of a Term Loan.
21.2 NON-UTILISATION FEE
(a) Either Borrower shall pay to the Bank a non-utilisation fee equal to
0.325 per cent per annum in respect of the period from the date of this
Agreement up to and including the date falling three months after the
date of this Agreement and thereafter until the Final Maturity Date 0.40
per cent per annum on the Total Commitments to the extent not cancelled
or drawndown under this Agreement. For this purpose Loans are taken at
their Original Sterling Amount.
(b) Accrued non-utilisation fee is payable quarterly in arrears and on the
Final Maturity Date.
21.3 VAT
Any fee referred to in this Clause 21 is exclusive of any value added
tax or any other tax which might be chargeable in connection with that
fee. If any value added tax or other tax is so chargeable, it shall be
paid by Aegis at the same time as it pays the relevant fee.
22. EXPENSES
22.1 INITIAL AND SPECIAL COSTS
Aegis shall forthwith on demand pay the Bank the amount of all
reasonable costs and expenses (including legal fees) incurred by it in
connection with:
(a) the negotiation, preparation, printing and execution of:
(i) this Agreement;
(ii) any other Finance Document executed after the date of this
Agreement; and
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf of a
Borrower and relating to a Finance Document or a document referred
to in any Finance Document.
<PAGE>
41
22.2 ENFORCEMENT COSTS
The Borrower shall forthwith on demand pay to the Bank the amount of all
costs and expenses (including legal fees) incurred by it in connection
with the enforcement of, or the preservation of any rights under, any
Finance Document.
23. STAMP DUTIES
Aegis shall pay and forthwith on demand indemnify the Bank against any
liability it incurs in respect of any stamp, registration and similar
tax which is or becomes payable in connection with the entry into,
performance or enforcement of any Finance Document.
24. INDEMNITIES
24.1 CURRENCY INDEMNITY
(a) If the Bank receives an amount in respect of a Borrower's liability
under the Finance Documents or if that liability is converted into a
claim, proof, judgment or order in a currency other than the currency
(the "CONTRACTUAL CURRENCY") in which the amount is expressed to be
payable under the relevant Finance Document:
(i) that Borrower shall indemnify the Bank as an independent
obligation against any loss or liability arising out of or as a
result of the conversion;
(ii) if the amount received by the Bank, when converted into the
contractual currency at a market rate in the usual course of its
business, is less than the amount owed in the contractual
currency, the Borrower concerned shall forthwith on demand pay to
the Bank an amount in the contractual currency equal to the
deficit; and
(iii) the Borrower shall forthwith on demand pay to the Bank on demand
any exchange costs and taxes payable in connection with any such
conversion.
(b) Each Borrower waives any right it may have in any jurisdiction to pay
any amount under the Finance Documents in a currency other than that in
which it is expressed to be payable.
24.2 OTHER INDEMNITIES
Aegis shall forthwith on demand indemnify the Bank against any loss or
liability which the Bank incurs as a consequence of:
(a) the occurrence of any Event of Default;
(b) the operation of Clause 20.14 (Acceleration);
(c) any payment of principal or an overdue amount being received from
any source otherwise than on the last day of the relevant Interest
Period or Designated Interest Period (as defined in Clause 9.3
(Default interest)) relative to the amount so received; or
(d) a Loan (or part of a Loan) not being prepaid in accordance with a
notice of prepayment or (other than by reason of negligence or
default by the Bank) a Loan not being made after the Borrower has
delivered a Request for that Loan.
<PAGE>
42
Aegis's liability in each case includes any loss or expense on account
of funds borrowed, contracted for or utilised to fund any amount payable
under any Finance Document, any amount repaid or prepaid or any Loan.
24.3 OFFER INDEMNITY
(a) Aegis shall whether or not the transactions contemplated, the Finance
Documents and the Offer Documents are consummated, indemnify the Bank
and its respective officers, directors and employees (each, an
"INDEMNITEE" and collectively, the "INDEMNITEES") from and hold each of
them harmless against any and all losses, claims, damages, costs,
expenses and liabilities, joint or several to which any such Indemnitee
may be or may become subject resulting from, arising out of or by reason
of:
(a) its agreement to make the Facilities available for the purposes of
the Offer;
(b) the use or intended use of the proceeds of any advance under
either Facility for the purposes of the Offer; or
(c) the Offer (whether or not made) or any acquisition by any member
of the Group or any person acting in concert with any member of
the Group of any shares in Market Facts,
and to reimburse any Indemnitee, upon its written demand therefor, for
any and all reasonable expenses (including fees and expenses of counsel)
as they are properly incurred in connection with the investigation of or
preparation for or defence of any actual or threatened claim or any
action, suit or proceeding relating thereto except as may result from
the wilful default or gross negligence of the Bank or an Indemnitee in
complying with the Bank's obligations under any Finance Document.
(b) The Bank shall (subject to the relevant restrictions of the Bank's
insurance policies) inform Aegis of the commencement of and consult with
and keep Aegis informed in respect of the conduct of its defence in
respect of any claim, action, suit, proceeding, or investigation
referred to in sub-paragraph (a) above.
25. EVIDENCE AND CALCULATIONS
25.1 ACCOUNTS
Accounts maintained by the Bank in connection with this Agreement are
prima facie evidence of the matters to which they relate.
25.2 CERTIFICATES AND DETERMINATIONS
Any certification or determination by the Bank of a rate or amount under
the Finance Documents is, in the absence of manifest error, conclusive
evidence of the matters to which it relates.
25.3 CALCULATIONS
Interest (including any applicable Mandatory Cost) and the fee payable
under Clause 21.2 (Non-utilisation fee) accrue from day to day and are
calculated on the basis of the actual number of days elapsed and a year
of 365 days, or, in the case of interest payable on an
<PAGE>
43
amount denominated in an Optional Currency or where market practice
otherwise dictates, 360 days.
26. WAIVERS AND REMEDIES CUMULATIVE
The rights of the Bank under the Finance Documents:
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
27. AMENDMENTS AND WAIVERS
Any term of the Finance Documents may be amended or waived with the
agreement of Aegis and the Bank.
28. CHANGES TO THE PARTIES
28.1 TRANSFERS BY BORROWERS
Neither Borrower may assign, transfer, novate or dispose of any of, or
any interest in, its rights and/or obligations under the Finance
Documents.
28.2 TRANSFERS BY THE BANK
The Bank may not at any time assign, transfer or novate any of the Total
Commitments and/or any of its rights and/or obligations under this
Agreement.
29. DISCLOSURE OF INFORMATION
The Bank shall keep confidential and shall not, without the prior
consent of Aegis, use any confidential information supplied by or on
behalf of Aegis under this Agreement otherwise than in connection with
this Agreement. However, the Bank is entitled to disclose confidential
information:
(i) in connection with any legal proceedings arising out of or in
connection with this Agreement; or
(ii) if required to do so by an order of a court of competent
jurisdiction whether in pursuance of any procedure for discovering
documents or otherwise; or
(iii) pursuant to any law or regulation in accordance with which the
Bank is required to act; or
(iv) to any governmental, banking or taxation authority of competent
jurisdiction; or
(v) to its auditors or other professional advisers.
<PAGE>
44
30. SET-OFF
After the occurrence of an Event of Default, the Bank may set off any
matured obligation owed by a Borrower under the Finance Documents (to
the extent beneficially owned by the Bank) against any obligation
(whether or not matured) owed by the Bank to that Borrower, regardless
of the place of payment, booking branch or currency of either
obligation. If the obligations are in different currencies, the Bank may
convert either obligation at a market rate of exchange in its usual
course of business for the purpose of the set-off. If either obligation
is unliquidated or unascertained, the Bank may set off in an amount
estimated by it in good faith to be the amount of that obligation.
31. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:
(a) the legality, validity or enforceability in that jurisdiction of
any other provision of the Finance Documents; or
(b) the legality, validity or enforceability in other jurisdictions of
that or any other provision of the Finance Documents.
32. COUNTERPARTS
Each Finance Document may be executed in any number of counterparts, and
this has the same effect as if the signatures on the counterparts were
on a single copy of the Finance Document.
33. NOTICES
33.1 GIVING OF NOTICES
All notices or other communications under or in connection with this
Agreement shall be given in writing and, unless otherwise stated, may be
made by letter, or by telex or facsimile. Any such notice will be deemed
to be given as follows:
(a) if by letter, when delivered personally or on actual receipt;
(b) if by telex, when despatched, but only if, at the time of
transmission, the correct answerback appears at the start and at
the end of the sender's copy of the notice; and
(c) if by facsimile, when received in legible form.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will
only be deemed to be given on the next working day in that place.
33.2 ADDRESSES FOR NOTICES
(a) The address and facsimile number of Aegis are:
Aegis Group plc
<PAGE>
45
11A West Halkin Street
London
SW1X 8JL
Attention: Company Secretary
Fax: 0171 470 5098
or such other as Aegis may notify to the Bank by not less than five
Business Days' notice.
(b) The address and facsimile number of AAC are:
3 Park Avenue
New York
NY 10016
USA
Attention: Paul Greenhalgh
Fax: 001 212 252 1250
or such other as AAC may notify to the Bank by not less than five
Business Days' notice.
(c) The addresses, telephone numbers and facsimile numbers of the Bank are:
(i) for the purposes of sending Requests only:
135 Bishopsgate
London EC2
Attention: Alan Colley or Duncan Wiggins
Fax: 0171 334 1288
Tel: 0171 334 1120
(ii) for all other purposes:
Portsmouth Corporate Office
Society Building
176 London Road
Portsmouth
Hants P02 9DR
Attention: John McNamara
Fax: 01705 666858
Tel: 01705 665060
or such other as the Bank may notify to Aegis by not less than five
Business Days' notice.
<PAGE>
46
34. JURISDICTION
34.1 SUBMISSION
Each Borrower agrees that the courts of England have jurisdiction to
settle any disputes in connection with any Finance Document and
accordingly submits to the jurisdiction of the English courts.
34.2 SERVICE OF PROCESS
Without prejudice to any other mode of service:
(a) AAC irrevocably appoints Aegis as its agent for service of process
relating to any proceedings before the English courts in
connection with any Finance Document (and Aegis accepts this
appointment);
(b) agrees that failure by a process agent to notify the relevant
Borrower of the process will not invalidate the proceedings
concerned;
(c) consents to the service of process relating to any such
proceedings by prepaid posting of a copy of the process to its
address for the time being applying under Clause 33.2 (Addresses
for notices); and
(d) agrees that if the appointment of any person mentioned in
paragraph (a) above ceases to be effective, the relevant Borrower
shall immediately appoint a further person in England to accept
service of process on its behalf in England and, failing such
appointment within 15 days, the Bank is entitled to appoint such a
person by notice to the Borrowers.
34.3 FORUM CONVENIENS AND ENFORCEMENT ABROAD
Each Borrower:
(a) waives objection to the English courts on grounds of inconvenient
forum or otherwise as regards proceedings in connection with a
Finance Document; and
(b) agrees that a judgment or order of an English court in connection
with a Finance Document is conclusive and binding on it and may be
enforced against it in the courts of any other jurisdiction.
34.4 NON-EXCLUSIVITY
Nothing in this Clause 34 limits the right of the Bank to bring
proceedings against a Borrower in connection with any Finance Document:
(a) in any other court of competent jurisdiction; or
(i) concurrently in more than one jurisdiction.
<PAGE>
47
35. GOVERNING LAW
This Agreement is governed by English law.
This Agreement has been entered into on the date stated at the beginning
of this Agreement.
<PAGE>
48
SCHEDULE 1
CONDITIONS PRECEDENT DOCUMENTS
1. CONSTITUTIONAL DOCUMENTS
A copy of the memorandum and articles of association and certificate of
incorporation (or equivalent constitutional documents) of each Borrower.
2. AUTHORISATIONS
(a) A copy of a resolution of the board of directors of each Borrower or, if
applicable, of a committee of the board of directors (together with a
copy of the resolution of the board of directors constituting that
committee):
(i) approving the terms of, and the transactions contemplated by, this
Agreement (and, in the case of Aegis, the Vendor Placing) and
resolving that it execute this Agreement (and, in the case of
Aegis, all documents relating to the Vendor Placing to which they
are a party);
(ii) authorizing a specified person or persons to execute this
Agreement on its behalf; and
(iii) authorizing a specified person or persons, on its behalf, to sign
and/or despatch all other documents and notices to be signed
and/or despatched by it under or in connection with this
Agreement;
(b) a specimen of the signature of each person authorized by the resolution
referred to in paragraph (a) above;
(c) a certificate of a director of Aegis confirming that the borrowing of
the Total Commitments in full would not cause any borrowing limit
binding on it to be exceeded;
(d) a certificate of a director of AAC confirming that the borrowing of the
Term Loan Commitments in full would not cause any borrowing limit
binding on it to be exceeded; and
(e) a certificate of an authorized signatory of Aegis certifying that each
copy document specified in this Schedule 1 is correct, complete and in
full force and effect as at a date no earlier than the date of this
Agreement.
3. ACQUISITION DOCUMENTS
(a) A copy of the Press Release.
(b) A copy of the resolution of the board of directors of AAC approving the
acquisition of Market Facts.
(c) A certificate from Aegis signed by two senior officials confirming that
AAC has accepted for payment pursuant to the terms of the Offer and/or
acquired pursuant to the terms of Lock-up Agreements in aggregate not
less than 50 per cent. of the outstanding Market Facts Shares.
<PAGE>
49
4. LOCK-UP OPTION AGREEMENTS
(a) A copy of each of the Lock-up Agreements.
(b) A certificate from Aegis signed by two senior officials confirming that
a competing offer for the Market Facts Shares has been made and all the
Lock-up Options have been exercised pursuant to the terms of the Lock-up
Agreements.
5. OFFER DOCUMENTS
(a) A copy of each Offer Document and a copy of any circular issued by
either Borrower to its shareholders or the shareholders in Market Facts
in connection with the Offer.
(b) A certificate from Aegis signed by two senior officials confirming that
AAC has accepted for payment pursuant to the terms of the Offer, Market
Facts Shares which, taken together with any Market Facts Shares acquired
under the Lock-up Agreements amount to not less than 50 per cent. of the
outstanding Market Facts Shares and that the Placing Agreement has
become wholly unconditional (except to the extent that it is conditional
only on Admission occurring) and that the Placing Agreement has not been
terminated in accordance with its terms.
6. REVOLVING LOANS DOCUMENTS
A certificate from Aegis signed by two senior officials confirming that
all amounts outstanding under the Existing Facility Agreement will be
repaid (and will be partially repaid out of the proceeds of the first
Revolving Credit Loan) and the commitments of each bank under that
agreement will be cancelled in full, on or before, the first Drawdown
Date for a Revolving Credit Loan.
7. LEGAL OPINION
A legal opinion of Allen & Overy, New York counsel to the Bank, in
relation to Delaware corporation law, substantially in the form agreed.
<PAGE>
50
SCHEDULE 2
CALCULATION OF THE MANDATORY COST
(a) For the purpose of paragraph (a) of the definition of Mandatory Cost,
the Mandatory Cost for a Loan denominated in Sterling for its Interest
Periods is calculated in accordance with the following formula:
BY+S(Y-Z)+Fx0.01
----------------% per annum
100-(B+S)
where on the day of application of a formula:
B is the percentage of the Bank's eligible liabilities (in excess of
any stated minimum) which the Bank of England requires the Bank to
hold on a non-interest-bearing deposit account in accordance with
its cash ratio requirements;
Y is LIBOR at or about 11.00 a.m. on that day for the Interest
Period;
S is the percentage of the Bank's eligible liabilities which the
Bank of England requires the Bank to place as a special deposit;
Z is the interest rate per annum allowed by the Bank of England on
special deposits; and
F is the charge payable by the Bank to the Financial Services
Authority under paragraph 2.02 or 2.03 (as appropriate) of the
Fees Regulations (but where for this purpose, the figure in
paragraph 2.02b and 2.03b will be deemed to be zero) expressed in
pounds per L1 million of the fee base of the Bank.
(b) For the purposes of this Schedule 2:
(i) "ELIGIBLE liabilities" and "SPECIAL DEPOSITS" have the meanings
given to them at the time of application of the formula by the
Bank of England;
(ii) "FEE BASE" has the meaning given to it in the Fees Regulations;
and
(iii) "FEES REGULATIONS" means the Banking Supervision (Fees)
Regulations 1998 and/or any other regulations governing the
payment of fees for banking supervision.
(c) In the application of the formula, B, Y, S and Z are included in the
formula as figures and not as percentages, e.g. if B = 0.5% and Y = 15%,
BY is calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of the Interest Period.
(ii) Each rate calculated in accordance with the formula is, if
necessary, rounded upward to four decimal places.
<PAGE>
51
(e) If the Bank determines that a change in circumstances has rendered, or
will render, the formulae inappropriate, the Bank shall notify the
Borrower of the manner in which the Mandatory Cost will subsequently be
calculated. The manner of calculation so notified by the Bank shall, in
the absence of manifest error, be binding on all the Parties.
<PAGE>
52
SCHEDULE 3
FORM OF REQUEST
To: NATIONAL WESTMINSTER BANK PLC
From: [AEGIS GROUP plc/Aegis Acquisition Corp.]*
Date:[ ], 1999
AEGIS GROUP PLC/AEGIS ACQUISITION CORP. -L250,000,000 REVOLVING CREDIT AND TERM
AGREEMENT DATED [ ], 1999
1. We wish to borrow a Loan as follows:
(a) Term Loan/ Option Term Loan/Revolving Credit Loan
(b) Drawdown Date: [ ]
(c) Amount: [ ]
(d) Currency: [ ]
(e) Interest Period: [ ]
(f) Payment instructions: [ ].
2. We confirm that each condition specified in Clause 4.2 (Further
conditions precedent) is satisfied on the date of this Request.
By:
[AEGIS GROUP plc/Aegis Acquisition Corp.]*
Authorized Signatory
- ----------------------------
* Delete as appropriate
<PAGE>
53
SIGNATORIES
BORROWERS
AEGIS GROUP PLC
By:
AEGIS ACQUISITION CORP.
By:
GUARANTOR
AEGIS GROUP PLC
By:
BANK
NATIONAL WESTMINSTER BANK PLC
By:
<PAGE>
CONFORMED COPY
DATED 30 APRIL 1999
AEGIS GROUP PLC
- and -
HOARE GOVETT LIMITED
---------------------------------------
PLACING AGREEMENT
---------------------------------------
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
Tel: 0171-638 1111
Fax: 0171-972 7990
DRK/H83600005/1129447
<PAGE>
CONTENTS
CLAUSE PAGE
1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . . . . 1
2. CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. APPLICATION TO THE LONDON STOCK EXCHANGE . . . . . . . . . . . . . . . . 5
4. PLACING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. DELIVERY AND RELEASE OF DOCUMENTS. . . . . . . . . . . . . . . . . . . . 7
6. ALLOTMENT, PAYMENT AND REGISTRATION. . . . . . . . . . . . . . . . . . . 7
7. US OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8. COMMISSIONS, FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . 9
9. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . .10
10. INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
11. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
12. PUBLICITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
13. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
14. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
15. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
SCHEDULE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
The Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
SCHEDULE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Delivery of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
<PAGE>
THIS AGREEMENT is made on 30 April 1999
BETWEEN:-
(1) AEGIS GROUP PLC (registered in England with registered no. 1403668) whose
registered office is at 11A West Halkin Street, London SW1X 8JL (the
"COMPANY"); and
(2) HOARE GOVETT LIMITED (registered in England with registered no 2026375)
whose registered office is at 4 Broadgate, London EC2M 7LE ("HOARE
GOVETT").
RECITALS
(A) The Company proposes to procure the making of the US Offer by US Purchaser
to acquire the entire issued common stock of Target.
(B) ABN AMRO Equities Holdings (UK) Limited has agreed to subscribe for the
Preference Shares on the terms and subject to the conditions of the
Subscription Agreement.
(C) The Company has agreed to purchase the Preference Shares on the terms and
subject to the conditions of the Preference Share Purchase Agreement
(D) On and subject to the terms and conditions of this agreement, Hoare Govett
has agreed as attorney for ABN and, as agent for and on behalf of the
Company, to use its reasonable endeavours to procure placees to accept the
allotment of the Placing Shares at the Minimum Placing Price or above and
itself as principal to accept the allotment of any Placing Shares for which
it is unable to procure Placees, at the Minimum Placing Price.
(E) The proceeds of the placing of the Placing Shares will on completion of the
transactions described in the Preference Share Purchase Agreement be paid
to ABN.
THE PARTIES AGREE AS FOLLOWS:-
DEFINITIONS AND INTERPRETATION
In this agreement, including the recitals and the schedules, the following
words and expressions shall, unless the context otherwise requires, have
the following meanings:-
"ABN" means ABN AMRO Equities Holdings (UK) Limited whose registered office
is at 4 Broadgate, London EC2M 7LE;
"ACCOUNTS" means the published annual report and audited accounts of the
Group as at and for the financial period ended on the Accounts Date;
"ACCOUNTS DATE" means 31 December 1998;
"ACQUISITION" means the acquisition of Target pursuant to the US Offer;
"ACT" means the Companies Act 1985;
"ADMISSION" means the admission of the Placing Shares to the Official List
of the London Stock Exchange becoming effective within the meaning of
paragraph 7.1 of the Listing Rules;
-1-
<PAGE>
"DEALING DAY" means any day upon which the London Stock Exchange is open
for dealing in domestic equity securities;
"DIRECTORS" means the directors of the Company;
"ENLARGED GROUP" means the Company and its subsidiary undertakings
following the Acquisition;
"FSA" means the Financial Services Act 1986;
"GROUP" means the Company and its subsidiary undertakings as at the date
hereof;
"HOARE GOVETT GROUP" means Hoare Govett and any subsidiary or parent
undertaking of Hoare Govett including (for the avoidance of doubt) ABN and
any subsidiary undertaking of any such parent undertaking;
"INDEMNIFIED PERSONS" means Hoare Govett, each other member of the Hoare
Govett Group and all of their respective directors, officers and employees
each of whom shall be an "INDEMNIFIED PERSON" for the purposes of this
agreement;
"JERSEY CO" means Aegis Investments (Jersey) Limited, a company
incorporated in Jersey whose registered office is at 22 Grenville Street,
St. Helier, Jersey;
"LISTING RULES" means the listing rules made by the London Stock Exchange
pursuant to part IV of the FSA;
"LONDON STOCK EXCHANGE" means London Stock Exchange Limited;
"MINIMUM PLACING PRICE" means 120p per Placing Share;
"OFFICIAL LIST" means the Official List of the London Stock Exchange;
"ORDINARY SHARES" means the ordinary shares of 5p each in the capital of
the Company;
"PLACEES" means persons who are nominated by Hoare Govett to have Placing
Shares allotted to them pursuant to the Placing;
"PLACING" means the placing of the Placing Shares with Placees to be
effected by Hoare Govett as agent for the Company pursuant to this
agreement and the Placing Letters;
"PLACING LETTERS" means the letters in the agreed form pursuant to which
the Placing Shares are to be placed with Placees;
"PLACING SHARES" means the 96,000,000 Ordinary Shares which are to be
issued credited as fully paid by way of consideration under the Preference
Share Purchase Agreement to persons nominated by Hoare Govett (on behalf of
ABN) and all of which are to be placed pursuant to the Placing;
"POWER OF ATTORNEY" means the power of attorney of today's date executed by
ABN in favour of Hoare Govett;
-2-
<PAGE>
"PREFERENCE SHARES" means the cumulative redeemable preference shares of L1
each in the capital of Jersey Co to be subscribed by ABN pursuant to the
Subscription Agreement;
"PREFERENCE SHARE PURCHASE AGREEMENT" means the agreement of today's date
between ABN and the Company providing for the purchase of the Preference
Shares by the Company;
"PRESS ANNOUNCEMENT" means the press announcement in the agreed form
containing details of the Acquisition and the Placing;
"QUALIFIED INSTITUTIONAL BUYER" has the meaning ascribed to it in Rule 144A
under the Securities Act;
"RULE 144A" means Rule 144A under the Securities Act;
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended;
"SUBSCRIPTION AGREEMENT" means the agreement of today's date between ABN
and Jersey Co. providing for the subscription of the Preference Shares by
ABN;
"TARGET" means Market Facts, Inc, an Illinois corporation;
"TENDER PRICE" means the Minimum Placing Price or, if higher, the price per
Placing Share inserted in the final form of the tender confirmation fax;
"US OFFER" means the cash tender offer to be made by US Purchaser pursuant
to the U.S. Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), for the issued common stock of Target;
"US OFFER CONDITIONS" means the conditions to the obligations of the
Company and US Purchaser Co contained in the US Offer;
"US OFFER UNCONDITIONAL DATE" means the date on which a member of the
Group accepts for payment pursuant to the terms of the US Offer and/or
acquires or has acquired pursuant to the terms of any agreements entered
into between any member of the Group and any shareholders of Target not
less than 50 per cent. of the outstanding common stock of Target;
"US PURCHASER CO" means Aegis Acquisition Corporation, a subsidiary of the
Company;
"VAT" means value added tax;
"VATA" means Value Added Taxes Act 1994;
"VENDORS" means the shareholders in Target who accept the US Offer;
"WARRANTIES" means the representations, warranties, covenants and
undertakings set out in schedule 1.
In this agreement unless the context otherwise requires:-
(a) references to clauses and schedules are references to clauses of,
and schedules to, this agreement;
-3-
<PAGE>
(b) words and expressions defined in the Act shall bear the same
meaning;
(c) a reference to any statute or statutory provision shall be construed
as a reference to the same as it may have been, or may from time to
time be, amended, consolidated or re-enacted (with or without
modification) and includes all instruments or orders made thereunder
(save to the extent that any such amendment, consolidation or
re-enactment would increase the liability of any party hereunder);
(d) references to times are to London times;
(e) headings to clauses and paragraphs are for convenience only and do
not affect the interpretation of this agreement.
In this agreement, any reference to a document as being in the agreed form
shall be to the form of the relevant document agreed by or on behalf of the
Company and Hoare Govett and initialled by them or on their behalf, in each
case with such amendments thereto as may be agreed between the Company and
Hoare Govett. References to any such document in this agreement shall,
where appropriate, be construed as references to such document as so
amended.
CONDITIONS
The obligations of Hoare Govett and of Placees to accept the allotment of
Placing Shares under clause 4 are conditional upon:-
(a) [deleted];
(b) the publication of the Press Announcement through the Regulatory
News Service of the London Stock Exchange by not later than 8.30a.m.
on 30 April 1999;
(c) the Company accepting for payment pursuant to the terms of the US
Offer and/or acquiring or having acquired pursuant to the terms of
any agreements entered into between any member of the Group and any
shareholders of Target not less than 50 per cent. of the outstanding
common stock of Target;
(d) the Placing Shares having been allotted, subject only to Admission,
credited as fully paid, to the Placees; and
(e) the London Stock Exchange having admitted the Placing Shares to the
Official List (subject to allotment) and Admission taking place by
not later than 9.00a.m. on 29 June 1999.
If any of the conditions in clause 2.1 is not fulfilled or waived (save in
the case of clause 2.1(e) above which may not be waived) by Hoare Govett
not later than 9.00a.m. on 29 June 1999) this agreement shall cease and
determine and, except in relation to any breach of any provision of this
agreement prior thereto, neither party shall have any claim against the
other for any costs, damages, compensation or otherwise hereunder save that
the provisions of clauses 1, 8, 10, 13, 14 and 15 shall continue to apply
in accordance with their respective terms.
APPLICATION TO THE LONDON STOCK EXCHANGE
-4-
<PAGE>
The Company authorises Hoare Govett, at the Company's expense, to make
application to the London Stock Exchange for the admission of the Placing
Shares to the Official List and Hoare Govett agrees to do so. The Company
undertakes to Hoare Govett that it will, in conjunction with Hoare Govett,
use all reasonable endeavours to procure that all conditions specified in
clause 2.1 are satisfied by not later than 9.00a.m. on 29 June 1999 and,
for such purpose, the Company shall supply or procure the supply of all
such information and documentation, give or procure the giving of all such
undertakings, execute all such documents, pay all such fees and generally
do or procure to be done all such things as may be necessary, or reasonably
required by the London Stock Exchange, in connection therewith.
PLACING
The Company authorises Hoare Govett to arrange for Placing Letters
together, at Hoare Govett's discretion, with copies of the Press
Announcement to be despatched on 30 April 1999 to such persons (other than
the Vendors) as Hoare Govett in its absolute discretion thinks fit
(including to no more than twenty Qualified Institutional Buyers, subject
to clause 4.4 below) for the purpose of arranging the Placing on the terms
and conditions set out in the Placing Letters. Hoare Govett shall, as
attorney for ABN and as agent of the Company, use its reasonable endeavours
to procure Placees to accept the allotment of the Placing Shares in
consideration of the payment of the Tender Price and itself as principal
accept the allotment of any Placing Shares for which it is unable to
procure Placees, in consideration of the payment of the Minimum Placing
Price per Placing Share and in default of Hoare Govett so doing in respect
of any Placing Shares the Company is hereby irrevocably authorised to treat
this agreement as Hoare Govett's agreement to accept the allotment of
Placing Shares at the Minimum Placing Price on the terms and conditions
contained in this agreement and the Placing Letters and on the basis of the
information contained in the Press Announcement and in reliance upon the
Warranties.
The Company hereby irrevocably and unconditionally appoints Hoare Govett as
its agent for the purpose of effecting the Placing on the terms and subject
to the conditions set out in this agreement and the Placing Letters and
Hoare Govett hereby accepts such appointment. The Company hereby confirms
that this appointment confers on Hoare Govett all powers, authorities and
discretions on behalf of the Company which are necessary for, or reasonably
incidental to, the Placing and the Company hereby agrees to ratify and
confirm everything which Hoare Govett may lawfully do in the exercise of
that appointment and those powers, authorities and discretions.
The Company authorises Hoare Govett to set the Tender Price at such level
as Hoare Govett may in its discretion determine in accordance with the
process described in the Placing Letter (being not less than the Minimum
Placing Price) following communications with potential Placees.
Hoare Govett for itself and on behalf of ABN AMRO Inc. ("HGUS") represents
to and agrees with the Company as follows:-
(a) Hoare Govett and HGUS are Qualified Institutional Buyers.
(b) The Placing Shares have not been and will not be registered under
the Securities Act and may not be offered or sold within the United
States except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of
-5-
<PAGE>
the Securities Act. Each of Hoare Govett and HGUS, their respective
affiliates and any persons acting on behalf of any of them will not
offer or sell any Placing Shares within the United States except in
accordance with clause (d) below. Accordingly, Hoare Govett and
HGUS each represents and agrees that neither it, their respective
affiliates nor any person acting on its or their behalf have engaged
or will engage in any directed selling efforts with respect to the
Placing Shares. Terms used in this paragraph have the meanings
given to them by Regulation S under the Securities Act ("REGULATION
S").
(c) Hoare Govett and HGUS have not entered and will not enter into any
contractual arrangement with any distributor (as that term is
defined for purposes of Regulation S) with respect to the
distribution of Placing Shares, except with its affiliates.
(d) Neither Hoare Govett, HGUS nor any of their respective affiliates
nor any person acting on its or their behalf will engage in any form
of general solicitation or general advertising (as those terms are
used in Rule 502(c) under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of
the Securities Act in connection with any offer or sale of Placing
Shares in the United States.
(e) Hoare Govett undertakes that, in the case of offers for the Placing
Shares inside the United States, it will solicit such offers only
from, and will offer the Placing Shares only to, persons that have
signed and returned to Hoare Govett by facsimile a letter
substantially in the form of the Qualified Institutional Buyer
Confirmation set out in the Appendix hereto.
The Company agrees with Hoare Govett for itself and as trustee for the
holders from time to time of Placing Shares that so long as any of the
Placing Shares are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, and so long as the Company is neither
subject to Section 13 or 15(d) of the Exchange Act, nor exempt from
reporting pursuant to Rule 12g3-2(b) under the Exchange Act, the Company
will provide to any holder of such restricted securities, or to any
prospective purchaser of such restricted securities designated by a holder,
upon the request of such holder or prospective purchaser any information
required to be provided by sub-section (d)(4) of Rule 144A.
DELIVERY AND RELEASE OF DOCUMENTS
The Company shall procure that there are delivered to Hoare Govett the
documents referred to in schedule 2 in accordance with the requirements of
that schedule.
The Company hereby confirms that it has arranged for the Press Announcement
to be delivered to the London Stock Exchange for release not later than
8.30 a.m. on 30 April 1999.
The Company shall, from time to time, procure to be communicated or
delivered to Hoare Govett all such information and documents (signed by the
appropriate person where so required) as Hoare Govett may reasonably
require to enable it to discharge its obligations hereunder and pursuant to
the Placing or as may be necessary to comply with the requirements of the
London Stock Exchange.
ALLOTMENT, PAYMENT AND REGISTRATION
-6-
<PAGE>
On or after the US Offer Unconditional Date and upon completion of the
purchase of the Preference Shares by the Company, the Company shall allot,
conditional only upon Admission and this agreement not being terminated
before Admission, the Placing Shares to such persons who are nominated by
Hoare Govett (as attorney for ABN and pursuant to clause 4.1 of this
agreement) details of which shall be supplied to the Company and the
Registrars not later than 2 business days prior to such date. The Placing
Shares shall be allotted credited as fully paid, free from all claims,
liens, charges, encumbrances and equities whatsoever and with all rights
attached thereto, (but without entitlement to the final dividend of 0.50
pence per Ordinary Share in respect of the financial year of the Company
ended 31 December 1998) and shall rank as provided in clause 6.2.
The Placing Shares shall rank pari passu in all respects with, and be
identical to, the Ordinary Shares in issue at the date hereof (but without
entitlement to the final dividend of 0.50 pence per Ordinary Share in
respect of the financial year of the Company ended 31 December 1998).
Following Admission, Hoare Govett shall make or procure payment in
immediately available funds to ABN (or as ABN shall reasonably direct) of
an amount equal to the gross proceeds of the Placing (being an amount equal
to the Tender Price multiplied by the number of Placing Shares), so as to
be received within 3 business days of the US Offer Unconditional Date.
Hoare Govett shall send to the Company a list of Placees showing the number
of Placing Shares each Placee has committed to subscribe for and
confirmation of the Tender Price within 10 business days of the date
hereof.
The Company shall, without the payment of any registration fee by Hoare
Govett, against production by Hoare Govett to the Registrars of the
following:-
(a) a list containing the names of the Placees and/or Hoare Govett or
its nominees as applicants for the Placing Shares;
(b) in respect of Placing Shares to be held in uncertificated form, each
of the CREST participant ID, the CREST account name and CREST member
account ID of the relevant Placees as may be instructed by Hoare
Govett
procure forthwith (i) in the case of Placing Shares to be held in
certificated form, the despatch of definitive share certificates to such
persons in such denominations as shall have been set out in such list and
(ii) in the case of Placing Shares to be held in uncertificated form that
the CREST stock accounts of such persons are respectively credited with
such number of Placing Shares as Hoare Govett shall have been directed in
such list, provided in each case that permission has been granted by the
London Stock Exchange (and remains in effect) for Admission.
US OFFER
The Company undertakes to Hoare Govett that:-
(a) subject always to (c) below and save with the prior consent in
writing of Hoare Govett (such consent not to be unreasonably
withheld or delayed) it will not agree to any alteration, revision
or amendment of any of the terms or conditions of the US Offer (or
any document entered into pursuant thereto) or waive, vary,
compromise or
-7-
<PAGE>
release any term, condition or obligation thereunder or grant any
time for performance or completion thereof or other indulgence
thereunder where such alteration, revision, amendment, waiver,
variation, compromise, release, grant or indulgence is material in
the context of the Group;
(b) save with the prior consent in writing of Hoare Govett (such consent
not to be unreasonably withheld or delayed) it will not proceed to
completion of the US Offer prior to satisfaction of those terms and
conditions thereof which are material in the context of the Placing
and, should it become aware, prior to Admission, that it is entitled
to rescind or terminate the US Offer, it will not exercise its right
to proceed with completion of the US Offer or terminate the US
Offer;
(c) it will not increase the consideration offered to stockholders in
Target under the US Offer from that offered under the US Offer made
on or shortly after the 30 April 1999.
COMMISSIONS, FEES AND EXPENSES
The Company shall pay to Hoare Govett for its services hereunder and
otherwise in relation to the Placing:-
(a) a commission of one half of one per cent. on the aggregate value of
the Placing Shares at the Minimum Placing Price plus;
(b) a further commission equal to 0.25 per cent of the amount by which
the aggregate value of the Placing Shares at the Tender Price
exceeds the aggregate value of the Placing Shares at the Minimum
Placing Price;
but subject to receipt of a proper tax invoice therefor, with any
applicable VAT thereon.
The commission referred to in clause 8.1 shall be paid to Hoare Govett
whether or not this agreement becomes unconditional or is terminated in
accordance with its terms. Out of such commission, Hoare Govett shall pay
commission (if any) payable to Placees. The commission under clause 8.1
shall be paid by the Company to Hoare Govett in immediately available funds
on receipt of an invoice for such sum from Hoare Govett and in any event
within three business days after Admission or, if earlier, on the business
day following the date on which Hoare Govett's obligations under this
agreement cease pursuant to either clause 2.2 or clause 11.
In addition to the commission referred to in clause 8.1, the Company shall
pay all other expenses of or incidental to the Placing including (without
limitation) all fees and expenses payable in connection with Admission,
registrars' fees, the Company's own legal fees and expenses and Hoare
Govett's reasonable legal fees and expenses, the accountancy and other
professional fees and expenses of the Company, Hoare Govett's out-of-pocket
expenses and all printing, advertising and distribution expenses. The
Company shall promptly after request by Hoare Govett pay or reimburse Hoare
Govett the amount of any expenses for which the Company is responsible
pursuant to this clause 8.3.
Where, pursuant to this agreement, Hoare Govett is paid or reimbursed any
sum in respect of any cost or expense and that cost or expense includes an
amount in respect of VAT (the "VAT AMOUNT"), the Company shall in addition
pay to Hoare Govett promptly after request by Hoare Govett in respect of
the VAT Amount:-
-8-
<PAGE>
(a) to the extent that any payment or reimbursement is in respect of any
supply of goods or services to Hoare Govett, including where Hoare
Govett acts as agent for the Company within the meaning of Section
47(3) VATA, a sum equal to the proportion of the VAT Amount that
Hoare Govett certifies as representing irrecoverable input tax in
the hands of Hoare Govett; and
(b) to the extent that any such payment or reimbursement is in respect
of a disbursement made by Hoare Govett as agent for the Company,
excluding where Hoare Govett acts as agent within the meaning of
Section 47(3) VATA, such amount as equals the whole of the VAT
Amount,
and where a sum equal to the VAT Amount has been reimbursed to Hoare Govett
pursuant to sub-clause (b) above, Hoare Govett shall provide the Company
with an appropriate tax invoice in respect of the supply to which the
payment or reimbursement relates, that is to say a tax invoice naming the
Company as the recipient of the supply and issued by the person making the
supply.
If the performance by Hoare Govett of any of its obligations under this
agreement shall represent for VAT purposes the making by Hoare Govett of
any supply of goods or services to the Company (including where Hoare
Govett acts as agent for the Company within the meaning of Section 47(3)
VATA), the Company shall pay to Hoare Govett, in addition to the amounts
otherwise payable by the Company to Hoare Govett pursuant to this
agreement, an amount equal to the VAT chargeable on any such supply and
Hoare Govett shall issue the Company with an appropriate tax invoice in
respect of the supply to which the payment relates.
REPRESENTATIONS AND WARRANTIES
The Company hereby warrants, covenants, represents and undertakes to Hoare
Govett that the statements contained in schedule 1 are true and accurate
and not misleading as at the date hereof. The Company acknowledges that
Hoare Govett is entering into this agreement in reliance upon each of the
Warranties. Each of the Warranties shall be construed separately and none
of the Warranties shall be limited or restricted by reference to the terms
of any other Warranty.
The Company undertakes to notify Hoare Govett forthwith if the Company or
any of the Directors becomes aware prior to Admission that (a) any of the
Warranties was untrue, inaccurate or misleading at the date hereof; and/or
(b) a matter has arisen which might give rise to a claim under clause 10.
In the event that it comes to the knowledge of Hoare Govett prior to
Admission (whether by way of receipt of a notification pursuant to clause
9.2 or otherwise) that any of the Warranties was untrue or inaccurate or
misleading when made and/or that any of the Warranties have ceased to be
true or accurate or has become misleading if the same were to be repeated
by reference to the facts and circumstances from time to time subsisting,
Hoare Govett may prior to Admission (without prejudice to its right to
terminate its obligations under this agreement pursuant to clause 11)
request the Company at its own expense to make or cause to be made such
announcement and/or despatch such communication as Hoare Govett shall,
after consultation with the Company, reasonably consider necessary and the
Company shall comply with any such request.
-9-
<PAGE>
INDEMNITY
No claim shall be made against any Indemnified Person by the Company to
recover any loss or damage which the Company or any of its subsidiary
undertakings or any of their respective directors, officers, agents or
employees or any other person may suffer or incur by reason of, arising out
of, or otherwise in connection with, the allotment and issue of the Placing
Shares, the issue and distribution of the Press Announcement, the Placing
Letters and any other document in connection with the Placing or otherwise
in connection with the carrying out by Hoare Govett of its obligations (or
the exercise of its rights) under this agreement unless and to the extent
that such loss or damage results from the negligence or wilful default of
any Indemnified Person or from a breach by any Indemnified Person of any of
its duties or obligations under the FSA or under the regulatory system (as
defined in the rules of the Securities and Futures Authority Limited
("SFA"), including, for the avoidance of doubt, the rules of the SFA) or
from a breach by any Indemnified Person of its obligations under this
agreement or any other agreement entered into in connection with the
Placing.
The Company undertakes with Hoare Govett to the fullest extent permitted by
law to keep each Indemnified Person fully and effectively indemnified from
and against all or any claims (whether or not successful, compromised or
settled), actions, liabilities, demands, proceedings or judgments brought
or established against any Indemnified Person in any jurisdiction by any
allottee of any of the Placing Shares pursuant to the Placing or by any
subsequent purchaser or transferee thereof of, by any governmental agency
or regulatory body or by any other person whatsoever and against all
losses, charges, costs or expenses (including legal fees reasonably
incurred) and taxes (including stamp duty, stamp duty reserve tax and value
added tax) which any Indemnified Person may suffer or incur (including, but
not limited to, all such losses, costs, charges, expenses or taxes suffered
or incurred in disputing any claim, action, liability, demand or
proceedings as aforesaid) and/or in establishing its right to be
indemnified pursuant to this clause 10.2 and/or in seeking advice as to any
claim, action, liability, demand or proceedings as aforesaid in any way
related to or in connection with this indemnity or the Placing) and which
in any such case arises, directly or indirectly, out of or is attributable
to or is in connection with the Placing including without limitation:-
(a) the issue, despatch or distribution by or on behalf of the Company
of the Press Announcement, the Placing Letters or any other
document, or the entry into or performance of any agreement or
transaction in connection with the Placing or the allotment and
issue of the Placing Shares;
(b) any breach or alleged breach by the Company or any member of the
Group of any of their respective obligations under the US Offer (or
any document entered into pursuant thereto);
(c) any breach or alleged breach by the Company of any of its
obligations under this agreement and any breach or alleged breach of
any of the Warranties and any breach of the Warranties which would
have occurred if the Warranties had been repeated at any time up to
the date of Admission by reference to the facts and circumstances
then existing;
(d) the Press Announcement not containing, or being alleged not to
contain, all the information required by law or regulation
(including, for the avoidance of doubt, the FSA and the Listing
Rules) to be stated therein or any statement therein being, or
-10-
<PAGE>
being alleged to be, incomplete, untrue, inaccurate, unfair,
misleading, unreasonable or defamatory or there being, or being
alleged to be, an omission therefrom;
(e) any failure or alleged failure to comply with the FSA or the Listing
Rules or any other statutory or regulatory requirement in relation
to the Placing or with any requirement imposed by the London Stock
Exchange in connection with the application for Admission;
(f) any breach or alleged breach of the laws or regulations of any
country in connection with the Placing or the issue or distribution
of the Press Announcement, the Placing Letters or any other document
in connection with the Placing or the US Offer;
(g) the due and proper performance by Hoare Govett or any Indemnified
Person of Hoare Govett's duties, obligations and services under this
agreement or otherwise in connection with the Placing or the US
Offer,
unless and to the extent that any of them arises from the negligence or
wilful default of any Indemnified Person or from a breach by any
Indemnified Person of any of its duties or obligations under the FSA or
under the regulatory system (as defined in the rules of the SFA, including,
for the avoidance of doubt, the rules of the SFA) or from a breach by any
Indemnified Person of its obligations under this agreement or any other
agreement entered into in connection with the Placing, save that if either
Hoare Govett or any Placee to which any claim under this Clause 10.2
relates is a nominee or agent of (a) person(s) who is/are or may be, (a)
person(s) liable to stamp duty or stamp duty reserve tax at a rate in
excess of 0.5 per cent under sections 67, 70, 93 or 96 of the Finance Act
1986 (depositary receipts and clearance services) then the Company shall
only be liable in respect of any stamp duty reserve tax suffered by Hoare
Govett or such Placee at a rate of 0.5 per cent.
Without prejudice to clause 10.2, if any action or claim shall be brought
against any Indemnified Person in respect of which indemnity may be sought
pursuant to clause 10.2, Hoare Govett shall consult with the Company prior
to taking any action in response thereto. Nothing in this clause shall
require Hoare Govett to do, or refrain from doing, anything which would, or
which Hoare Govett in good faith considers might, either prejudice any
insurance cover to which it, or any other Indemnified Person may from time
to time be entitled, or from which it or any of them may benefit.
If the United Kingdom Inland Revenue or any other taxing authority brings
into any charge to taxation (or into any computation of income, profit or
gains for the purposes of any charge to taxation) any sum payable to any
Indemnified Person under this agreement (other than commissions paid
pursuant to clause 8) then the sum so payable shall, be increased by such
amount as will ensure that after deduction of the taxation so chargeable
the Indemnified Person in question shall retain a sum equal to the amount
that would otherwise have been payable under this agreement (additional
payments being made on demand as may be necessary).
All sums payable by the Company to any Indemnified Person under the
indemnities contained in clause 10.2 shall be paid free and clear of all
deductions or withholdings for or on account of tax unless the deduction or
withholding is required by law, in which event the Company shall pay such
additional amount as shall be required to ensure that the net amount
received by the Indemnified Person will equal the full amount which would
have been received by it had no such deduction or withholding been made.
-11-
<PAGE>
If Hoare Govett receives payment of, or obtains or utilises a credit
against, any tax paid by it in respect of, or calculated with reference to,
the deduction or withholding giving rise to the payment of an additional
amount in accordance with clause 10.5, Hoare Govett shall, when it has
utilised any such credit or received any such repayment of tax, promptly
pay to the Company such amount as will leave Hoare Govett in no worse
position on an after-tax basis than it would have been in had no such
deduction or withholding been required. Nothing in this clause affects the
right of Hoare Govett to arrange its tax affairs as it thinks fit (and in
particular to claim and/or utilise other tax reliefs in priority to any
relief arising out of the deduction or withholding giving rise to such
additional amount) or gives the Company the right to enquire into them.
TERMINATION
If at any time prior to Admission there shall occur:
(a) a breach of any of the obligations of the Company or any member of
the Group under this agreement, the Subscription Agreement, the
Preference Share Purchase Agreement or the US Offer; and/or
(b) a breach of the Warranties as at the date hereof;
which in any such case, in the reasonable opinion of Hoare Govett, is
material in the context of the Placing, Hoare Govett may, in its absolute
discretion by notice in writing to the Company served prior to Admission,
terminate its obligations under this agreement and so that upon the giving
of such notice this agreement will terminate and thereupon have no further
effect save that the provisions of clauses 1, 8, 10, 13, 14 and 15 shall
continue to apply in accordance with their respective terms and in such
event, except in relation to any breach of any provision of this agreement
prior thereto and save for the specific provisions just mentioned, neither
party shall have any claim against the other for any costs, damages,
compensation or otherwise hereunder.
PUBLICITY
Any publicity by or on behalf of the Company in connection with, and which
is or may be material in the context of, the Placing, including any
statement to or interview with the media, shall be consistent with the
terms of the Press Announcement and shall be agreed with Hoare Govett in
advance (or in the case of interviews or conferences with the press or
other representatives of the media to the maximum practicable extent).
Prior to the second dealing day after Admission the Company shall not (and
shall procure that no other member of the Group shall) save as required by
law or the requirements of the London Stock Exchange or as may be required
pursuant to the US Offer, make any public announcement or statement or
issue any circular or other document (whether to its shareholders or
otherwise) in relation to the financial position or affairs of the Enlarged
Group which might reasonably be expected to have a material effect (adverse
or positive) on the attitude of investors or potential investors in the
Company or otherwise on the market price of the Ordinary Shares without the
prior written consent of Hoare Govett (such consent not to be unreasonably
withheld or delayed).
Save pursuant to the US Offer, the Company shall not (and shall procure
similar observance by all other members of the Group) after the signing of
this agreement and prior to the second dealing day after Admission enter
into any commitment or agreement, or put itself in
-12-
<PAGE>
a position where it is obliged to announce that any commitment or agreement
may be entered into, which is or might be material in the context of the
Placing, or, other than pursuant to share option or long term incentive
schemes in the ordinary course or pursuant to existing contractual
arrangements, issue any shares or options over shares or securities
convertible or exchangeable into shares or enter into any agreement or
undertaking to do the same without the prior written consent of Hoare
Govett which consent shall not be unreasonably withheld or delayed.
MISCELLANEOUS
Each of the warranties, representations, covenants, undertakings and
indemnities contained in this agreement shall remain in full force and
effect notwithstanding completion of the Placing.
No delay or omission on the part of Hoare Govett in exercising any right,
power or remedy under this agreement shall impair such right, power or
remedy or operate as a waiver thereof. The single or partial exercise of
any right, power or remedy under this agreement shall not preclude any
other or further exercise thereof or the exercise of any other right, power
or remedy.
Except in the case of fraud or fraudulent misrepresentation, or in the
event that Clause 10 hereto is deemed to be unenforceable (in part or in
whole) in accordance with the terms of this agreement for whatever reason,
the rights, powers and remedies of Hoare Govett provided in this agreement
are exclusive of any rights, powers and remedies provided by law. In
particular, but without limitation Hoare Govett shall have no rights of
termination or rescission except as expressly set out in this agreement.
Time shall be of the essence of this agreement, both as regards the times,
dates and periods mentioned herein and as regards any times, dates and
periods which may, by agreement in writing between the parties, be
substituted for them.
NOTICES
Any notice, demand or other communication to be served under this agreement
may be served upon any party only by posting by first class post, or
delivering the same, to its address given in clause 14.3, or sending the
same by facsimile transmission to the party at the number given in clause
14.3 or at such other address or number in the United Kingdom as may from
time to time be notified in writing to the other party hereto.
A notice or demand served by first class post shall be deemed duly served
48 hours after posting and a notice or demand sent by facsimile
transmission shall be deemed to have been served at the time of
transmission and in proving service of the same it will be sufficient to
prove, in the case of a letter, that such letter was properly stamped or
franked first class, addressed to the address of the party to be served
given in clause 14.3 and placed in the post or, in the case of a facsimile
transmission, that such facsimile was duly transmitted to the number of the
party to be served given in clause 14.3 or at such other address or number
in the United Kingdom as may from time to time be notified in writing to
the other party hereto.
If to the Company: Aegis Group plc
11A West Halkin Street
LONDON
-13-
<PAGE>
SW1X 8JL
Fax: 0171 470 5098
Attention: Crispin Davis Esq
If to Hoare Govett: Hoare Govett Limited
4 Broadgate, London, EC2M 7LE
Fax: 0171 374 7675
Attention: Mark Astaire Esq
GOVERNING LAW
This agreement and any dispute, controversy, proceedings or claim of
whatever nature arising out of or relating to it shall be governed by
English Law.
IN WITNESS whereof this agreement has been executed on the date first above
written.
-14-
<PAGE>
SCHEDULE 1
The Warranties
PRESS ANNOUNCEMENT
All statements of fact contained in the Press Announcement are true and
accurate in all material respects and not misleading in any material
respect.
All expressions of opinion, intention or expectation contained in the Press
Announcement are honestly held by the Directors and are fairly based and
have been made on reasonable grounds after due and proper consideration.
There are no facts known, or which could on reasonable enquiry have been
known, to the Company or any of the Directors which are not contained in
the Press Announcement, the omission of which would make any statement of
fact or expression of opinion, intention or expectation contained therein
misleading in any material respect.
ACCOUNTS
Save as disclosed therein, the Accounts were:-
(a) prepared on bases consistent with the bases upon which the audited
consolidated accounts of the Group for the year ended 31 December
1997 were prepared; and
(b) prepared in accordance with, and comply with, the Act and generally
accepted accounting principles and practices in the United Kingdom
and all applicable financial reporting standards and statements of
standard accounting practice.
The Accounts give a true and fair view of the state of affairs of the
Company and the Group as at, and of the results and cash flows of the Group
for the period ended on, the Accounts Date and fairly set out the assets,
liabilities and reserves of the Group and either make proper provision for
or, where appropriate, include a note of all material liabilities or
commitments, whether actual, deferred or contingent, of the Group as at the
Accounts Date as required by the Companies Act or United Kingdom generally
accepted accounting policies and practices.
POSITION SINCE THE ACCOUNTS DATE
Since 31 December 1998 and save as publicly disclosed to the London Stock
Exchange or disclosed in the Press Announcement, the businesses of each
member of the Group have been carried on in the ordinary and usual course;
there has been no material adverse change in the financial or trading
position or prospects of the Group; no member of the Group has incurred any
commitment or liability of an onerous or unusual nature nor has any such
company become a party or otherwise subject to any contract or commitment
of an onerous or unusual nature which in either case is material for
disclosure in the context of the Placing.
LITIGATION
No member of the Group nor, so far as the Directors are aware, any person
for whom any member of the Group is or may be vicariously liable is or has
been involved in any civil, criminal, arbitration or other proceedings
(including, for this purpose, any governmental, regulatory or similar
investigation or enquiry) which individually or collectively may have
-15-
<PAGE>
or has had during the twelve months preceding the date of this agreement a
significant effect on the financial or trading position or prospects of the
Group or which individually or collectively are material for disclosure in
the context of the Placing or the underwriting of the Placing Shares and,
so far as the Directors are aware, no such proceedings are pending or
threatened and, so far as the Directors are aware, there are no
circumstances which are likely to give rise to any such proceedings.
CAPACITY AND COMPLIANCE
The Directors have power to enter into and perform this agreement and, in
particular, to allot and issue the Placing Shares in the manner proposed
without any further sanction or consent by members of the Company or any
class of them and, subject to Admission, there are no other consents,
authorisations or approvals required by the Company in connection with the
entering into and the performance of this agreement and the allotment and
issue of the Placing Shares which have not been obtained.
The entering into of this agreement and the performance by the Company of
its obligations hereunder and the allotment and issue of the Placing Shares
will comply with all agreements to which any member of the Group is a party
and will not infringe or exceed any limits, powers or restrictions binding
upon any member of the Group and/or any of its assets or the terms of any
contract, obligation or commitment of any member of the Group.
The issue and publication of the Press Announcement, the Placing Letters,
the allotment and issue of the Placing Shares and the making of the US
Offer in the manner proposed will comply with the FSA, the Act, the Listing
Rules, the rules and regulations of the London Stock Exchange, the
Securities Exchange Commission, NASDAQ and all other relevant laws and
regulations of the United Kingdom and the United States of America (and
each of them as relevant) and all applicable requirements of any regulatory
body in the United Kingdom and the United States.
DEFAULT
No event or circumstance has occurred or arisen or, so far as the Company
and the Directors are aware (having made all reasonable enquiries), is
about to occur or arise by reason of which any person is, or would be, or
could with the giving of notice and/or lapse of time and/or a relevant
determination become entitled to require repayment prior to its stated
maturity, or to take any step to enforce security for, any borrowings or
indebtedness in the nature of borrowing of any member of the Group and no
member of the Group has received notice from any person to whom any
indebtedness which is repayable on demand is owed demanding repayment of
the same and neither the Company nor the Directors is otherwise aware that
any such person proposes to demand repayment of, or to take any step to
enforce any security for, the same and which in any such case would have a
material adverse effect on the businesses, assets or prospects of the Group
taken as a whole material in context of Placing.
No event or circumstance has occurred or arisen or, so far as the Directors
are aware, is about to occur which constitutes or results in, or would with
the giving of notice and/or lapse of time and/or the making of a relevant
determination, constitute, or result in, a default or the acceleration or
breach of any obligation under any agreement, instrument or arrangement to
which any member of the Group is a party or by which any such company or
any of its properties, revenues or assets are bound, and which would in any
such case have a material adverse effect on the businesses, assets or
prospects of the Group taken as a whole.
-16-
<PAGE>
OPTIONS
Save as disclosed to Hoare Govett on or before the date hereof or as
reflected in the Accounts or as publicly announced to the London Stock
Exchange there are in force no options or other agreements or arrangements
which call for the issue of, or accord to any person the right to call for
the issue of, in either case, whether conditionally or unconditionally, any
shares or other securities of the Company or any other member of the Group
now or at any time hereafter.
INSOLVENCY
No member of the Group has taken any action, nor have any other steps been
taken or legal proceedings started or threatened against any member of the
Group, for its winding-up or dissolution or for it to enter into any
arrangement or composition for the benefit of creditors or for the
appointment of a receiver, trustee, administrator or similar officer of it
or any of its properties, revenues or assets.
AUTHORITY TO CARRY ON BUSINESS
All licences, permissions, authorisations and consents required for
carrying on the businesses of the Group have been obtained and are in full
force and effect and, so far as the Directors are aware, there are no
circumstances which might lead to any of such licences, permissions,
authorisations and consents being revoked, suspended or refused renewal.
MISCELLANEOUS
The Company reasonably believes that there is no "substantial U.S. market
interest" (as defined in Regulation S under the Securities Act) in the
Placing Shares.
None of the Company, any of its affiliates or any person acting on its or
their behalf has engaged or will engage in any "directed selling efforts"
(as defined in Regulation S under the Securities Act) with respect to the
Placing Shares or any "general solicitation" or "general advertising" (as
defined in Rule 502(c) under the Securities Act or in any manner involving
a "public offering" (within the meaning of Section 4(2) of the Securities
Act) in connection with any offer or sale of Placing Shares in the United
States.
The Company reasonably believes that it is not, and after giving effect to
the offering and sale of the Placing Shares and the application of the
proceeds thereof as described in the Press Announcement will not be, an
"investment company" (as defined in the U.S. Investment Company Act of
1940, as amended).
-17-
<PAGE>
SCHEDULE 2
DELIVERY OF DOCUMENTS
The following documents shall be delivered by the Company to Hoare Govett
promptly upon this agreement taking effect:-
(a) certified copy of the US Offer;
(b) a certified copy of resolutions of the board of Directors, or a duly
authorised committee thereof, in agreed form approving and
authorising, inter alia, the making of the US Offer by the Company,
the execution of the Preference Share Sale Agreement by the Company,
the signing of the schedule 3A application in respect of the Placing
Shares, the issue, despatch and publication of the Press
Announcement, and the Placing Letters and the execution of this
agreement by the Company.
The following documents shall be delivered by the Company to Hoare Govett
prior to Admission a certified copy of resolutions of the board of
Directors, or a duly authorised committee thereof, in agreed form allotting
the Placing Shares credited as fully paid, subject to Admission.
Where the resolutions referred to in paragraphs 1(b) and 2(a) of this
schedule or either of them are resolutions of a committee of the board of
Directors, the Company shall procure that there is also delivered to Hoare
Govett a certified copy of the resolution of the board of Directors
appointing such committee (save to the extent that a certified copy thereof
shall previously have been delivered to Hoare Govett).
-18-
<PAGE>
APPENDIX
[Needs to be typed onto the Letterhead of US Investor, signed and faxed to
Tracey Weston of Hoare Govett on 0171 374 7645 as soon as possible. You will be
unable to participate in the vendor placing if Hoare Govett do not receive this
letter from you.]
[Date]
Aegis Group PLC
11a West Halkin Street
London
SW1X 8JL
Hoare Govett Limited
4 Broadgate
London
EC2M 7LE
Dear Sirs
RE: VENDOR PLACING BY AEGIS GROUP PLC (THE "COMPANY")
PURCHASE OF [INSERT NUMBER OF SHARES TENDERED FOR] ORDINARY SHARES (THE
"SECURITIES") OF AEGIS GROUP PLC
In connection with our tender for the purchase of the Securities we confirm
that:-
We understand that no offering document or prospectus has been prepared in
connection with the offering of the Securities and the Securities are not
being and will not be registered under the U.S. Securities Act of 1933 (the
"SECURITIES ACT") are being sold to us in a transaction that is exempt from
the registration requirements of the Securities Act and are "restricted
securities" (within the meaning of Rule 144(a)(3) under the Securities
Act).
We acknowledge that (a) none of the Company, Hoare Govett Limited, any of
their respective affiliates or any person representing any of such persons
has made any representation with respect to the Company or the Securities,
(b) we have conducted our own investigation with respect to the Company and
the Securities and (c) any information we desire concerning the Securities
and the Company or any other matter relevant to our decision to purchase
the Securities is or has been made available to us.
We have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment in the
Securities, and we are a "qualified institutional buyer" ("QIB") (within
the meaning of Rule 144A under the Securities Act) that is able to bear the
economic risk of an investment in the Securities.
We agree that, for so long as the Securities are "restricted securities"
(within the meaning of Rule 144(a)(3) under the Securities Act), we will
not (A) deposit the Securities in an unrestricted American Depositary
Receipt facility or (B) offer or sell the Securities except (i) in an
"offshore transaction" (as defined in Regulation S under the Securities
Act) pursuant to an exemption under Regulation S from the registration
requirements of the
-19-
<PAGE>
Securities Act; (ii) by transfer to a QIB that delivers to the addressees
of this letter a letter substantially in this form, it being understood
that all offers or solicitations in connection with such a transfer are
limited to QIBs and do not involve any means of general solicitation or
general advertising (as defined in Rule 502(c) under the Securities Act);
or (iii) pursuant to an effective registration statement under the
Securities Act.
Very truly yours,
[PURCHASER]
By: .............................................
(Authorised Officer)
-20-
<PAGE>
Signed by )
duly authorised for and on behalf of ) Colin Day
AEGIS GROUP PLC )
Signed by )
duly authorised for and on behalf of ) Mark Astaire
HOARE GOVETT LIMITED )
-21-
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and among
AEGIS GROUP PLC,
AEGIS ACQUISITION CORP.
and
MARKET FACTS, INC.
DATED AS OF APRIL 29, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
1. The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Offer Documents. . . . . . . . . . . . . . . . . . . . . 2
1.3 Company Actions. . . . . . . . . . . . . . . . . . . . . 3
1.4 Directors. . . . . . . . . . . . . . . . . . . . . . . . 4
2. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . 5
2.3 Effect of the Merger . . . . . . . . . . . . . . . . . . 5
2.4 Charter; By-laws; Directors and Officers . . . . . . . . 6
2.5 Conversion of Securities . . . . . . . . . . . . . . . . 6
2.6 Payment for Shares . . . . . . . . . . . . . . . . . . . 7
2.7 Stock Transfers. . . . . . . . . . . . . . . . . . . . . 8
2.8 Stock Options. . . . . . . . . . . . . . . . . . . . . . 8
2.9 Dissenting Shares. . . . . . . . . . . . . . . . . . . . 9
2.10 Lost Certificates. . . . . . . . . . . . . . . . . . . .10
3. Representations and Warranties Of Parent and the Purchaser . . . .10
3.1 Organization . . . . . . . . . . . . . . . . . . . . . .10
3.2 Authority Relative to this Agreement . . . . . . . . . .10
3.3 Financing. . . . . . . . . . . . . . . . . . . . . . . .11
3.4 Ownership of Shares. . . . . . . . . . . . . . . . . . .11
3.5 Information Supplied . . . . . . . . . . . . . . . . . .11
3.6 Interim Operations of Purchaser. . . . . . . . . . . . .11
3.7 Board Recommendation . . . . . . . . . . . . . . . . . .11
4. Representations and Warranties of the Company. . . . . . . . . . .12
4.1 Organization and Qualification . . . . . . . . . . . . .12
4.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . .12
4.3 Capitalization . . . . . . . . . . . . . . . . . . . . .12
4.4 Authority Relative to Agreement. . . . . . . . . . . . .13
4.5 Compliance . . . . . . . . . . . . . . . . . . . . . . .13
4.6 Commission Filings . . . . . . . . . . . . . . . . . . .14
4.7 Material Contracts . . . . . . . . . . . . . . . . . . .16
4.8 Litigation . . . . . . . . . . . . . . . . . . . . . . .16
4.9 Properties . . . . . . . . . . . . . . . . . . . . . . .17
4.10 Intellectual Property. . . . . . . . . . . . . . . . . .17
4.11 Labor Matters. . . . . . . . . . . . . . . . . . . . . .18
4.12 Board Recommendation . . . . . . . . . . . . . . . . . .19
i
<PAGE>
4.13 Compliance with Law. . . . . . . . . . . . . . . . . . .19
4.14 Changes. . . . . . . . . . . . . . . . . . . . . . . . .19
4.15 Vote Required For Merger . . . . . . . . . . . . . . . .20
4.16 Information Supplied . . . . . . . . . . . . . . . . . .20
4.17 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . .20
4.18 Pension and Benefits Plans; ERISA. . . . . . . . . . . .21
4.19 Insurance Policies and Coverages . . . . . . . . . . . .24
4.20 Environmental Matters. . . . . . . . . . . . . . . . . .24
4.21 Rights Agreement . . . . . . . . . . . . . . . . . . . .25
4.22 Year 2000. . . . . . . . . . . . . . . . . . . . . . . .25
4.23 Opinion of Financial Advisor . . . . . . . . . . . . . .25
4.24 Section 203 of the Delaware Law Not Applicable . . . . .25
4.25 Absence of Certain Changes . . . . . . . . . . . . . . .26
5. Conduct of Business Pending the Merger . . . . . . . . . . . . . .26
6. Additional Agreements. . . . . . . . . . . . . . . . . . . . . . .28
6.1 Proxy Statement. . . . . . . . . . . . . . . . . . . . .28
6.2 Action of Stockholders of the Company; Voting and
Disposition of the Shares; Approval by Parent. . . . . .28
6.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . .29
6.4 Additional Agreements. . . . . . . . . . . . . . . . . .30
6.5 Third Party Offers . . . . . . . . . . . . . . . . . . .30
6.6 Access to Information. . . . . . . . . . . . . . . . . .32
6.7 Officers' and Directors' Insurance; Indemnification. . .32
6.8 Certain Contracts. . . . . . . . . . . . . . . . . . . .34
6.9 Employee Stock Ownership Plan. . . . . . . . . . . . . .34
6.10 Employee Matters . . . . . . . . . . . . . . . . . . . .34
6.11 Appraisal Rights . . . . . . . . . . . . . . . . . . . .35
6.12 Accountants. . . . . . . . . . . . . . . . . . . . . . .35
7. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
7.1 Conditions to Obligation of Each Party to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . .35
7.2 Conditions of Obligations of Parent and Purchaser. . . .36
7.3 Conditions of Obligations of the Company . . . . . . . .36
8. Termination, Amendment and Waiver. . . . . . . . . . . . . . . . .37
8.1 Termination. . . . . . . . . . . . . . . . . . . . . . .37
8.2 Effect of Termination. . . . . . . . . . . . . . . . . .38
8.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . .38
8.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . .38
9. General Provisions . . . . . . . . . . . . . . . . . . . . . . . .39
9.1 Brokers. . . . . . . . . . . . . . . . . . . . . . . . .39
9.2 Public Statements. . . . . . . . . . . . . . . . . . . .39
ii
<PAGE>
9.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . .39
9.4 Interpretation . . . . . . . . . . . . . . . . . . . . .40
9.5 Representations and Warranties . . . . . . . . . . . . .41
9.6 Action by Company. . . . . . . . . . . . . . . . . . . .41
9.7 Miscellaneous. . . . . . . . . . . . . . . . . . . . . .41
9.8 Waiver of Jury Trial . . . . . . . . . . . . . . . . . .41
ANNEX I CONDITIONS TO THE OFFER. . . . . . . . . . . . . . . . . 1
</TABLE>
EXHIBITS
Exhibit A Certificate of Incorporation of Surviving Corporation
Exhibit B By-Laws of Surviving Corporation
SCHEDULES
Schedule 4.2 Subsidiaries
Schedule 4.3 Capitalization
Schedule 4.5 Compliance
Schedule 4.6 Commission Filings
Schedule 4.7 Materials Contracts
Schedule 4.10 Intellectual Property
Schedule 4.11 Labor Matters
Schedule 4.14 Changes
Schedule 4.17 Taxes
Schedule 4.18 Pension and Benefit Plans; ERISA
Schedule 4.19 Insurance Policies and Coverages
Schedule 5.2 Conduct of Business Pending the Merger
Schedule 6.8 Certain Contracts
iii
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Definition Page
- ---------- ----
<S> <C>
Acquiring Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Applicable Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Associate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Break-up Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Claims.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Code........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Company... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company 10-K's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Company Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . .22
Company Intellectual Property Rights . . . . . . . . . . . . . . . . . . . .17
Company Pension Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Company Welfare Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Competing Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
December Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Designation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DGCL........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Disclosed Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Employee Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Encumbrance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Environmental Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
ERISA......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
ESOP.......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Executive Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Filings..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Hazardous Substance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
HSR Act... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Independent Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Intervening Tender Offer . . . . . . . . . . . . . . . . . . . . . . . . . . 2
iv
<PAGE>
KPMG........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Lien.......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Marks....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . .12
Merger...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Multiple Employer Plans. . . . . . . . . . . . . . . . . . . . . . . . . . .22
Offer....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Offer Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Offer to Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Option Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 25
Option Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Parent...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Payment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Per Share Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Permitted Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Representative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Review Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Reviewed Financial Statements. . . . . . . . . . . . . . . . . . . . . . . .35
Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Rights Agreement Amendment . . . . . . . . . . . . . . . . . . . . . . . . .25
Schedule 14D-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Shares...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Special Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Subsequent Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12, 40
Superior Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Tax......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Taxable... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Taxes..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Trade Secrets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
U.S. Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Year 2000 Problem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
</TABLE>
v
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of April 29,
1999, is by and among Aegis Group plc, a company incorporated under the laws of
England and Wales ("Parent"), Aegis Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Parent (the "Purchaser"), and Market Facts,
Inc., a Delaware corporation (the "Company").
RECITALS
1. Parent proposes to acquire the Company and the Company proposes to be
acquired by Parent pursuant to the terms of this Agreement.
2. In furtherance of such acquisition it is proposed that the Purchaser
will make a cash tender offer (the "Offer") to purchase up to 100% of the issued
and outstanding shares of Common Stock, par value $1.00 per share (the
"Shares"), of the Company for $31.00 per Share, or such higher price as may be
paid if the Offer is amended, net to the seller in cash (the "Per Share
Amount").
3. It is further proposed that the Purchaser, or another direct or
indirect wholly-owned subsidiary of Parent, merge with and into the Company (the
"Merger") following consummation of the Offer, and that the Shares not tendered
and accepted pursuant to the Offer will thereupon be converted into the right to
receive the Per Share Amount (Purchaser and the Company sometimes being
hereinafter referred to as the "Constituent Corporations").
4. As a condition and inducement to Parent's and Purchaser's entering
into this Agreement and incurring the obligations set forth herein, concurrently
with execution and delivery of this Agreement, Parent and Purchaser have entered
into one or more Option and Voting Agreements (collectively the "Option
Agreements") with the individuals and entities named therein (the
"Stockholders"), pursuant to which, among other things, each Stockholder has
agreed to vote the Shares then owned by such Stockholder in favor of the Merger,
to grant Parent an irrevocable proxy to vote such Shares, and to grant an option
to purchase all Shares then owned by such Stockholder to Parent.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, Parent, the Purchaser and the Company
hereby agree as follows:
1. THE OFFER
1.1 THE OFFER. Provided that nothing shall have occurred which would
result in a failure to satisfy any of the conditions set forth in ANNEX I
hereto, Parent shall cause the Purchaser to and the Purchaser shall, as soon as
practicable after the date hereof, and in any event not later than five (5)
business days after the day on which the Purchaser's intention to make the Offer
is announced commence (within the meaning of Rule 14d-2(a) of the Securities
Exchange Act of 1934, as
1
<PAGE>
amended (the "Exchange Act")) the Offer for all of the outstanding Shares at the
Per Share Amount. Subject to the Minimum Condition as defined in ANNEX I and
subject only to the other conditions set forth in ANNEX I, the Purchaser shall
consummate the Offer as soon as legally permissible. Purchaser expressly
reserves the right to waive any such condition or to increase the Per Share
Amount or, subject to the provisions of this Section 1.1, to make other changes
in the terms and conditions of the Offer. The Offer shall be made by means of
an offer to purchase (the "Offer to Purchase") containing the Minimum Condition,
and no other conditions except those set forth in ANNEX I hereto, and shall not
be amended with respect to any provision thereof set forth in such Annex or the
Minimum Condition, with respect to a reduction in the price or change in the
form of consideration to be paid in the Offer, or with respect to an extension
of the Offer (except as provided in this Section 1.1) without the consent of the
Company; provided, however, that Purchaser may extend the expiration date (x) in
its sole discretion from time to time, if on the initial scheduled or any
extended expiration date of the Offer the Minimum Condition has not been
satisfied, or any of the other conditions set forth in ANNEX I shall not have
been satisfied or waived, until such time as such conditions are satisfied or
waived; provided, however, that unless agreed to by the Company, any extended
expiration date pursuant to this clause (x) may not be later than ninety (90)
days from the date of commencement of the Offer, or one hundred twenty (120)
days from such date if within such ninety (90) day period a tender offer for at
least 20% of the outstanding Shares is commenced by any person who is not an
affiliate (as defined under the rules promulgated pursuant to the Securities Act
of 1933) of Parent or Purchaser (an "Intervening Tender Offer"), or (y) for a
period not to exceed ten (10) business days, notwithstanding that all conditions
to the Offer are satisfied as of such expiration date of the Offer, if,
immediately prior to the expiration date of the Offer (as it may be extended),
the Shares tendered and not withdrawn pursuant to the Offer, together with the
Shares subject to the Option Agreements, without duplication, equal less than
90% of the outstanding Shares and Purchaser expressly irrevocably waives any
condition (other than the Minimum Condition) that subsequently may not be
satisfied during such extension of the Offer, or (z) for any period required by
any rule, regulation, interpretation or position of the Securities and Exchange
Commission (the "Commission") or the staff thereof applicable to the Offer.
Without limiting the right of Purchaser to extend the Offer pursuant to the
provisions of this Section 1.1, in the event that (i) the Minimum Condition
shall not have been satisfied or (ii) the conditions set forth in ANNEX I shall
not have been satisfied or waived at the scheduled or any extended expiration
date of the Offer, at the request of the Company, the Purchaser shall, and
Parent shall cause Purchaser to, extend the expiration date of the Offer in
increments of five (5) business days each until the earliest to occur of (x) the
satisfaction or waiver of the Minimum Condition or such other condition, (y) the
termination of this Agreement in accordance with its terms, and (z) ninety (90)
days from commencement of the Offer or one hundred twenty (120) days from such
date in the event of an Intervening Tender Offer (unless extended by agreement
of the parties). The Purchaser agrees to pay for all Shares tendered pursuant
to the Offer that it is obligated to purchase as promptly as practicable.
1.2 OFFER DOCUMENTS. On the date of commencement of the Offer, Parent
and the Purchaser shall file with the Commission with respect to the Offer a
Schedule 14D-1 (the "Schedule 14D-1") which will comply in all material respects
with the provisions of applicable federal securities law, and will contain the
Offer to Purchase and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements thereof or
2
<PAGE>
amendments thereto, are referred to herein collectively as the "Offer
Documents"). The Schedule 14D-1 and the Offer Documents, on the date the
Schedule 14D-1 is filed with the Commission, and on the date the Offer Documents
are first published, sent or given to 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 or warranty is made by Parent or Purchaser with respect to
written information supplied by the Company or any of its stockholders. Parent,
Purchaser and the Company each agree promptly to correct the Schedule 14D-1 or
the Offer Documents if and to the extent that any information provided by any of
them shall have become false or misleading in any material respect, and to take
all steps necessary to cause such Schedule 14D-1 as so corrected to be filed
with the Commission and such Offer Documents as so corrected 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 any Offer Documents before they
are filed with the Commission. Parent and Purchaser agree to provide the
Company and its counsel with any comments that Parent, Purchaser or their
counsel may receive from the Commission or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
1.3 COMPANY ACTIONS. The Company hereby consents to the Offer and
represents that (a) its Board of Directors (at a meeting duly called and held)
has (i) unanimously determined that each of this Agreement, the Offer and the
Merger are fair to and in the best interests of the stockholders of the Company,
(ii) approved this Agreement and the transactions contemplated hereby, including
the Offer and the Merger, and such approval constitutes approval of the Offer,
this Agreement, and the transactions contemplated hereby, including the Merger,
for purposes of Section 203 of the Delaware General Corporation Law, as amended
(the "DGCL"), and (iii) after considering its fiduciary duties under applicable
law upon the advice of counsel, resolved to recommend acceptance of the Offer,
approval and adoption of this Agreement and approval of the Merger by the
Company's stockholders, and (b) Schroder & Co. Inc. has delivered to the Board
of Directors of the Company its written opinion that the Offer Consideration and
the Merger Consideration to be received by the holders of Shares in the Offer
and the Merger, respectively, is fair, from a financial point of view, to such
holders. The Board of Directors of the Company may withdraw or modify its
approval or recommendation of the Offer, this Agreement or the Merger if the
Board of Directors of the Company shall conclude in good faith upon advice of
counsel that such action is required under applicable law for the discharge of
such Board's fiduciary duties. The Company hereby consents to the inclusion in
the Offer Documents of the recommendation referred to in this Section 1.3
The Company hereby agrees to file with the Commission as promptly as
practicable after the filing by Parent and Purchaser of the Schedule 14D-1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing, subject to
the penultimate sentence of the preceding paragraph, such recommendations of the
Board of Directors of the Company in favor of the Offer and the Merger and
otherwise complying with Rule 14D-9 under the Exchange Act. The Schedule 14D-9
shall comply in all material respects with the Exchange Act and shall contain
(or shall be amended in a timely manner to contain) all information which is
required to be included therein in accordance with the Exchange
3
<PAGE>
Act and the rules and regulations thereunder and, on the date filed with the
Commission and on the date first published, sent or given to 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 or warranty is made by the Company
with respect to written information supplied by Parent or Purchaser specifically
for inclusion in the Schedule 14D-9. The Company, Parent and Purchaser each
agree promptly to correct any information provided by them for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect and the Company further agrees to take all
lawful action necessary to cause the Schedule 14D-9 as so corrected to be filed
promptly with the Commission and disseminated to the holders of Shares, in each
case as and to the extent required by applicable law. Parent, Purchaser and
their counsel shall be given a reasonable opportunity to review and comment on
the Schedule 14D-9 and any amendments thereto prior to filing thereof with the
Commission.
In connection with the Offer, the Company shall promptly furnish Parent
with mailing labels, security position listings and all available listings or
computer files containing the names and addresses of the record holders of the
Shares as of the latest practicable date and shall furnish Parent with such
information and assistance (including updated lists of stockholders, mailing
labels and lists of security positions) as Parent or its agents may reasonably
request in communicating the Offer to the record and beneficial holders of the
Shares. Subject to the requirements of applicable law, and except for such
actions as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, until consummation
of the Merger, Parent and Purchaser and each of their affiliates, associates,
partners, employees, agents and advisors shall hold in confidence the
information contained in such labels and lists, shall use such information only
in connection with the Offer and the Merger, and, if this Agreement is
terminated, in accordance with its terms, shall deliver promptly to the Company
all copies of such information then in their possession or control.
1.4 DIRECTORS. Promptly upon the acceptance for payment and purchase by
the Purchaser pursuant to the Offer and the Option Agreements of such number of
Shares which represents at least a majority of the outstanding Shares (on a
fully diluted basis), and from time to time thereafter, the Parent shall be
entitled to designate such number of directors (the date on which such
designated persons become directors being the "Designation Date"), rounded up to
the next whole number, on the Board of Directors as will give the Purchaser,
subject to compliance with Section 14(f) of the Exchange Act, representation on
the Board of Directors (including any directors designated by Parent then
serving on the Board of Directors) equal to at least that number of directors
which equals the product of the total number of directors on the Board of
Directors (giving effect to the directors elected pursuant to this sentence)
multiplied by the percentage that such number of Shares so accepted for payment
and paid for by the Purchaser, together with the Shares, if any, beneficially
owned by Parent and its affiliates as of the date hereof, bears to the number of
Shares outstanding and the Company shall, at such time, cause the Purchaser's
designees to be so elected; provided, however, that until the Effective Time (as
hereinafter defined) the Board of Directors shall have at least two directors
who are directors on the date hereof who are not employees of the Company and
who have not been designated as directors of the Company by Parent and its
affiliates (the "Independent Directors"); provided further, that if the number
of Independent Directors shall be
4
<PAGE>
reduced below two because of disability or resignation, the remaining
Independent Director shall be entitled to designate one person to fill such
vacancy who shall be deemed to be an Independent Director for purposes of this
Agreement. Subject to applicable law, the Company shall take all action
necessary to effect any such election, including mailing to its stockholders the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder.
Subject to applicable law, the Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under this Section
1.4 and shall include in the Schedule 14D-9 mailed to stockholders promptly
after the commencement of the Offer (or an amendment thereof or an information
statement pursuant to Rule 14f-1 if the Company has not theretofore designated
directors) such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.4. Parent will supply the Company and be
solely responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
Notwithstanding anything in this Agreement to the contrary, prior to the
Effective Time the affirmative vote of a majority of the Independent Directors
shall be required to (i) amend or terminate this Agreement on behalf of the
Company, (ii) exercise or waive any of the Company's rights or remedies
hereunder, (iii) extend the time for performance of the Purchaser's obligations
hereunder, or (iv) take any other action by the Company in connection with this
Agreement required to be taken by the Board of Directors.
2. THE MERGER
2.1 THE MERGER. At the Effective Time (as defined below), in accordance
with this Agreement and the DGCL, the Purchaser shall be merged with and into
the Company, the separate existence of the Purchaser (except as may be continued
by operation of law) shall cease, and the Company shall continue as the
surviving corporation. The Company hereinafter sometimes is referred to as the
"Surviving Corporation." At the election of Parent exercised prior to the
filing of any proxy statement pursuant to Section 6.1 hereof, the Merger may be
structured so that the Company shall be merged with and into the Purchaser with
the result that the Purchaser shall be the Surviving Corporation. If Parent
elects to structure the Merger so that the Purchaser, rather than the Company,
is the Surviving Corporation, any inaccuracy of any representation or warranty
of the Company which is premised on the assumption that the Company shall be the
Surviving Corporation, which representation or warranty becomes inaccurate
solely as a result of the Purchaser, rather than the Company, being the
Surviving Corporation, shall not be deemed to be a breach of such representation
or warranty and shall not release Parent or the Purchaser from their duties and
obligations under the Offer and this Agreement. At the election of Parent,
another direct or indirect wholly-owned subsidiary of Parent may be substituted
for the Purchaser for purposes of this Section 2.1. If any such change in
structure or Purchaser is made as aforesaid, the parties agree to make
appropriate amendments to this Agreement prior to mailing any Proxy Statement
pursuant to Section 6.1.
2.2 EFFECTIVE TIME. The Merger shall become effective at the date and
time when the Certificate of Merger or Certificate of Ownership and Merger, as
applicable, is filed by the Secretary in accordance with the applicable
provisions of the DGCL (or at such later time specified as the
5
<PAGE>
Effective Time in the Certificate of Merger or Certificate of Ownership, as
applicable), which Certificate shall be submitted for filing as soon as
practicable after all of the conditions set forth in Section 7 are fulfilled or
waived, provided that this Agreement has not been previously terminated pursuant
to Section 8.1 hereof. The date and time when the Merger shall become effective
are herein referred to as the "Effective Time."
2.3 EFFECT OF THE MERGER. The effect of the Merger shall be as set
forth in the DGCL. From and after the Effective Time the Surviving Corporation
shall possess all of the rights, privileges, powers and franchises of a public
as well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all and
singular rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all debts due to
either of the Constituent Corporations on whatever account, as well as for stock
subscriptions and all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations; and the title to any
real estate vested by deed or otherwise, in each of the Constituent
Corporations, shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired; and all debts, liabilities and
duties of the Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if said debts
and liabilities had been incurred by it.
2.4 CHARTER; BY-LAWS; DIRECTORS AND OFFICERS. The Certificate of
Incorporation of the Surviving Corporation shall be amended to read as set forth
in EXHIBIT A hereto, and the by-laws of the Surviving Corporation shall be as
set forth in EXHIBIT B hereto, and such documents shall contain the provisions
of the Company's certificate of incorporation and by-laws required to be
maintained pursuant to Section 6.7(b), as in effect immediately prior to the
Effective Time, until thereafter amended as provided therein and under the DGCL,
except that the Certificate of Incorporation of the Surviving Corporation shall
provide that the name of the Surviving Corporation shall be "Market Facts, Inc."
The directors of the Surviving Corporation from and after the Effective Time
shall be as follows: Crispin Davis, Colin Day, Eleonore Sauerwein, David
Verklin, Pat Doble, Stig Karlsen, Paul Greenhalgh, Thomas H. Payne and Timothy
J. Sullivan, and the officers of the Company immediately prior to the Effective
Time will be the initial officers of the Surviving Corporation, in each case
until their successors are 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.
2.5 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of the Purchaser, the Company, the
Surviving Corporation or the holder of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to Section 2.5(b) or
2.5(c) hereof and any Dissenting Shares (as defined in Section 2.9)), shall be
converted into and become the right to receive the Per Share Amount in cash,
without interest thereon (the "Merger Consideration").
6
<PAGE>
(b) Each share of Series B Preferred Stock which is issued and
outstanding immediately prior to the Effective Time shall be canceled and
retired, and no payment shall be made with respect thereto.
(c) Each Share which is issued and outstanding immediately prior
to the Effective Time, and owned by the Purchaser, Parent or the Company or any
direct or indirect subsidiary of the Purchaser, Parent or the Company, shall be
canceled and retired, and no payment shall be made with respect thereto.
(d) All shares of Common Stock of the Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted into and
become a sole validly issued, fully paid and nonassessable share of Common Stock
of the Surviving Corporation.
2.6 PAYMENT FOR SHARES.
(a) Prior to the Effective Time, Purchaser shall appoint a bank
or trust company located in the City of New York having assets equal to or
greater than $500,000,000 to act as paying agent (the "Paying Agent") for the
payment of the Merger Consideration, and shall deposit or shall cause to be
deposited with the Paying Agent in a separate fund established for the benefit
of the holders of Shares, for payment in accordance with this Article II,
through the Paying Agent (the "Payment Fund"), immediately available funds in
amounts necessary to make the payments pursuant to Section 2.5(a) and this
Section 2.6 to holders (other than the Company or any Subsidiary of the Company
or Parent, Purchaser or any other subsidiary of Parent, or holders of Dissenting
Shares) or shall enter into such other agreement or arrangement with respect to
such payments as may be satisfactory to the Company. The Paying Agent shall,
pursuant to irrevocable instructions, pay the Merger Consideration out of the
Payment Fund.
From time to time at or after the Effective Time, Parent shall take
all lawful action necessary to make the appropriate cash payments, if any, to
holders of Dissenting Shares. The Paying Agent shall invest portions of the
Payment Fund as Parent directs in obligations of or guaranteed by the United
States of America, in commercial paper obligations receiving the highest
investment grade rating from both Moody's Investors Services, Inc. and Standard
& Poor's Corporation, or in certificates of deposit, bank repurchase agreements
or banker's acceptances of commercial banks with capital exceeding
$1,000,000,000 (collectively, "Permitted Investments"); PROVIDED, HOWEVER, that
the maturities of Permitted Investments shall be such as to permit the Paying
Agent to make prompt payment to former holders of Shares entitled thereto as
contemplated by this Section. Parent shall cause the Payment Fund to be
promptly replenished to the extent of any losses incurred as a result of
Permitted Investments. All earnings on Permitted Investments shall be paid to
Parent. If for any reason (including losses) the Payment Fund is inadequate to
pay the amounts to which holders of Shares shall be entitled under this Section
2.6, Parent shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.
(b) As soon as reasonably practicable after the Effective Time,
Parent shall instruct the Paying Agent to mail to each holder of record (other
than the Company or any
7
<PAGE>
Subsidiary of the Company or Parent, Purchaser or any other subsidiary of
Parent) of a Certificate or Certificates which, immediately prior to the
Effective Time, evidenced outstanding Shares (the "Certificates"), (i) a form of
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Paying Agent, and shall be in such form and have such
other provisions as Parent reasonably may specify), and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for payment
therefor. Upon surrender of a Certificate for cancellation to the Paying Agent
together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the holder
of such Certificate shall be entitled to receive in respect thereof cash in an
amount equal to the product of (x) the number of Shares represented by such
Certificate, and (y) the Merger Consideration, and the Certificate so
surrendered shall forthwith be canceled. Absolutely no interest shall be paid
or accrued on the Merger Consideration payable upon the surrender of any
Certificate. If payment 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
otherwise in proper form for transfer, to the person who is to receive such
payment, and that the person requesting such payment shall pay any transfer or
other taxes required by reason of the payment to a person other than the
registered holder of the surrendered Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
2.6(b), each Certificate (other than Certificates representing Shares owned by
Parent or any subsidiary of Parent or held in the treasury of the Company) shall
represent for all purposes only the right to receive the Merger Consideration,
without any interest thereon.
(c) Any portion of the Payment Fund which remains undistributed
to the holders of Shares for twelve (12) months after the Effective Time shall
be delivered to Parent or its designee, upon demand, and any holders of Shares
who have not theretofore complied with this Article III and the instructions set
forth in the letter of transmittal mailed to such holder after the Effective
Time shall thereafter look only to Parent for payment of the Merger
Consideration to which they are entitled. All interest accrued in respect of
the Payment Fund shall inure to the benefit of and be paid to Parent.
(d) Any portion of the Payment Fund remaining unclaimed by
holders of Shares as of a date which is immediately prior to such time as such
amounts would otherwise escheat to or become property of any government entity
shall, to the extent permitted by applicable law, become the property of
Purchaser free and clear of any claims or interest of any person previously
entitled thereto. Except as otherwise required by applicable law, neither
Parent nor the Surviving Corporation shall be liable to any holder of Shares for
any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(e) Parent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as Parent is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), or any provision of state, local or foreign tax law. To the
extent that amounts are so withheld by Parent, such withheld amounts shall be
treated for all
8
<PAGE>
purposes of this Agreement as having been paid to the holder of the Shares in
respect of which such deduction and withholding was made by Parent.
(f) From and after the Effective Time, holders of Certificates
shall cease to have any rights as stockholders of the Company, except as
provided by applicable law.
2.7 STOCK TRANSFERS. At the Effective Time, there shall be no further
registration of transfers of Shares thereafter on the records of the Company.
Subject to Section 2.6(d), on or after the Effective Time, any Certificates
presented to the Paying Agent or Parent for any reason shall represent only the
right to receive the Merger Consideration, subject to all of the requirements of
this Agreement.
2.8 STOCK OPTIONS. At the Effective Time, each holder of an Employee
Option (as hereafter defined), whether or not then vested or exercisable shall,
in settlement thereof, receive for each Share subject to such Employee Option an
amount (subject to any applicable withholding tax) in cash equal to the
difference between the Offer Consideration and the per Share exercise price of
such Employee Option to the extent such difference is a positive number (such
amount being hereinafter referred to as, the "Option Consideration"); PROVIDED,
HOWEVER, that with respect to any person subject to Section 16(a) of the
Exchange Act, any such amount shall be paid as soon as practicable after the
first date payment can be made without liability to such person under Section
16(b) of the Exchange Act. Upon receipt of the Option Consideration, the
Employee Option shall be canceled. The surrender of an Employee Option to the
Company in exchange for the Option Consideration shall be deemed a release of
any and all rights the holder had or may have had in respect of such Employee
Option. Prior to the Effective Time, the Company shall obtain all necessary
consents or releases from holders of Employee Options under the Company's stock
option plan and to take all such other lawful action as may be necessary to give
effect to the transactions contemplated by this Section 2.8. Except as
otherwise agreed to by the parties, (i) all stock option plans of the Company
shall terminate as of the Effective Time and the provisions in any other plan,
program or arrangement providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any Subsidiary thereof, shall
be canceled as of the Effective Time, and (ii) the Company shall ensure that
following the Effective Time no participant in any stock option plan or other
plans, programs, arrangements or agreements shall have any right thereunder to
acquire equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof and to terminate all such plans. The failure of the Company
to cancel any Employee Option or to ensure that following the Effective Time no
participants in any stock option plan or other plan, program, arrangement or
agreement shall have the right thereunder to acquire any equity interest of the
Company, the Surviving Corporation or any Subsidiary or to terminate any such
plans, which options or equity interests shall not be material in number, shall
not be deemed to have a Material Adverse Effect for the purposes of Section
7.2(b) and paragraph (C) of ANNEX I. Prior to the Effective Time, the Company
shall not take any action to accelerate the vesting of any unvested stock
options as a result of the Offer or the Merger.
2.9 DISSENTING SHARES. Notwithstanding any other provisions of this
Agreement to the contrary, Shares that are outstanding immediately prior to the
Effective Time and which are held by stockholders who shall have not voted in
favor of the Merger or consented thereto in writing and
9
<PAGE>
who shall have demanded properly in writing appraisal for such shares in
accordance with Section 262 of the DGCL (collectively, the "Dissenting Shares")
shall not be converted into or represent the right to receive the Merger
Consideration. Such stockholders instead shall be entitled to receive payment
of the appraised value of such Shares held by them in accordance with the
provisions of such Section 262, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under such Section
262 shall thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender in the manner provided
in Section 2.6, of the Certificate or Certificates that, immediately prior to
the Effective Time, evidenced such Shares. The Company shall give Parent and
the Purchaser prompt written notice of any demands for payment, or notices of
intent to demand payment, received by the Company with respect to Shares, and
Parent and the Purchaser shall have the right to participate in and control all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent or as otherwise required by
law, make any payment with respect to, or settle, or offer to settle, any such
demands.
2.10 LOST CERTIFICATES. If any certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such certificate, the
Paying Agent will pay the Merger Consideration in accordance with the terms of
the Offer to the registered owner of such Shares.
3. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER.
The Purchaser and Parent each represents and warrants to the Company as
follows:
3.1 ORGANIZATION. Each of Parent and the Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power to carry on
its respective business as now conducted.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT.
(a) Each of Parent and the Purchaser has the requisite corporate
power and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Parent and the Purchaser and the consummation
by each of them of the transactions contemplated hereby have been duly
authorized by the respective Boards of Directors of Parent and the Purchaser and
by the stockholders of the Purchaser, and no other corporate proceeding on the
part of either of Parent or the Purchaser is necessary to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and the Purchaser and constitutes a valid and legally
binding obligation of each such corporation, enforceable against each such
corporation in accordance with
10
<PAGE>
its terms, except as the enforcement hereof may be limited by general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
(b) Neither the execution and delivery of this Agreement by
Parent and the Purchaser nor the consummation by Parent and the Purchaser of the
transactions contemplated hereby, nor compliance by Parent and the Purchaser
with any of the provisions hereof will (i) violate, conflict with, or result in
a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Parent or the Purchaser or any other direct or indirect subsidiary of
Parent under, any of the terms, conditions or provisions of (x) the certificates
of incorporation, by-laws or other organizational documents of Parent or the
Purchaser or any other direct or indirect subsidiary of Parent, or (y) any
material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which Parent or the Purchaser or
any other direct or indirect subsidiary of Parent is a party, or to which any of
them or any of their respective properties or assets may be subject, or (ii)
subject to compliance with the statutes and regulations referred to in the next
paragraph, violate any judgment, ruling, order, writ, injunction, decree,
statute, rule or regulation applicable to Parent or the Purchaser or any other
direct or indirect subsidiary of Parent or any of their respective properties or
assets; except, in the case of each of clauses (i) and (ii) above, for such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances, which, in the
aggregate, would not have a material adverse effect on the financial condition,
business or results of operations of Parent and its subsidiaries, taken as a
whole, or which will be cured, waived or terminated prior to the expiration of
the Offer.
(c) Other than in connection with or in compliance with the
provisions of the DGCL, the Exchange Act, the "takeover" or "blue sky" laws of
various states, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), and any
required foreign regulatory approvals, no notice to, filing with, or
authorization, consent or approval of, any domestic or foreign public body or
authority is necessary for the consummation by Parent and the Purchaser of the
transactions contemplated by this Agreement, except where failures to give such
notices, make such filings or obtain such authorizations, consents or approvals
will not have a material adverse effect on the financial condition, business or
results of operations of Parent and its subsidiaries, taken as a whole, and will
not prevent the consummation of the transactions contemplated hereby or
otherwise prevent Parent or Purchaser from performing their respective
obligations under this Agreement.
3.3 FINANCING. The Purchaser presently has available to it or can
borrow under existing lines of credit or other existing financing arrangements
sufficient funds to enable the Purchaser to pay for all the Shares purchased
pursuant to the Offer and to make all necessary payments in respect of the
Merger.
3.4 OWNERSHIP OF SHARES. As of the date hereof, Parent and its
affiliates do not beneficially own any Shares. During the term of this
Agreement and so long as the Company has not failed to perform its obligations
hereunder in any material respect, neither Parent nor any of its
11
<PAGE>
affiliates shall acquire, directly or indirectly, any Shares other than pursuant
to the Offer and the Merger.
3.5 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Parent or Purchaser for inclusion or incorporation by reference in
(i) the Schedule 14D-9 at the time the Schedule 14D-9 is filed with the SEC and
at any time it is amended or supplemented, or (ii) the Proxy Statement (as
defined in Section 6.1 hereof) at the date it is first mailed to the Company's
stockholders or at the time of the Company Stockholders Meeting, will 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 made 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 Purchaser, or with respect to information supplied by Parent or
Purchaser for inclusion of the Schedule 14D-9 or the Proxy Statement, shall
occur which is required to be described in an amendment of, or a supplement to,
such documents, such event shall be so described to the Company.
3.6 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.
3.7 BOARD RECOMMENDATION. The Board of Directors of the Parent, at a
meeting duly called and held, has determined that each of the Offer and the
Merger is fair to and in the best interests of Parent and has approved the same.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to Parent and the Purchaser the
following:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power to carry on its business as now
conducted. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or leased or the nature of its activities makes such
qualification necessary, except for failures to be so qualified or in good
standing which would not, in the aggregate, have a material adverse effect on
the financial condition, business, operations or results of operations of the
Company and its Subsidiaries, taken as a whole and will not prevent the
consummation of the transactions contemplated hereby ("Material Adverse
Effect"). Copies of the certificate of incorporation and by-laws of the Company
heretofore delivered to the Purchaser are accurate and complete as of the date
hereof. The Company is not in substantial violation of any of the provisions of
its Restated Certificate of Incorporation or Bylaws.
4.2 SUBSIDIARIES. The only corporations or other entities more than 50%
of whose outstanding voting securities or other equity interests are directly or
indirectly owned by the Company are those named in SCHEDULE 4.2 hereof (the
"Subsidiaries"). SCHEDULE 4.2 also contains a complete and accurate list of all
other corporations, partnerships, joint ventures or other legal entities of
which the Company owns, directly or indirectly, any voting stock or other equity
or
12
<PAGE>
beneficial interest, together with the jurisdiction of organization of such
entity. Each Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has the
requisite corporate power to carry on its business as now conducted. Each
Subsidiary is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or leased or the nature of its activities makes such qualification necessary,
except for failures to be so qualified or in good standing which in the
aggregate would not have a Material Adverse Effect. All of the outstanding
capital stock of each Subsidiary has been validly issued. Except as set forth
in such Schedule, the Company is, directly or indirectly, the record and
beneficial owner of all of the outstanding shares of capital stock or other
equity interest of each of such Subsidiaries and other entities, there are no
irrevocable proxies with respect to such shares and no equity securities of any
of the Subsidiaries are or may become required to be issued for any reason. All
of the shares of the Subsidiaries owned by the Company have been validly issued
and are fully paid and nonassessable and are owned by it free and clear of any
Encumbrance with respect thereto. Solely for purposes of this Section 4.2,
"Encumbrance" shall mean any pledge, security interest, lien, claim,
encumbrance, mortgage, charge, hypothecation, option, right of first refusal or
offer, preemptive right, voting agreement, voting trust, proxy, power of
attorney, escrow, option, forfeiture, penalty, action at law or in equity,
security agreement, stockholder agreement or other agreement, arrangement,
contract, commitment, understanding or obligation, or any other restriction,
qualification or limitation on the use, transfer, right to vote, right to
dissent and seek appraisal, receipt of income or other exercise of any attribute
of ownership.
4.3 CAPITALIZATION. The authorized capital stock of the Company
consists of 15,000,000 shares of Common Stock, $1.00 par value, and 500,000
shares of preferred stock, no par value (the "Preferred Stock"), of which 25,000
shares were designated as Series A Preferred Stock and 100 were designated as
Series B Preferred Stock. As of the date hereof (a) 8,944,701 shares of Common
Stock were validly issued and outstanding, fully paid and nonassessable, (b)
1,965,357 shares of Common Stock were held in the treasury of the Company, (c)
932,900 shares of Common Stock were reserved for issuance pursuant to
outstanding employee stock options ("Employee Options") heretofore granted under
the Company's stock option plan, (d) 100,000 shares were reserved for issuance
in connection with possible future purchase price payments in connection with a
past acquisition, (e) no shares of Series A Preferred Stock were outstanding,
and (f) 100 shares of Series B Preferred Stock were outstanding. The Shares and
the Series B Preferred Shares are the only outstanding voting securities of the
Company. Except as contemplated by clauses (a) through (f) above or set forth
on SCHEDULE 4.3, there are no other shares of capital stock or other equity
securities of the Company outstanding and no other outstanding options,
warrants, rights to subscribe for (including any preemptive rights), calls or
commitments of any character whatsoever to which the Company or any of its
Subsidiaries is a party or may be bound requiring the issuance or sale of shares
of any capital stock or other equity securities of the Company or any of its
Subsidiaries or securities or rights convertible into or exchangeable for such
shares or other equity securities, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue (i) additional shares of its capital stock or
other equity securities or (ii) options, warrants or rights to purchase or
acquire any additional shares of its capital stock or other equity securities or
securities convertible into or exchangeable for such shares or other equity
securities. All shares subject to issuance pursuant to options referred to in
clauses
13
<PAGE>
(c) and (d) hereof, upon issuance on the terms and conditions specified in such
options, will be duly authorized, validly issued, fully paid and nonassessable.
There are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Shares. Other than
as set forth on SCHEDULE 4.3, there are no stockholder agreements, voting trusts
or other agreements or understandings to which the Company or any of its
Subsidiaries is a party relating to voting or disposition of any shares of
capital stock of the Company or any Subsidiary or granting to any person or
group of persons the right to elect, or to designate or nominate for election, a
director to the board of directors of the Company or any Subsidiary.
4.4 AUTHORITY RELATIVE TO AGREEMENT. The Company has the requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Except for the approval of its stockholders (if required under the DGCL) as set
forth in Section 6.2 of this Agreement, no other corporate proceeding on the
part of the Company is necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement hereof may be limited by general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
4.5 COMPLIANCE.
(a) Except as set forth on SCHEDULE 4.5(a) hereto, neither the
execution and delivery of this Agreement by the Company, nor, the consummation
by the Company of the transactions contemplated hereby, nor, compliance by the
Company with any of the provisions hereof will (a) violate, conflict with, or
result in a breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge, claim, right of first refusal
or encumbrance upon any of the properties or assets of the Company or any of its
Subsidiaries under any of the terms, conditions or provisions of (i) their
respective charters or bylaws, or (ii) any bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which the
Company or any such Subsidiary is a party or to which they or any of their
respective properties or assets may be subject, or (b) subject to compliance
with the statutes and regulations referred to in the next paragraph, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to the Company and its Subsidiaries or any of their respective
properties or assets; except, in the case of each of clauses (a) and (b) above,
for such violations, conflicts, breaches, defaults, terminations, accelerations
or creations of liens, security interests, charges, claims, rights of first
refusal or encumbrances, which, in the aggregate, would not have a Material
Adverse Effect, or which will be cured, waived or terminated prior to the
expiration of the Offer; provided, however, that except for the agreements set
forth in SCHEDULE 4.5(a), to the knowledge of the Company there are no such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges, claims, rights of first refusal
or encumbrances, which, in the aggregate, would have a Material Adverse Effect
or which will need to be cured, waived or terminated prior to the expiration of
the Offer.
14
<PAGE>
(b) Other than in connection with or in compliance with the
provisions of the DGCL, the Exchange Act, the "takeover" or "blue sky" laws of
various states, the HSR Act and any required foreign regulatory approvals, no
notice to, filing with, or authorization, consent or approval of any domestic or
foreign public body, authority or self-regulatory organization is necessary for
the consummation by the Company of the transactions contemplated by this
Agreement, except where failures to give such notices, make such filings or
obtain such authorizations, consents or approvals will not have a Material
Adverse Effect, and will not prevent or delay the consummation of the
transactions contemplated hereby or otherwise prevent the Company from
performing its obligations under this Agreement.
4.6 COMMISSION FILINGS.
(a) The Company has made available to Parent its (a) Annual
Reports on Form 10-K (the "Company 10-K's") for the years ended December 31,
1996, December 31, 1997 and December 31, 1998 as filed with the Commission, (b)
proxy statements relating to all of the Company's meetings of stockholders
(whether annual or special) since January 1, 1996, and (c) all other reports or
registration statements filed by the Company with the Commission since
January 1, 1996 (collectively, the "Filings"). The Filings were prepared and
the Subsequent Filings (as defined hereafter) will be prepared in all material
respects in accordance with the requirements of the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act and the rules and
regulations of the Commission thereunder applicable to such Filings and
Subsequent Filings. As of their respective dates, the Filings (including all
exhibits and schedules thereto and documents incorporated by reference therein)
did not contain and the Subsequent Filings will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of the Company and its Subsidiaries (including any related notes or
schedules thereto) included or incorporated by reference in the Filings have
complied in all material respects with the applicable published accounting rules
and regulations of the Commission with respect thereto and have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as indicated in the notes or schedules
thereto), and fairly present the consolidated financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of operations and cash flows of the Company and its consolidated
Subsidiaries for the respective periods then ended, except as otherwise
indicated in the notes thereto (subject, in the case of any unaudited interim
financial statements, to normal year-end adjustments which were not and are not
expected, individually or in the aggregate, to have a Material Adverse Effect).
Since January 1, 1992 and until the consummation of the Offer, the Company has
filed or will file with the Commission all reports, proxy statements and other
documents required by Section 13, 14 or 15 of the Exchange Act to be filed by
it. All reports, proxy statements and other documents required by the Exchange
Act to be filed by the Company after the date hereof and until the consummation
of the Offer, except for the Schedule 14D-9 and the Proxy Statement (as
hereinafter defined), are referred to herein as the "Subsequent Filings."
15
<PAGE>
(b) Except as and to the extent set forth on, or reserved
against on, the consolidated balance sheet of the Company and its consolidated
Subsidiaries as of December 31, 1998, including the notes thereto, neither the
Company nor any Subsidiary has any liability or obligation of any nature
(whether accrued, absolute, contingent, fixed, liquidated, unliquidated or
otherwise) that would be required to be reflected on, or reserved against in, a
balance sheet of the Company, or in the notes thereto, prepared in accordance
with generally accepted accounting principles, except for liabilities or
obligations (i) disclosed in any Filing filed since December 31, 1998, and prior
to the execution and delivery of this Agreement, or in SCHEDULE 4.6(b), or (ii)
incurred in the ordinary course of business since December 31, 1998 consistent
with past practices, that would not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect. SCHEDULE 4.6(b) sets
forth the amount of principal and unpaid interest outstanding as of December 31,
1998, under each instrument evidencing Indebtedness (as defined hereafter) of or
borrowed money of the Company and its Subsidiaries which will accelerate or
become due or result in a right of redemption or repurchase on the part of the
holder of such Indebtedness (with or without due notice or lapse of time) as a
result of this Agreement, the Merger or the consummation of the transactions
contemplated hereby.
(c) Except as disclosed in the Filings or as set forth in
SCHEDULE 4.6(c), none of the Company or any of the Subsidiaries is indebted to
any current director or Executive Officer (as defined hereafter) of the Company
or any former director or Executive Officer of the Company (except for amounts
due as normal salaries and bonuses, in reimbursement of ordinary expenses and
directors' fees), and no such person is indebted to the Company or any of the
Subsidiaries, and there have been no other transactions of the type required to
be disclosed in a proxy statement filed under the Exchange Act pursuant to Item
404 of Regulation S-K under the Securities Act. For purposes of this Agreement,
"Executive Officer" shall mean the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer and any Executive Vice President.
(d) Except as identified in SCHEDULE 4.6(d), no Indebtedness of
the Company or any of the Subsidiaries in excess of $100,000 contains any
restriction upon (i) the prepayment of such Indebtedness, (ii) the incurrence of
other Indebtedness by the Company or any of the Subsidiaries, or (iii) the
ability of the Company or any of the Subsidiaries to grant any liens on its
properties or assets. For purposes of this Agreement, "Indebtedness" shall mean
(i) all indebtedness for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices),
(ii) any other indebtedness which is evidenced by a note, bond, debenture or
similar instrument, (iii) all obligations under financing leases (as such term
is used in accordance with generally accepted accounting principles), (iv) all
obligations in respect of acceptances issued or created, (v) all liabilities
secured by any lien on any property, and (vi) all guarantee obligations.
4.7 MATERIAL CONTRACTS.
(a) All of the material contracts of the Company and its
Subsidiaries that are required to be described in the Filings or to be filed as
exhibits thereto have been described or filed as required. Neither the Company
nor any Subsidiary nor, to the knowledge of the Company, any other party is in
breach of or default under any such contract currently in effect to which the
16
<PAGE>
Company or any of its Subsidiaries is a party, except for such breaches and
defaults which are described in SCHEDULE 4.7 or which would not have,
individually or in the aggregate, a Material Adverse Effect.
(b) Except as set forth in SCHEDULE 4.7, the Company has not
granted any right of first refusal or similar right in favor of any third party
with respect to any material portion of its properties or assets or entered into
any non-competition agreement or similar agreement restricting its ability to
engage in any business which, in either case, would result in a Material Adverse
Effect.
(c) SCHEDULE 4.7 sets forth a list, as of the date of this
agreement, of all agreements of the Company with any stockholder who, to the
Company's knowledge, beneficially owns 5% or more of the outstanding Common
Stock or any current Executive Officer or director of the Company or any former
director or Executive Officer of the Company. Except as set forth in SCHEDULE
4.7, no current Executive Officer or director of the Company, former Executive
Officer of the Company or any "associate" (as such term is defined in Rule 14a-1
under the Exchange Act) of any such Executive Officer or director, has any
material interest in any material contract or property (real or personal,
tangible or intangible), used in, or pertaining to the business of the Company.
4.8 LITIGATION. Other than as set forth in the Company's 10-K for the
year ended December 31, 1998, there are no actions, suits, proceedings or, to
the Company's knowledge, investigations pending or, to the knowledge of the
Company threatened against the Company or any of its Subsidiaries, nor is the
Company or any of its Subsidiaries subject to any order, judgment, writ,
injunction or decree (collectively the "Disclosed Litigation"), except in either
case for matters which, in the aggregate, would not have a Material Adverse
Effect and would not materially adversely affect the Company's ability to
perform its obligations under this Agreement. There are no obligations or
liabilities, whether accrued, contingent or otherwise and whether required to be
disclosed, including without limitation, those relating to matters involving any
Environmental Law (as hereinafter defined), or any other facts and circumstances
of which the management of the Company has knowledge, that are reasonably likely
to result in any claims against or obligations or liabilities of the Company or
any of its Subsidiaries, that, alone or in the aggregate, would be reasonably
likely to have a Material Adverse Effect.
4.9 PROPERTIES. The Company and its Subsidiaries have good title to, or
in the case of leased property have valid leasehold interests in, all of their
respective properties and assets (whether real or personal, tangible or
intangible) except for imperfections in title or invalidities in leasehold
interests that do not, individually or in the aggregate, materially detract from
the value reflected in the Company's December 31, 1998 audited consolidated
balance sheet included in its December 31, 1998 Form 10-K "December Balance
Sheet." None of such properties or assets is subject to any mortgage, lien,
pledge, charge, security interest, right of first refusal, encumbrance or other
adverse claim of any kind ("Lien"), except: (i) Liens reflected on the
Company's December Balance Sheet, (ii) Liens for taxes not yet due or being
contested in good faith and for which adequate accruals or reserves have been
established on the December Balance Sheet, and (iii) Liens which do not,
individually or in the aggregate materially detract from the value reflected on
the December Balance Sheet or materially interfere with any present or intended
use of any material properties or assets.
17
<PAGE>
4.10 INTELLECTUAL PROPERTY.
(a) "Company Intellectual Property Rights" means all trademarks,
trademark rights, trade names, trade name rights, patents, patent rights,
industrial models, copyrights, service marks, trade secrets, computer software
programs or applications (in both source code and object code form), maskworks,
schematics, technology, ideas, algorithms, processes, know-how, inventions and
applications for patents, and applications for trademark, copyright and service
mark registrations and all other tangible and intangible proprietary rights and
information owned by or licensed to the Company or any Subsidiary which the
Company or any Subsidiary otherwise possesses legally enforceable rights to use.
(b) SCHEDULE 4.10(b) contains a complete and accurate list of
all current material contracts, agreements, understandings or arrangements
relating to the Company Intellectual Property Rights to which the Company is a
party or by which the Company is bound, except for any license implied by the
sale of a product, any client engagement contracts and any paid-up licenses for
commercially available software programs under which the Company is the
licensee. Except as set forth on SCHEDULE 4.10(b)(2)(1), there are no
outstanding and, to the Company's knowledge, no threatened disputes or
disagreements with respect to the Company's Intellectual Property Rights
relating to any such material contracts, agreements, understandings or
arrangements.
(c) Know-How Necessary for the Business. The Company
Intellectual Property Rights are all those used by the Company for the operation
of the business of the Company and its Subsidiaries as they are currently
conducted. Either the Company or one of its Subsidiaries is the owner of all
right, title, and interest in and to each of the Company Intellectual Property
Rights, free and clear of all liens, security interests, charges, encumbrances,
equities and other adverse claims other than liens granted to primary lending
institutions, and, except as set forth on SCHEDULE 4.10(c) and the documents
identified therein, to the Company's knowledge, has the right to use without
payment to a third party such Company Intellectual Property Rights.
(d) Trademarks. SCHEDULE 4.10(D) contains a complete and
accurate list of all trademarks, trademark rights, trade names, trade name
rights and servicemarks owned and currently used by the Company (collectively,
the "Marks"). All registrations of the Marks that have been registered with the
United States Patent and Trademark Office the ("U.S. Marks") are currently in
effect and are otherwise valid. No U.S. Mark has been or is now involved in any
opposition or cancellation proceeding and, to the Company's knowledge, no such
action is threatened with respect to any of the Marks. Except as disclosed on
SCHEDULE 4.10(d), to the Company's knowledge, there is no potentially
interfering trademark or trademark application of any third party. Except as
disclosed on SCHEDULE 4.10, to the Company's knowledge, no Mark is currently
being infringed, challenged or threatened in any way. To the Company's
knowledge, none of the Marks infringes or is alleged to infringe any trade name,
trademark, or service mark of any third party.
(e) Copyrights. SCHEDULE 4.10(e) contains a complete and
accurate list of all copyrights for significant works of authorship owned and
currently used or proposed to be used by the Company and registered with the
United States Copyright Office ("Copyrights"). All the Copyrights have been
registered and are valid and enforceable, and the Copyrights are not subject
18
<PAGE>
to any maintenance fees or taxes or actions falling due within ninety (90) days
after the Effective Time. To the Company's knowledge, no Copyright is infringed
or has been challenged or threatened in any way. To the Company's knowledge,
none of the subject matter of any of the Copyrights infringes or is alleged to
infringe any copyright of any third party or is a derivative work based on the
work of a third party. To the Company's knowledge, all works subject to the
Copyrights are original works of authorship of regular employees of the Company
or independent contractors who have assigned their rights in such works to the
Company and no part of any such work, other than a fair use of an insubstantial
part, has been copied from any other source.
(f) Trade Secrets. Each of the Company and its Subsidiaries has
taken reasonable precautions to protect the secrecy, confidentiality, and value
of its trade secrets (the "Trade Secrets"). To the Company's knowledge, either
the Company or one of its Subsidiaries has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets used or proposed to be
used by the Company or any of its Subsidiaries. To the Company's knowledge, the
Trade Secrets are not part of the public knowledge or literature, and have not
been used, divulged, or appropriated either for the benefit of any person (other
than the Company or any of its Subsidiaries) or to the detriment of the Company
or any of its Subsidiaries other than pursuant to agreements containing
confidentiality provisions. To the Company's knowledge, no Trade Secret is
currently subject to any adverse claim or is currently being challenged or
threatened in any way.
4.11 LABOR MATTERS. Neither the Company nor any Subsidiary is a party to
any collective bargaining or other labor union contract, and no collective
bargaining agreement is being negotiated by the Company or any Subsidiary. To
the knowledge of the Company, there are no material activities or proceedings of
any labor union to organize any employees of the Company or any Subsidiary.
There is no material labor dispute, strike or work stoppage against the Company
or any Subsidiary pending or, to the knowledge of the Company threatened which
may interfere with the business activities of the Company or any of its
Subsidiaries. Except as set forth on SCHEDULE 4.11, neither the Company nor any
Subsidiary has received any notice that its current practices are not in
compliance, in all material respects, with all applicable laws respecting
employment and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health, and is not engaged in any
unfair labor practices as defined in the National Labor Relations Act or other
similar laws of any jurisdiction. There is no unfair labor practice or similar
charge or complaint against the Company or any of its Subsidiaries pending or,
to the knowledge of the Company, threatened before the National Labor Relations
Board or any similar state or foreign agency. Except as set forth on SCHEDULE
4.11, no charges with respect to or relating to the Company or any of its
Subsidiaries are pending before the Equal Employment Opportunity Commission or
any other federal, state, local or foreign agency responsible for the prevention
of unlawful employment practices. Except as set forth on SCHEDULE 4.11, neither
the Company nor any Subsidiary has received notice of the intent of any federal,
state, local or foreign agency responsible for the enforcement of labor or
employment laws to conduct an investigation with respect to or relating to the
Company or any of the Subsidiaries and no such investigation is in progress.
Except as set forth on SCHEDULE 4.11, there are no complaints, lawsuits or other
proceedings pending or, to the knowledge of the Company, threatened in any forum
by or on behalf of any present or former employee of the Company or any present
employee of any Subsidiary, any applicant for employment or classes of the
foregoing alleging breach of any express or implied contract or employment, any
19
<PAGE>
laws governing employment or the termination thereof or other discriminatory,
wrongful or tortuous conduct in connection with the employment relationship,
except in each case which would not result in a Material Adverse Effect.
4.12 BOARD RECOMMENDATION. The Board of Directors has duly approved this
Agreement and the Merger and other transactions contemplated hereby on the terms
and conditions set forth herein, and recommended that the stockholders of the
Company accept the Offer and approve and adopt this Agreement and the Merger.
4.13 COMPLIANCE WITH LAW. To the knowledge of the Company, the Company
has not violated or failed to comply with any statute, law, ordinance,
regulation, rule or order of any foreign, federal, state or local government or
any other governmental department or agency, or any judgment, decree or order of
any court, applicable to its business or operations except where any such
violation or failure to comply would not have a Material Adverse Effect; and, to
the knowledge of the Company, the conduct of the Company's business is in
conformity with all energy, public utility, health, OSHA and environmental
requirements and all other foreign, federal, state and local governmental and
regulatory requirements except where any such non-conformity would not have a
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 have a Material Adverse Effect.
4.14 CHANGES. Except as contemplated by this Agreement, set forth on
SCHEDULE 4.14 or reflected in any financial statement or note thereto referred
to in Section 4.6 filed with the Commission prior to the date hereof, since
December 31, 1998, the Company and its Subsidiaries have conducted their
businesses only in the ordinary and usual course, and there has not been:
(a) any change, condition, circumstance or event which would
have a Material Adverse Effect;
(b) other than as required by a change in generally accepted
accounting principles, any change in accounting methods, principles or practices
by the Company affecting its assets, liabilities or business;
(c) other than as required by a change in generally accepted
accounting principles, any revaluation by the Company or any of its Subsidiaries
of any of its assets, including without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the ordinary
course of business;
(d) any damage, destruction or loss, whether or not covered by
insurance, materially adversely affecting the financial condition, business or
results of operations of the Company and its Subsidiaries taken as a whole;
(e) any declaration, setting aside or payment of dividends or
distributions in respect of the Shares or any redemption, purchase or other
acquisition of any of its securities;
20
<PAGE>
(f) any adoption of a plan of liquidation or resolutions
providing for the liquidation, dissolution, merger, consolidation or other
reorganization of the Company;
(g) any issuance by the Company of, or commitment of the Company
to issue, any shares of capital stock or securities convertible into or
exchangeable or exercisable for shares of capital stock other than pursuant to
the stock option plans of the Company or the ESOP or as set forth in 2.c. on
SCHEDULE 4.3;
(h) any increase in the benefits under, or the establishment or
amendment of, any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without limitation, the
granting of stock options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee benefit plan, or any
other increase in the compensation payable or to become payable to any Executive
Officer or Senior Vice President of the Company or any Subsidiary except as set
forth in SCHEDULE 4.14;
(i) any entry by the Company into any employment, consulting,
termination or indemnification agreement with any Executive Officer or Senior
Vice President of the Company or any Subsidiary or entry into any such agreement
with any other person outside the ordinary course of business except as set
forth in SCHEDULE 4.14; or
(j) any agreement by the Company to do any of the things
described in the preceding clauses (a) through (i) other than as expressly
provided for herein.
4.15 VOTE REQUIRED FOR MERGER. The affirmative vote of the holders of a
majority of the issued and outstanding Shares is sufficient for stockholder
approval of the Merger.
4.16 INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) any
of the Offer Documents at the time the Offer Documents are filed with the
Commission and at any time they are amended or supplemented, or (ii) the Proxy
Statement (as defined in Section 6.1 hereof) at the date it is first mailed to
the Company's stockholders or at the time of the Company Stockholders 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.
4.17 TAXES. The Company and its Subsidiaries have filed all material tax
returns required to be filed by such party, and the most recent financial
statements contained in the Company's Commission Filings reflect an adequate
reserve in accordance with generally accepted accounting principles for all
taxes payable by the Company and its Subsidiaries accrued through the date of
such financial statements. The unpaid taxes, including any contingent tax
liabilities and net deferred tax liabilities, of the Company which have accrued
as of the date of the most recent financial statements contained in the Filings
do not materially exceed the reserve for accrued tax liability set forth or
included in such financial statements. The Company has delivered or made
available to Parent correct and complete copies of all federal Income Tax
Returns, examination reports, and statements of deficiencies assessed against or
agreed to by any of the Company and its Subsidiaries since
21
<PAGE>
December 31, 1995. Neither the Company nor any of its consolidated Subsidiaries
has been advised of any deficiency claimed or proposed to be claimed against or
relating to the Company or any of its consolidated Subsidiaries that would be
material to the Company by any taxing authority which has not been paid, settled
or described in SCHEDULE 4.17 and there are no matters under discussion with any
taxing authority which might result in the assessment of additional amounts
against or relating to the Company or any of its Subsidiaries that would be
material to the Company. Except as set forth on SCHEDULE 4.17, there are no
pending audits or examinations of any tax returns filed by the Company or any of
its consolidated Subsidiaries. As of the date of this Agreement, the
consolidated federal income tax returns of the Company and the Subsidiaries have
been audited by the Internal Revenue Service (or the appropriate statute of
limitations has expired) for all fiscal years through and including December 31,
1994. All deficiencies asserted or proposed as a result of any examinations or
audits of any tax returns have been paid or adequately provided for on the books
of the Company or one of its consolidated Subsidiaries in accordance with
generally accepted accounting principles. Neither the Company nor any of its
consolidated Subsidiaries has waived any statute of limitation in respect of
Income Taxes or agreed to any extension of time with respect to an Income Tax
assessment or deficiency. The Company is not a party to or bound by any
agreement providing for the allocation or sharing of taxes with any entity which
is not, either directly or indirectly, a subsidiary of the Company. Neither the
Company nor, to its knowledge, any of its consolidated Subsidiaries (i) has
filed a consent pursuant to or agreed to the application of Section 341(f) of
the Code, (ii) has an application pending with respect to any tax requesting
permission for a change in accounting method, or (iii) is required to make any
adjustments to income pursuant to Section 481 of the Code. The Company does not
own real property that would or may subject the parties hereto or the Surviving
Corporation to a transfer or gains tax in Illinois as a result of the Merger
(unless Purchaser elects to merge the Company into Merger Sub and except for
transactions after the Merger). The Company is not a "United States real
property holding corporation" as defined in Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. To the
knowledge of the Company, all taxes and assessments required to have been
withheld or collected by the Company on or before the date hereof have been duly
withheld and collected on or before the date hereof and have been duly paid over
to the proper governmental authorities, as and to the extent required by law.
For the purpose of this Agreement, the term "tax" (and, with correlative
meaning, the terms "taxes" and "taxable") shall include all federal, state,
local and foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise and other taxes, duties or
assessments of any nature whatsoever, together with all interest, penalties and
additional imposed with respect to such amounts.
4.18 PENSION AND BENEFITS PLANS; ERISA.
(a) SCHEDULE 4.18(a) hereto contains a true and complete list of
(i) all "employee benefit plans", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all other
employee compensation and benefit arrangements or payroll practices, including,
without limitation, "change of control," severance pay, sick leave or other
leave of absence, vacation or holiday pay, salary continuation or disability,
consulting or compensation, retirement, deferred compensation, bonus or other
incentive compensation, stock option, award or purchase, restricted stock award,
hospitalization, medical insurance, life insurance and scholarship or other
educational assistance programs or agreements maintained by the Company or any
of its
22
<PAGE>
Subsidiaries or to which the Company or any of its Subsidiaries contributed or
were required to contribute during the past six (6) years or is obligated to
contribute thereunder ("Company Employee Benefit Plans"), and (ii) all "employee
pension plans", as defined in Section 3(2) of ERISA maintained by the Company or
any of its Subsidiaries or to which the Company or any of its Subsidiaries
contributed or is obligated to contribute thereunder ("Company Pension Plans").
None of the Company Employee Benefit Plans or the Company Pension Plans is a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA or is or has been
subject to Section 4036 or 4064 of ERISA ("Multiple Employer Plans") or a
defined benefit pension plan subject to Title IV of ERISA.
(b) Except as set forth on SCHEDULE 4.18(b), each Company
Pension Plan and Company Employee Benefit Plan intended to qualify under Section
401 of the Code so qualify and has received a favorable determination letter
from the Internal Revenue Service. The trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the Code, and nothing
has occurred with respect to the operation of the Company Pension Plans or
Company Employee Benefit Plans which could cause the loss of such qualification
or exemption or the imposition of any material liability (except for benefits,
insurance premiums or administrative expenses), penalty, or tax under ERISA or
the Code.
(c) All contributions required by law to have been made under
any of the Company Employee Benefit Plans or the Company Pension Plans to any
funds or trusts established thereunder or in connection therewith have been made
by the due date thereof (including any valid extension) and no accumulated
funding deficiencies (without regard to any waivers granted under Section 412 of
the Code) exist in any of the Company Employee Benefit Plans or the Company
Pension Plans subject to Section 412 of the Code.
(d) True, correct and complete copies of the following
documents, with respect to each of the Company Employee Benefit Plans and the
Company Pension Plans, have been made available or delivered by the Company to
Parent: (A) all plan, agreements and related trust documents, and amendments
thereto, (B) the most recent Form 5500 (with Schedules) with respect to each
plan (if any such report was required), (C) the most recent actuarial report and
valuation, (D) the most recent Internal Revenue Service determination letter,
(E) all summary plan descriptions (whether or not required to be furnished
pursuant to ERISA) and the most recent annual and periodic accounting of related
plan assets with respect to each Employee Benefit Plan, (F) written descriptions
of all material non-written agreements relating to the Company Employee Benefit
Plans and the Company Pension Plans, (G) employment, consulting or individual
compensation, severance, deferred compensation or any similar agreements (and
any amendments to such agreements), (H) employee manuals and policies, and (I)
material employee communications relating to each plan other than communications
involving routine claims for benefits.
(e) There are no pending actions, claims or lawsuits which have
been instituted or, to the knowledge of the Company, threatened against Company
Employee Benefit Plans or the Company Pension Plans, the assets of any of the
trusts under such plans, the plan sponsor, the plan administrator or any
fiduciary of the Company Employee Benefit Plans or the Company Pension Plans
with respect to the operation of such plans (other than routine benefit claims).
To the Company's knowledge, no event has occurred and there exists no condition
or set of circumstances
23
<PAGE>
in connection with which the Company or any Subsidiary or any Company Employee
Benefit Plan or Company Pension Plan, directly or indirectly, could be subject
to any liability under ERISA, the Code or any other law, regulation or
governmental order including all Canadian federal, provincial and municipal law,
regulations or governmental orders applicable to any Benefit Plan (other than
for customary benefits).
(f) Except as set forth on SCHEDULE 4.18(f), the Company
Employee Benefit Plans and the Company Pension Plans have been maintained and
administered, in all material respects, in accordance with their terms and with
all provisions of ERISA (including applicable regulations thereunder), other
applicable Federal and state law and applicable Canadian federal, provincial or
municipal law, and neither the Company nor any of its Subsidiaries nor any
"party in interest" or "disqualified person" with respect to the Company
Employee Benefit Plans and the Company Pension Plans has engaged in a
"reportable event" (as such term is defined in ERISA) or non-exempt "prohibited
transaction" within the meaning of Section 4975 of the Code or Section 406 of
ERISA. No termination of a Company Employee Benefit Plan or Company Pension
Plan, if it has occurred or were to occur before the consummation of the Offer
or the Effective Time, as the case may be, would present a risk of liability to
any governmental entity or other persons that would have a Material Adverse
Effect.
(g) Except as disclosed on SCHEDULE 4.18(g), neither the Company
nor any of its Subsidiaries maintains retiree life or retiree health insurance
plans which are "welfare benefit plans" within the meaning of Section 3(l) of
ERISA and which provide for continuing benefits or coverage for any participant
or any beneficiary of a participant except as may be required under Section
4980B of the Code and at the sole expense of the participant or the
participant's beneficiary.
(h) Neither the Company nor any of its Subsidiaries has any
contract, plan, or commitment, whether legally binding or not, to create any
additional Company Employee Benefit Plan or Company Pension Plan or to modify
any existing Company Employee Benefit Plan or Company Pension Plan.
(i) Except as set forth in SCHEDULE 4.18(i), the Company has no
contract, agreement, obligation or arrangement with any employee or other
person, any of the payments or other benefits of which will be increased or the
vesting of the benefits under which will be accelerated by any change of control
of the Company or the occurrence of any of the transactions contemplated by this
Agreement or the benefits under which will be calculated on the basis of the
transactions contemplated by this Agreement.
(j) With respect to any period for which any contribution to or
in respect of any Company Employee Benefit Plan or Company Pension Plan is not
yet due or owing, the Company and each of its Subsidiaries has made due and
sufficient current accruals for such contributions and other payments in
accordance with generally accepted accounting principles and such current
accruals through March 31, 1999 are duly and fully provided for in the financial
statements of such entity for the period then ended.
24
<PAGE>
(k) Except as disclosed in the Filings or SCHEDULE 4.18(k),
there exist no employment, consulting, severance or termination agreements,
arrangements or understandings between the Company and any of the ten (10)
highest compensated employees of the Company and its Subsidiaries as measured by
earnings reported on Form W-2s for the year ended December 31, 1998.
4.19 INSURANCE POLICIES AND COVERAGES. SCHEDULE 4.19 lists and describes
all insurance policies (including policy amounts and deductibles) which provide
coverage to the Company, including, without limitation, general liability, fire
and title insurance policies on its assets (the "Insurance Policies"). To the
Company's knowledge, the Company's insurance coverages are adequate for the
conduct of the business and for the full repair or replacement of its assets in
the event any such assets are damaged, destroyed or lost as the result of any
fire or other casualty or loss customarily insured against under extended fire
and "all risk" insurance policies. The Company has not received notice of
termination of any policy and has no knowledge of any facts or conditions which,
with notice or lapse of time, or both, would or might result in a termination of
any of the policies. Neither the Company nor any of its Subsidiaries is in
material default, and to the Company's knowledge, no event has occurred (or
failed to occur) that, with the passage of time or the giving of notice or both
would constitute a material default by the Company under any such policy of
insurance, or would entitle the insurer under such insurance to deny coverage of
any claim against the Company or any Subsidiary.
4.20 ENVIRONMENTAL MATTERS. Except as disclosed in the Filings prior to
the date hereof, to the knowledge of the Company, (i) the Company and its
Subsidiaries are in substantial compliance with all applicable Environmental
Laws; (ii) the properties presently or formerly owned or operated by the Company
or its Subsidiaries (including, without limitation, soil, groundwater or surface
water on, under or adjacent to the properties, and buildings thereon) (the
"Properties") do not contain any Hazardous Substance (as hereinafter defined)
other than as permitted under applicable Environmental Laws, do not, and have
not, contained any underground storage tanks, do not have any asbestos present
(and have not had any asbestos removed therefrom) and have not been used as a
sanitary landfill or hazardous waste disposal site (provided, however, that with
respect to Properties formerly owned or operated by the Company, such
representation is limited to the period during which period the Company owned or
operated such Properties); (iii) neither the Company nor any of its Subsidiaries
has received any notices, demand letters or request for information from any
governmental entity or any third party alleging that the Company may be in
substantial violation of, or liable under, any Environmental Law and neither the
Company, its Subsidiaries nor the Properties is subject to any court order,
administrative order or decree arising under any Environmental Law; and (iv) no
Hazardous Substance has been disposed of, released or transported from any of
the Properties during the time such Property was owned or operated by the
Company or one of its Subsidiaries, other than as permitted under applicable
Environmental Law. Following the date hereof, except as would not reasonably be
expected to have a Material Adverse Effect, the representation in this Section
is true and correct without regard to any limitation as to the date hereof or
the knowledge of the Company. "Environmental Law" means any Federal, state,
foreign or local law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, common law, order, judgment, decree,
injunction, requirement or agreement with any governmental entity, (x) relating
to the protection, preservation or restoration of the environment, (including,
25
<PAGE>
without limitation, air, water, surface water, groundwater, surface or
subsurface soil or any other natural resource), or to human health or safety, or
(y) the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Substances, in each case as amended and as now in effect.
"Hazardous Substance" means (A) any substance presently listed, defined,
designated or classified as hazardous, toxic or radioactive under any
Environmental Law, whether by type or by quantity, including any substance
containing such substance as a component; (B) petroleum and petroleum products
including crude oil and any fractions thereof; (C) natural gas, synthetic gas,
and mixtures thereof; (D) radon; (E) asbestos; and (F) any substance with
respect to which a federal, state or local agency requires environmental
investigation, monitoring, reporting or remediation.
4.21 RIGHTS AGREEMENT. The Company has amended its Rights Agreement
dated as of July 26, 1989 between the Company and First Chicago Trust Company of
New York (the "Rights Agreement"), so that (i) neither the Parent nor the
Purchaser (nor any entity acquiring Shares as contemplated by this Agreement)
shall constitute an "Acquiring Person" as defined in Section 1(a) of the Rights
Agreement as a result of the execution and delivery of this Agreement and the
Option and Voting Agreements dated of even date herewith between Parent and the
stockholders of the Company named therein (the "Option Agreements"), (ii) the
acquisition of shares of the Common Stock of the Company by the Parent or the
Purchaser (or any affiliate of the Parent's or the Purchaser's) pursuant to the
consummation of the Offer or the consummation of the transactions contemplated
by this Agreement and the Option Agreements shall not cause the Parent or the
Purchaser or any of their respective affiliates to become an "Acquiring Person,"
(iii) no Distribution Date (as defined in the Rights Agreement) shall occur as a
result of the commencement of the Offer, and (iv) no Shares Acquisition Date (as
defined in the Rights Agreement) shall occur as a result of the commencement of
the Offer and/or the execution and delivery of this Agreement, and/or the Option
Agreements and/or the consummation of any of the transactions contemplated
hereby or thereby. Such amendment (the "Rights Agreement Amendment") also
provides that the Final Expiration Date (as defined in the Rights Agreement)
with respect to the Rights shall occur upon acceptance by Parent or Purchaser
(or other wholly owned subsidiary of Parent) of the Shares pursuant to the
Offer.
4.22 YEAR 2000. The Company has reviewed the areas within the business
and operations of the Company and its Subsidiaries which could be adversely
affected by, and has developed a plan to address on a timely basis, the "Year
2000 Problem" (that is, the risk that computer applications used by the Company
and its Subsidiaries may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), and has made related appropriate inquiry of material
suppliers, vendors and customers. Based on its review and inquiries, the
Company reasonably believes that the Year 2000 Problem will not have a Material
Adverse Effect.
4.23 OPINION OF FINANCIAL ADVISOR. The Company has received the opinion
of Schroder & Co. Inc. dated April 29, 1999, to the effect that, as of the date
hereof, the Offer Consideration to be received by the holders of Shares in the
Offer and the Merger Consideration to be received by the holders of Shares in
the Merger is fair from a financial point of view to such holders, a signed,
true
26
<PAGE>
and complete copy of which opinion has been delivered to Parent, and such
opinion has not been withdrawn or modified.
4.24 SECTION 203 OF THE DELAWARE LAW NOT APPLICABLE. The Board has taken
all actions so that the restrictions contained in Section 203 of the DGCL
applicable to a "business combination" (as defined in Section 203) will not
apply to the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated by this Agreement.
4.25 ABSENCE OF CERTAIN CHANGES. Except as and to the extent set forth
on, or reserved against on, the consolidated balance sheet of the Company and
its consolidated Subsidiaries as of December 31, 1998, including the notes
thereto, to the Company's knowledge, with respect to each of the Subsidiaries,
since the later of December 31, 1995 or the respective date of incorporation or
acquisition of the relevant Subsidiary, there has not been (i) any adverse
change in the condition (financial or otherwise) of the properties, assets,
liabilities, results of operation of the relevant Subsidiary, or (ii) any
damage, destruction or loss (whether or not covered by insurance) adversely
affecting the properties, assets, liabilities, financial condition, results of
operations or business prospects of the relevant Subsidiary, which, in any case,
either alone or in the aggregate, would result in a Material Adverse Effect.
5. CONDUCT OF BUSINESS PENDING THE MERGER.
The Company covenants and agrees that, prior to the earlier of the
Designation Date and the Effective Time, unless Parent shall otherwise agree in
writing or as otherwise expressly contemplated by this Agreement:
5.1 The business of the Company and its Subsidiaries shall be conducted
in the ordinary course of business, and the Company and its Subsidiaries shall
not take any material action except in the ordinary course of business and
consistent with past practices, and the Company and its Subsidiaries shall use
their respective best efforts to maintain and preserve their respective business
organization, assets, employees and advantageous business relationships.
5.2 Without Parent's prior written consent, neither the Company nor any
of its Subsidiaries shall directly or indirectly do any of the following:
(a) amend its charter or by-laws (or comparable charter
documents);
(b) except as set forth on SCHEDULE 5.2(b), authorize for
issuance, issue, sell, deliver or agree or commit to issue, sell or deliver
(whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) any stock of any class or any
other securities, except in the case of Shares of the Company, as required by
Employee Options outstanding on the date hereof or Company Employee Benefit
Plans as in effect on the date hereof, or amend any of the terms of any such
securities or agreements outstanding on the date hereof;
27
<PAGE>
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, or redeem or otherwise acquire any securities of the Company or any of
the Subsidiaries;
(d) (i) incur or assume any long-term debt, except in the
ordinary course of business under existing facilities or required refinancings
or replacements thereof, or incur or assume any short-term debt, except in the
ordinary course of business, or issue or sell any debt securities or rights to
acquire any debt securities of the Company or any Subsidiary; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except
wholly-owned subsidiaries of the Company in the ordinary course of business and
consistent with past practice; or (iii) make any loans, advances or capital
contributions to, or investments in, any person other than a wholly-owned
subsidiary of the Company in the ordinary course of business (except for
customary loans or advances to directors, officers or employees in accordance
with past practice or as required by existing contractual arrangements or
agreements);
(e) other than as set forth on SCHEDULE 5.2(e) or as required by
ERISA, as now or hereafter in effect, enter into, adopt or amend any bonus,
profit sharing, compensation, severance, termination, stock option, stock
appreciation right, restricted stock, performance unit, pension, retirement,
deferred compensation, employment, severance or other employee benefit
agreements, trusts, plans, funds or other arrangements for the benefit or
welfare of any director, officer or employee, or (except (i) in the case of
persons whose compensation has been established by the Compensation Committee of
the Board of Directors, for increases in amounts previously approved by such
Committee, and (ii) in the case of all other directors, officers or employees,
for normal increases in the ordinary course of business that are consistent with
past practices and that, in the aggregate, do not result in a material increase
in benefits or compensation expense to the Company), increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit or make any distribution or award not required by any existing plan or
arrangement (including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units) or enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing;
(f) except pursuant to existing contractual arrangements or
agreements disclosed pursuant to this Agreement, acquire, sell, lease, license,
dispose of, mortgage or otherwise encumber any assets outside the ordinary
course of business or any assets which are material, in the aggregate, to the
Company and its Subsidiaries, taken as a whole, or enter into any material
commitment or transaction outside the ordinary course of business;
(g) except as may be required by law, take any action to
terminate or amend or accelerate the vesting of any benefits under any of its
employee benefit plans;
(h) waive or release any rights material to the Company and its
Subsidiaries, taken as a whole, or make any payment, direct or indirect, of any
material liability of the Company or any of its Subsidiaries before the same
comes due in accordance with its terms;
28
<PAGE>
(i) except as set forth on SCHEDULE 5.2(i), acquire or agree to
acquire, including, without limitation, by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof without Parent's
prior written consent;
(j) except as set forth in SCHEDULE 5.2(j), make any capital
expenditure or expenditures which exceed $250,000 in the aggregate; and
(k) take, or agree in writing or otherwise to take, any of the
foregoing actions or any action which would make any representation or warranty
of the Company contained in this Agreement untrue or incorrect as of the date
when made or as of a future date.
6. ADDITIONAL AGREEMENTS
6.1 PROXY STATEMENT. Promptly after consummation of the Offer, if
Company stockholder approval is required by law, the Company and Parent shall
prepare and shall file with the Commission as soon as is reasonably practicable
a preliminary proxy statement, together with a form of proxy, or preliminary
information statement with respect to the meeting of the Company's stockholders
for the purpose of approving and adopting this Agreement and the Merger and all
actions contemplated hereby which require the approval of the Company's
stockholders, and as promptly as practicable thereafter, subject to compliance
with the rules and regulations of the Commission, shall mail a definitive proxy
statement or information statement to stockholders of the Company. The term
"Proxy Statement" shall mean such proxy or information statement at the time it
initially is mailed to the Company's stockholders and all amendments or
supplements thereto, if any, similarly filed and mailed. The information
provided and to be provided by Parent, the Purchaser and the Company,
respectively, for use in the Proxy Statement shall, on the date the Proxy
Statement is first mailed to the Company's stockholders and on the date of the
Special Meeting (as defined in Section 6.2), be true and correct in all material
respects and shall not omit to state any material fact necessary in order to
make such information not misleading, and Parent, the Company and the Purchaser
each agree to correct any information provided by it for use in the Proxy
Statement which shall have become false or misleading in any material respect.
The Proxy Statement shall comply as to form in all material respects with all
applicable requirements of federal securities laws.
6.2 ACTION OF STOCKHOLDERS OF THE COMPANY; VOTING AND DISPOSITION OF THE
SHARES; APPROVAL BY PARENT.
(a) Promptly after consummation of the Offer, if required by
law, the Company shall take all action necessary, in accordance with the DGCL
and its Certificate of Incorporation and Bylaws, to convene a meeting of its
stockholders (the "Special Meeting") as promptly as practicable to consider and
vote upon the approval of this Agreement and the Merger (if required by the
DGCL). The Proxy Statement shall contain the recommendation of the Board of
Directors that the stockholders of the Company vote to adopt and approve the
Merger and this Agreement, and the Company shall, if proxies are solicited, use
its best efforts to solicit from its stockholders proxies in favor of such
adoption and approval and to take all other action necessary or, in the
reasonable
29
<PAGE>
judgment of Parent, helpful to secure the vote or consent of stockholders
required by the DGCL to effect the Merger; provided, however, that the Board of
Directors of the Company at any time prior to the Effective Time may withdraw,
modify or change any such recommendations or refrain from soliciting proxies in
favor of the Merger to the extent that the Board of Directors of the Company
determines in good faith after consultation with and based upon the advice of
outside legal counsel that the failure to so withdraw, modify or change its
recommendation or to refrain from soliciting proxies in favor of the Merger
would cause the Board of Directors of the Company to breach its fiduciary duties
to the Company's stockholders under applicable law. Notwithstanding anything to
the contrary contained in this Agreement, any such withdrawal, modification or
change of recommendation in accordance with the provisions of this Section
6.2(a) shall not constitute a breach of this Agreement by the Company, but the
Company shall nonetheless submit this Agreement to its stockholders as
contemplated by this Section 6.2. At the Special Meeting, Parent and its direct
and indirect subsidiaries and affiliates shall vote, or cause to be voted, all
of the Shares then owned by them in favor of the Merger.
(b) Parent and the Purchaser shall not, and they shall cause
their direct and indirect subsidiaries and affiliates not to, sell, transfer,
assign, encumber or otherwise dispose of the Shares acquired by them pursuant to
the Offer or otherwise prior to the Special Meeting; provided, however, that
this Section 6.2(b) shall not apply to (i) any pledge or other encumbrance of
any or all of such Shares effected in connection with any financing for the
Offer and the Merger; and (ii) the sale, transfer, assignment, encumbrance or
other disposition of any or all of such Shares in transactions involving solely
Parent, the Purchaser and/or one or more of their direct or indirect
wholly-owned subsidiaries.
(c) Parent shall (i) cause Purchaser promptly to submit this
Agreement and the transactions contemplated hereby for approval and adoption by
its parent by written consent of sole stockholder; (ii) cause the shares of
capital stock of Purchaser to be voted for adoption and approval of this
Agreement and the transactions contemplated hereby; and (iii) cause to be taken
all additional actions necessary for Purchaser to adopt and approve this
Agreement and the transactions contemplated hereby.
(d) Notwithstanding the foregoing, at the election of the
Parent, in the event that Purchaser shall acquire at least 90% of the then
outstanding Shares, the parties hereto agree, subject to Article 7, to take all
necessary and appropriate action to cause the Merger to become effective, in
accordance with Section 253 of the DGCL, as soon as reasonably practicable after
such acquisition, without a meeting of the stockholders of the Company.
6.3 EXPENSES.
(a) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Offer or the Merger is consummated,
PROVIDED, HOWEVER, that:
(i) The Company agrees that, if (A) the Purchaser shall
terminate this Agreement pursuant to Section 8.1(c) (iii) or (iv);
(B) the Company shall terminate
30
<PAGE>
this Agreement pursuant to Section 8.1(b)(v); (C) the Purchaser
shall terminate the Offer because the Minimum Condition (as defined
in ANNEX I hereof) is not satisfied and at or prior to such time the
Company has received one or more proposals for a Competing
Transaction which at the time of such occurrence has not been
absolutely and unconditionally withdrawn or abandoned and within six
(6) months after the date of termination a Competing Transaction is
entered into by the Company, and within twelve (12) months of such
termination a Competing Transaction is consummated, then, in any
such case, promptly after any such termination (or, with respect to
item (C), upon the consummation of such Competing Transaction) by
Parent or the Company, the Company shall pay to Purchaser or its
designee an amount equal to $9,000,000 (the "Break-up Fee") and
shall reimburse Parent for all of its out-of-pocket costs and
expenses in connection with its investigation of the Company and its
Subsidiaries and the negotiation and implementation of this
Agreement up to an amount equal to $1,500,000 to Purchaser or its
designee;
(ii) the Purchaser agrees that if this Agreement is terminated by
the Company pursuant to Section 8.1(b)(i) or (iv) hereof, the
Purchaser shall pay to the Company the sum of $4,500,000.
(b) Any amount payable by the Company or the Purchaser shall be
made as promptly as practicable, but in no event later than the third (3rd)
business day following termination of this Agreement (or, with respect to item
(C), upon the consummation of such Competing Transaction) and shall be made by
wire transfer of immediately available funds to an account designated by the
payee.
(c) The Company and the Purchaser each agree that the payments
provided for by Sections 6.3(a)(i) and Section 6.3(a)(ii) shall be the sole and
exclusive remedy of the Purchaser and the Company, respectively, upon any
termination of this Agreement as described in Section 6.3(a) and such remedies
shall be limited to the sum stipulated in Section 6.3(a) regardless of the
circumstances (including willful or deliberate conduct) giving rise to such
termination.
6.4 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein
provided, including but not limited to Section 6.2(a), each of the parties
hereto agrees to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by the Offer and this Agreement, and to cooperate with
each other in connection with the foregoing, including using reasonable efforts
(a) to obtain all necessary waivers, consents and approvals from other parties
to material loan agreements, leases and other contracts; (b) to obtain all
necessary consents, approvals and authorizations as are required to be obtained
under any federal, state or foreign law or regulations; (c) to resolve any
action, suit, proceeding or investigation of the type described in paragraph (a)
of ANNEX I which shall have been instituted; (d) to defend all lawsuits or other
legal proceedings (other than as specified in the preceding clause (c))
challenging this Agreement or the consummation of the transactions contemplated
hereby; (e) promptly to effect all necessary registrations and filings
including, but not limited to, filings under the HSR Act and prompt submissions
of information requested by governmental authorities; and (f) to fulfill all
31
<PAGE>
conditions to this Agreement. The parties hereto shall cooperate with each
other in connection with the making of all such filings, including by providing
copies of all such documents to the nonfiling party and its advisors prior to
filing and providing a reasonable opportunity for comment in connection
therewith. In addition, after the date of consummation of the Offer, Parent and
Purchaser shall use all reasonable efforts to cause the Company to perform any
of its obligations to be performed under this Agreement from such date until the
Effective Time, including voting all Shares held by either of them in favor of
approving this Agreement.
6.5 THIRD PARTY OFFERS. The Company shall immediately cease and cause
to be terminated all existing discussions or negotiations relating to a
Competing Transaction (as defined below), with any parties conducted heretofore.
The Company will not, directly or indirectly, and will instruct its
representatives not to, directly or indirectly, initiate, (i) solicit or
encourage (including by way of furnishing information or assistance), or take
any other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing
Transaction, (ii) enter into or maintain discussions or negotiate with any
person in furtherance of or relating to such inquiries or to obtain a Competing
Transaction, (iii) agree to or endorse any Competing Transaction, or (iv)
authorize or permit any representative of the Company or any of its Subsidiaries
to take any such action. The Company shall promptly notify Purchaser if any
such inquiries or proposals are received by the Company or an affiliate of the
Company regarding a Competing Transaction, and the Company shall promptly inform
Purchaser in reasonable detail of any such inquiry or proposal. The Company
shall keep Parent informed, on a current basis, of significant developments and
changes in status relating to any such proposals; provided, however, that prior
to the consummation of the Offer, nothing contained in this Section 6.5 shall
prohibit the Board of Directors of the Company from (i) furnishing information
to, or entering into discussions or negotiations with, any person that after the
date hereof makes an unsolicited proposal regarding a Competing Transaction or
agreeing to or endorsing any Competing Transaction, if, and only to the extent
that, (A) the Board of Directors of the Company, after consultation with and
based upon the advice of independent legal counsel, determines in good faith
that such action is required for the Board of Directors of the Company to comply
with its fiduciary duties to stockholders imposed by Delaware law, (B) prior to
furnishing such information to, or entering into discussions or negotiations
with such person or agreeing to or endorsing any Competing Transaction, the
Board of Directors of the Company determines in good faith, after consultation
with and based upon the advice of a financial advisor of a nationally recognized
reputation, that such Competing Transaction is a Superior Proposal, (C) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person, the Company provides written notice to Purchaser to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such person, and (D) such information to be so furnished has
been previously delivered to Purchaser; or (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a Competing Transaction. The
Company agrees that if it determines that a Competing Transaction is a Superior
Proposal, it shall immediately notify Purchaser of such determination, and shall
not take any action with respect to such Competing Transaction or this Agreement
for at least forty-eight (48) hours after such notification.
For purposes of this Agreement, "Competing Transaction" shall mean any of
the following involving the Company or any of its Subsidiaries: (a) except as
disclosed in SCHEDULE 5.2(i) any
32
<PAGE>
merger, consolidation, share exchange, business combination, or other similar
transaction; (b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 20% or more of the assets of the Company and its Subsidiaries,
taken as a whole, in a single transaction or series of transactions; (c) any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of the outstanding shares of capital stock of
the Company or the filing of a registration statement under the Securities Act
in connection therewith; (d) any solicitation of proxies in opposition to
approval by the Company's stockholders of the Merger; (e) the adoption by the
Company of a plan of liquidation, the declaration or payment by the Company of
an extraordinary dividend on any of its shares of capital stock or the
effectuation by the Company of a recapitalization or other type of transaction
that would involve either a change in the Company's outstanding capital stock or
a distribution of assets of any kind to the holders of such capital stock; (f)
the repurchase by the Company or any of its Subsidiaries of 20% or more of the
outstanding Shares; or (g) any agreement to, or public announcement by the
Company or any other person, entity or group of a proposal, plan or intention
to, do any of the foregoing.
For purposes of this Agreement, a "Superior Proposal" means any proposal
relating to a Competing Transaction (as hereinafter defined) made by a third
party on terms which (if consummated) the Board of Directors of the Company
determines in its good faith judgment (based upon the advice of a financial
advisor of nationally recognized reputation) to be more financially favorable to
the Company's stockholders than the Offer and the Merger and for which
financing, to the extent required, is then committed or which, in the good faith
judgment (based upon the advice of a financial advisor of nationally recognized
reputation) of the Board of Directors of the Company, is reasonably capable of
being financed by such third party.
6.6 ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the Effective Time,
the Company will give Parent and the Purchaser and their authorized
representatives, and representatives of financial institutions identified by
Parent as its sources of financing, at reasonable times and upon reasonable
notice, full access to all officers, employees, offices, warehouses and other
facilities and to all books and records of the Company and each of its
Subsidiaries, will permit Parent and the Purchaser to make such inspections as
Parent or the Purchaser may reasonably require and will cause the officers and
independent auditors of the Company and its Subsidiaries to furnish Parent and
the Purchaser with such financial and operating data and other information
including access to working papers of its independent auditors with respect to
the business and properties of the Company and its Subsidiaries as Parent or the
Purchaser may from time to time reasonably request.
(b) Parent and the Purchaser will, and Parent will cause its
representatives to, comply with the terms of the letter agreement dated
March 18, 1999, between the Company and Parent. The term "Representative" as
used this Section 6.6(b) shall have the meaning set forth in such letter
agreement.
33
<PAGE>
6.7 OFFICERS' AND DIRECTORS' INSURANCE; INDEMNIFICATION.
(a) It is understood and agreed that the Company shall indemnify
and hold harmless, and, after the Effective Time, the Surviving Corporation
shall, and, so long as the Surviving Corporation or any of its successors and
assigns is an affiliate of Parent, Parent shall, and shall cause the Surviving
Corporation to, indemnify and hold harmless, each present and former director
and officer of the Company or any of its Subsidiaries (the "Indemnified
Parties") against any losses, claims, damages, liabilities, costs, expenses
(including attorneys fees), judgments and amounts paid in settlement in
connection with any threatened, pending or completed claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative (collectively, "Claims"), arising out of or pertaining to any
action or omission or alleged action or omission occurring on or prior to the
Effective Time and based in whole or in part on the fact that such person is or
was such a director or officer (including, without limitation, any Claims which
arise out of or relate to the transactions contemplated by this Agreement)
whether asserted or commenced prior to or after the Effective Time, to the
fullest extent now or hereafter permitted by the DGCL , including provisions
relating to advances of expenses incurred in the defense of any action or suit,
provided that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under the DGCL
shall be made by independent counsel mutually selected by the Indemnified Party
and the Surviving Corporation. In the event any such Claim is brought against
any Indemnified Party (whether arising before or after the Effective Time), (i)
the Indemnified Parties may retain counsel satisfactory to them and the Company
(or them and the Surviving Corporation after the Effective Time), (ii) the
Company (or after the Effective Time, the Surviving Corporation) shall, and, so
long as the Surviving Corporation or any of its successors and assigns is an
affiliate of Parent, Parent shall, and shall cause the Surviving Corporation to,
pay all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received, and (iii) the Company (or after
the Effective Time, the Surviving Corporation) will, and, so long as the
Surviving Corporation or any of its successors and assigns is an affiliate of
Parent, Parent shall, and shall cause the Surviving Corporation to, use their
respective best efforts to assist in the vigorous defense of any such matter;
provided, that neither Parent, the Company nor the Surviving Corporation shall
be liable for any settlement effected without Parent's written consent, which
consent, however, shall not be unreasonably withheld. Any Indemnified Party
wishing to claim indemnification under this Section 6.7, upon learning of any
such Claim, shall notify the Company or the Surviving Corporation or Parent, as
the case may be, thereof and shall deliver to the Company or the Surviving
Corporation or Parent an undertaking to repay any amounts advanced pursuant
hereto when and if a court of competent jurisdiction shall render final
judgment, not subject to appeal, that such Indemnified Party was not entitled to
indemnification under this Section. Notwithstanding the foregoing, the
Surviving Corporation, including its affiliates, shall not, in connection with
any one such action or proceeding or separate but substantially similar actions
or proceedings arising out of the same general allegations, be liable for the
fees and expenses of more than one separate firm of attorneys at any time for
all Indemnified Parties except to the extent that: (i) such Indemnified Parties
have been advised by counsel that there exist actual or potential differing
interests between them, or (ii) local counsel, in addition to such parties'
regular counsel, is necessary or desirable in order to effectively defend
against such action or proceeding. The Surviving Corporation, including its
affiliates, shall not have any obligation hereunder to any Indemnified Party
when and if a court of competent
34
<PAGE>
jurisdiction shall ultimately determine, and such determination shall have
become final and not subject to further appeal, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
(b) For six (6) years after the Effective Time, the Surviving
Corporation shall, and, so long as the Surviving Corporation or any of its
successors and assigns is an affiliate of Parent, Parent shall cause the
Surviving Corporation to, maintain, without modification or amendment that would
adversely affect the rights thereunder of any Indemnified Party, the provisions
of the Company's certificate of incorporation and bylaws with respect to
indemnification and liability of officers, directors and employees.
(c) For six (6) years after the Effective Time, the Surviving
Corporation shall, and, so long as the Surviving Corporation or any of its
successors and assigns is an affiliate of Parent, Parent shall cause the
Surviving Corporation to, provide officers' and directors' liability insurance
covering the Indemnified Parties who are currently covered by the Company's
officers' and directors' liability insurance policy on terms no less favorable
than those of such policy in terms of coverage and amounts; provided, that in no
event shall the Surviving Corporation or the Parent be required to expend in
excess of 200% of the rates currently paid by the Company (it being understood
that if any annual premium would exceed such agreed upon amount, the Surviving
Corporation shall provide the maximum coverage available for such amount).
(d) Without limiting the generality of the other provisions of
this Section 6.7, the Surviving Corporation shall, and, so long as the Surviving
Corporation or any of its successors and assigns is an affiliate of Parent,
Parent shall cause the Surviving Corporation to, honor any agreements disclosed
to Parent and the Purchaser prior to the date of this Agreement between the
Company and its directors, officers, employees and agents providing for
indemnification.
(e) This Section 6.7 shall survive the Merger, shall be binding
upon all successors and assigns of the Surviving Corporation, shall continue for
six (6) years after the Effective Time (or, in the case of Claims occurring on
or prior to the expiration of such six (6) year period and as to which notice
shall have been provided pursuant to Section 6.7(a) which have not been resolved
prior to the expiration of such six (6) year period, until such Claims are
finally resolved) and is intended to benefit each of the Indemnified Parties,
each of whom shall be entitled to enforce this Section 6.7 against the Company,
Parent and the Surviving Corporation. In the event the Surviving Corporation or
any of its 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 all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Surviving
Corporation assume the obligations set forth in this Section 6.7.
6.8 CERTAIN CONTRACTS. Parent hereby agrees to pay, or cause the
Surviving Corporation to pay, without offset, deduction, counterclaim,
interruptions or deferment (other than as required by applicable law) all
benefits due under the terms of all contracts, agreements, arrangements,
policies and commitments of the Company and its Subsidiaries with or with
respect to its current or former employees, officers and directors
(collectively, the "Contracts") which benefits are vested
35
<PAGE>
on or prior to the Effective Time or which become vested thereafter or as a
result of the transactions contemplated hereby. Without limiting the foregoing,
Parent acknowledges that the Company has entered into, and hereby agrees to
honor and to cause the Surviving Corporation to honor the employment agreements
identified on SCHEDULE 6.8 hereto.
6.9 EMPLOYEE STOCK OWNERSHIP PLAN. All accounts in the Company's
Employee Stock Ownership Plan (the "ESOP") shall become 100% vested as of the
Effective Time. The Company shall take all steps necessary to terminate, as of
or as promptly as practicable after the Effective Time, the ESOP, and the
balance of each participant's account in the ESOP shall be delivered to such
participant on or as promptly as practicable after the termination of the ESOP.
6.10 EMPLOYEE MATTERS.
(a) With respect to each active employee of the Company or any
Subsidiary as of the Effective Time (including any such employee absent as of
such date from active service for any reason, including but not limited to
disability or leave of absence but excluding any terminated employee receiving
severance) ("Applicable Employees"), Parent shall cause the Surviving
Corporation to provide, for a period ending on the first anniversary of the
Effective Time employee benefit plans, programs, policies and arrangements
(other than stock options and other equity-based benefits) which in the
aggregate are no less favorable than those provided under the applicable
employee benefit plans, programs, policies and arrangements of the Company and
each Subsidiary in effect on the Closing. Such Applicable Employees shall be
given credit under each new employee benefit plan, program, policy or
arrangement of Purchaser or any of its Affiliates in which such Applicable
Employees are eligible to participate for all service with the Company or any
Subsidiary or any predecessor employer (to the extent such credit was given by
the Company or any Subsidiary) for purposes of eligibility, vesting and benefit
accrual.
(b) Purchaser shall cause its medical, dental, and other health
plans, to the extent that such plans will apply to the Company's employees, to
(i) waive any preexisting condition limitations for conditions covered under the
applicable medical, dental or other health plans of the Company or any
Subsidiary (the "Company Welfare Plans"), and (ii) honor any deductible and
out-of-pocket expenses incurred by the Applicable Employees and their dependents
under the Company Welfare Plans during the portion of 1999 preceding the
Closing. Purchaser shall also cause to be waived any medical certification for
the Applicable Employees up to the amount of coverage the Applicable Employees
had under the life insurance plan of the Company or any Subsidiary, to the
extent that such plans will apply to the Company's employees. The provisions of
this Section 6.10 shall not be construed as obligating Parent or the Surviving
Corporation to provide any employees of the Company with equity or options on
equity of Parent, affiliates of Parent or the Surviving Corporation or any other
direct or indirect subsidiaries of Parent, to provide any applicable Employee or
its dependents any benefits or coverage which they do not enjoy at the present
time, or, following the first anniversary of Effective Time, to continue to
provide any benefits or plans which Parent or the Surviving Corporation
determines no longer to provide.
6.11 APPRAISAL RIGHTS. The Company shall not settle or compromise any
claim for appraisal rights prior to the Effective Time without the prior written
consent of Parent.
36
<PAGE>
6.12 ACCOUNTANTS. The Company shall cause KPMG LLP ("KPMG"), the
Company's independent auditors, to deliver to Parent on or prior to the
Effective Time a letter dated the date of consummation of the Offer attaching an
Independent Accountants' Review Report (the "Review Report") with respect to the
condensed consolidated financial statements contained in any reports filed by
the Company with the Commission pursuant to the Exchange Act with respect to the
periods ending after December 31, 1998 (the "Reviewed Financial Statements").
The Review Report shall be addressed to the Company and shall confirm that KPMG
has conducted a review in accordance with the standards established by the
American Institute of Certified Public Accountants and, that based on this
review, KPMG is not aware of any material modifications that should be made to
the Reviewed Financial Statements.
7. CONDITIONS
7.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) This Agreement and the Merger shall have been approved and
adopted by the requisite vote of the stockholders of the Company required by the
DGCL and the Company's Certificate of Incorporation and, if required by
applicable law, by the requisite vote of the stockholders of Parent;
(b) Any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated and any required approvals in connection with any pre-merger
notification filing with any relevant non-U.S. antitrust authority shall have
been obtained and shall have remained in full force and effect;
(c) No preliminary or permanent injunction or other order,
decree or official action issued by any United States Federal or state or
foreign court or regulatory or administrative agency or commission of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States Federal or state or foreign governmental
authority of competent jurisdiction, shall be in effect, which would (i) make
the acquisition or holding by Parent or its subsidiaries or affiliates of the
shares of Common Stock of the Surviving Corporation illegal or otherwise prevent
the consummation of the Merger, or (ii) impose any limitations on the ability of
Parent effectively to control, directly or indirectly through its subsidiaries,
in any material respect the business and operations of the Company; and
(d) The Purchaser shall have accepted for payment and paid for
Shares tendered pursuant to the Offer; provided that this condition shall be
deemed waived by the Purchaser and Parent if the failure to accept for payment
and purchase Shares pursuant to the Offer is for any reason other than the
failure to satisfy the conditions to the Offer set forth in ANNEX I hereto.
7.2 CONDITIONS OF OBLIGATIONS OF PARENT AND PURCHASER. The obligations
of Parent and Purchaser to effect the Merger are subject to the satisfaction of
the following conditions, any or all of which may be waived in whole or in part
by Parent and Purchaser.
37
<PAGE>
(a) The representations and warranties of the Company set forth
in this Agreement (without giving effect to any materiality or similar
qualifications contained therein) shall be true and correct as of the expiration
of the Offer as if made on and as of the date of the expiration of the Offer,
except (i) for changes specifically permitted by this Agreement, (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date, (iii) in any case where such
failure to be so true and correct would not in the aggregate have a Material
Adverse Effect, and Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer and by the chief financial officer of
the Company to such effect, and (iv) notwithstanding anything in this Agreement
or ANNEX I to the contrary, in the event that any of the representations and
warranties of the Company with respect to any subsidiaries are determined to be
inaccurate, and all such inaccuracies capable of measurement in dollar amounts,
in the aggregate, exceed $3 million, then only the amounts in excess of $3
million will be taken into account in determining whether such inaccuracies,
taken together with all other breaches of representations and warranties,
generally, result in a Material Adverse Effect .
(b) The Company shall have performed or complied with all
obligations, covenants and agreements required to be performed by it under this
Agreement at or prior to the expiration of the Offer, unless all such failures
together in their entirety would not have a Material Adverse Effect, and Parent
shall have received a certificate signed on behalf of the Company by the chief
executive officer and by the chief financial officer of the Company to such
effect.
(c) All licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and other third parties as
are necessary in accordance with the transactions contemplated hereby shall have
been obtained and be in full force and effect, except such licenses, permits,
consents, approvals, authorizations, qualifications and orders, the failure to
deliver which would not have a Material Adverse Effect with respect to the
Company.
7.3 CONDITIONS OF OBLIGATIONS OF THE COMPANY. The obligations of the
Company to effect the Merger is subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by the
Company.
(a) The representations and warranties of Parent and Purchaser
set forth in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and (except to the extent such representations
and warranties speak as of an earlier date) as of the Effective Time as though
made on and as of the Effective Time, except as otherwise contemplated by this
Agreement, and the Company shall have received a certificate signed on behalf of
Parent by the chief executive officer and by the chief financial officer of
Parent to such effect.
(b) Parent and Purchaser shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Effective Time, and the Company shall have received a
certificate signed on behalf of Parent by the chief executive officer and by the
chief financial officer of Parent to such effect.
38
<PAGE>
8. TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. Subject to Section 9.6, this Agreement may be
terminated at any time prior to the Effective Time, whether prior to or after
approval by the stockholders of the Company:
(a) By mutual written consent of the Boards of Directors of the
Parent and the Company; or
(b) By the Company:
(i) If the Purchaser shall have failed to commence the
Offer by within five (5) business days of the day which Purchaser's
intention to make the Offer is announced; or
(ii) If the Offer is terminated in accordance with its
terms without the purchase of any Shares thereunder; or
(iii) If the Offer shall not have been consummated within
the period applicable pursuant to Section 1.1; or
(iv) If, prior to the purchase of any Shares pursuant to
the Offer, the Purchaser deliberately fails to perform in any
material respect any of its obligations under this Agreement; or
(v) If, prior to the purchase of any Shares pursuant to
the Offer the Board of Directors shall have (A) withdrawn, modified
or changed in a manner adverse to the Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger; or (B)
shall have recommended to the stockholders of the Company any
Superior Proposal, which is then pending, or resolved to do so;
provided that any termination of this Agreement by the Company
pursuant to this Section 8.1(b)(v) shall not be effective until the
close of business on the second (2nd) full business day after notice
of such termination to Purchaser;
(c) By the Purchaser:
(i) If, due to an occurrence which would result in a
failure to satisfy any of the conditions set forth in ANNEX I
hereto, the Purchaser shall have (A) failed to commence the Offer
within five (5) business days of the day in which Purchaser's
intention to make the Offer is announced, or (B) terminated the
Offer after having complied with the provisions of Section 1.1
without any purchase of Shares thereunder; or
(ii) If the Effective Time shall not have occurred on or
before October 31, 1999, unless prior thereto Parent, the Purchaser
and their affiliates shall have
39
<PAGE>
acquired beneficial ownership of at least a majority of the then
outstanding Shares; or
(iii) If, prior to the purchase of Shares pursuant to the
Offer, the Board of Directors (A) shall have withdrawn, modified or
changed in a manner adverse to the Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger, or (B)
shall have presented to the stockholders of the Company any
Competing Transaction, or (C) shall have resolved to do any of the
foregoing; or
(iv) If, prior to the purchase of Shares pursuant to the
Offer, the Company deliberately fails to perform in any material
respect any of its material obligations under this Agreement; or
(v) If Parent or its representatives shall have been
notified that there shall have occurred prior to 1:00 a.m. Chicago
time on April 30, 1999 an adverse effect on the financial markets
such as would lead a reasonable underwriter in the U.K. to decide
not to underwrite an issue of securities by Parent.
8.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 8.1, then (a) this Agreement shall forthwith
become void, and there shall be no liability or obligation on the part of
Parent, the Purchaser or the Company, except as set forth in this Section 8.2
and in Section 6.3 and Section 6.6(b); and (b) the Purchaser shall terminate the
Offer, if still pending, without purchasing any Shares thereunder.
8.3 AMENDMENT. Subject to Section 9.6, this Agreement may not be
amended except by action of the Board of Directors of each of the parties hereto
set forth in an instrument in writing signed on behalf of each of the parties
hereto; PROVIDED, HOWEVER, that after approval of the Merger by the stockholders
of the Company, no amendment may be made which amends the Certificate of
Incorporation of the Surviving Corporation, decreases the Per Share Price or in
any other way adversely affects the rights of such stockholders without the
approval of such stockholders.
8.4 WAIVER. Subject to Section 9.6, at any time prior to the Effective
Time, whether before or after the Special Meeting, any party hereto, by action
taken by its Board of Directors, may (a) extend the time for the performance of
any of the obligations or other acts of any other party hereto, or (b) subject
to the proviso contained in Section 8.3, waive compliance with any of the
agreements of any other party or with any conditions to its own obligations.
Any agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party by a duly authorized officer.
9. GENERAL PROVISIONS
9.1 BROKERS.
(a) The Company represents and warrants that no broker, finder
or investment banker other than Schroder & Co. Inc., is entitled to any
brokerage, finder's or other fee or
40
<PAGE>
commission in connection with the Offer or the Merger based upon arrangements
made by or on behalf of the Company. A copy of the engagement letter with
Schroder & Co. Inc. has previously been delivered to Parent.
(b) Parent represents and warrants that no broker, finder or
investment banker other than Morgan Stanley Dean Witter is entitled to any
brokerage, finder's or other fee or commission in connection with the Offer or
the Merger based upon arrangements made by or on behalf of Parent or its
affiliates. A copy of the engagement letter with Morgan Stanley Dean Witter
has previously been delivered to the Company.
9.2 PUBLIC STATEMENTS. Without the prior written consent of the other
party, neither party will issue any press release or otherwise make any public
statements with respect to this Agreement or any transactions contemplated
hereby except (a) to such party's directors, employees, agents, advisors and
affiliates, in each case on a confidential and need-to-know basis, or (b) as is
required, in the opinion of its outside counsel, by applicable law (including,
without limitation, Federal securities laws) or pursuant to applicable
requirements of any listing agreement with or the rules of the NYSE, the
NASDAQ/NMS or the London Stock Exchange, as applicable, provided that if any
party hereto proposes to make any disclosure based upon the opinion of its
counsel such party will use its reasonable efforts to advise and consult with
the other party reasonably prior to such disclosure concerning the information
such party proposes to disclose.
9.3 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by telecopier to the parties at the following addresses or at such other
addresses as shall be specified by the parties by like notice:
(a) If to Parent or the Purchaser:
Aegis Group plc
11A West Halkin Street
London, SW1X 8JL, United Kingdom
Attention: Crispin Davis, Chief Executive Officer
Telephone No.: 44-171-470-5000
Telecopy No.: 44-171-470-5099
With a copy to:
Aegis Group plc
4 Place de Saverne
92971 Paris La Defense
Cedex 106, France
Attention: Eleonore Sauerwein
Telephone No.: 33-1-41-16-64-29
Telecopy No.: 33-1-41-16-65-68
41
<PAGE>
With a copy to:
Mitchell Silberberg & Knupp LLP
11377 West Olympic Boulevard
Los Angeles, California 90064, U.S.A.
Attention: Daniel M. Freedman, Esq.
Telephone No.: 310-312-3156
Telecopy No.: 310-312-3785
and
(b) If to the Company:
Market Facts, Inc.
3040 West Salt Creek Lane
Arlington Heights, Illinois 60005, U.S.A.
Attention: Thomas H. Payne
Telephone No.: 847-590-7200
Telecopy No.: 847-590-7154
with a copy to:
Lord, Bissell & Brook
115 South LaSalle Street
Chicago, Illinois 60603, U.S.A.
Attention: Wesley S. Walton, Esq.
Telephone No.: 312-443-0239
Telecopy No.: 312- 443-0336
9.4 INTERPRETATION. When a reference is made in this Agreement to
subsidiaries of Parent, the Purchaser or the Company, the word "subsidiaries"
means any corporation more than 50% of whose outstanding voting securities, or
any partnership, joint venture or other entity more than 50% of whose total
equity interest, is directly or indirectly owned by Parent, the Purchaser or the
Company, as the case may be. For purposes of this Agreement the Company shall
not be deemed to be an affiliate or subsidiary of the Purchaser or Parent. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
9.5 REPRESENTATIONS AND WARRANTIES. The respective representations and
warranties of the Company, Parent and the Purchaser contained herein shall
expire with, and be terminated and extinguished upon the purchase of Shares
pursuant to the Offer, and thereafter neither the Company, Parent nor the
Purchaser nor any officer, director or agent thereof shall be under any
liability whatsoever with respect to any such representation or warranty. This
Section 9.5 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the consummation of the Merger.
42
<PAGE>
9.6 ACTION BY COMPANY. Any action required or permitted to be taken
hereunder on or prior to the Effective Time (other than the performance of the
Company's obligations hereunder in accordance with the terms hereof) by the
Company or by the Board of Directors of the Company (including any amendment or
waiver of any provision hereof) shall require the consent of a majority, but not
less than two, of the Independent Directors.
9.7 MISCELLANEOUS. This Agreement (a) constitutes the entire agreement
and supersedes all other prior agreements and undertakings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof (except for the confidentiality letter agreement described in Section
6.6(b)); (b) except for Sections 6.7, 6.8, 6.9 and 6.10 hereof (each of which is
intended to benefit the persons referred to therein or entitled to the benefits
thereof and each of which shall be enforceable by such persons), is not intended
to confer upon any other person any rights or remedies hereunder; (c) shall not
be assigned, except by the Purchaser to a directly or indirectly wholly-owned
subsidiary of Parent which in a written instrument shall agree to assume all of
such party's obligations hereunder and be bound by all of the terms and
conditions of this Agreement; provided, however, that no such assignment shall
relieve the assigning party of its obligations hereunder; and (d) shall be
governed in all respects, including validity, interpretation and effect, by the
internal laws of the State of Delaware, without giving effect to the principles
of conflict of laws of the State of Delaware or any other jurisdiction that
would call for the application of the law of any jurisdiction other than the
State of Delaware. Only the Purchaser (or Parent, or a directly or indirectly
wholly-owned subsidiary of Parent to which the Purchaser assigns such rights and
obligations) may commence the Offer or purchase Shares thereunder. This
Agreement may be executed in one or more counterparts which together shall
constitute a single agreement.
9.8 WAIVER OF JURY TRIAL. EACH OF PARENT, PURCHASER, AND THE COMPANY
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PURCHASER, THE COMPANY OR PARENT IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
43
<PAGE>
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
AEGIS GROUP PLC
By:
-------------------------------------------
Crispin Davis, Chief Executive Officer
AEGIS ACQUISITION CORP.
By:
-------------------------------------------
Crispin Davis, Chief Executive Officer
MARKET FACTS, INC.
By:
-------------------------------------------
Verne B. Churchill, Chairman of the Board
S-1
44
<PAGE>
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Parent or Purchaser shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to Purchaser's obligation to pay for or return tendered Shares promptly after
expiration or termination of the Offer), to pay for any Shares tendered, and may
postpone the acceptance for payment or, subject to the restriction referred to
above, payment for any Shares tendered, and may amend or terminate the Offer
(whether or not any Shares have theretofore been purchased or paid for) if, (i)
there have not been validly tendered and not withdrawn prior to the time the
Offer shall otherwise expire a number of Shares which constitutes a majority of
the Shares outstanding on a fully-diluted basis on the date of purchase ("on a
fully-diluted basis" having the meaning, as of any date: the number of Shares
outstanding, together with Shares the Company is then required to issue pursuant
to obligations outstanding at the date under employee stock option or other
benefit plans), less the number of Shares subject to the Option Agreements (the
"Minimum Condition"); (ii) all material regulatory and related approvals have
not been obtained or made on terms reasonably satisfactory to Purchaser; (iii)
any applicable waiting periods under the HSR Act shall not have expired or been
terminated prior to the expiration of the Offer; or (iv) at any time on or after
the date of the Agreement and before acceptance for payment of, or payment for,
such Shares any of the following events shall occur:
(A) any governmental entity or federal, state or foreign court
of competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, executive order, decree,
injunction or other order which is in effect (or pending) and which (1)
restricts, prevents or prohibits the making or consummation of the Offer,
the Merger or any transaction contemplated by the Merger Agreement, (2)
prohibits or limits materially the ownership or operation by the Company,
Parent or any of their subsidiaries of all or any material portion of the
business or assets of the Company and its subsidiaries taken as a whole, or
compels the Company, Parent, or any of their subsidiaries 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, (3) imposes limitations on
the ability of Parent, Purchaser or any other subsidiary of Parent to
exercise effectively full rights of ownership of any Shares, including,
without limitation, the right to vote any Shares acquired by Purchaser
pursuant to the Offer or otherwise on all matters properly presented to the
Company's stockholders, including, without limitation, the approval and
adoption of the Merger Agreement and the transactions contemplated thereby,
or (4) requires divestitures by Parent, Purchaser or any other affiliate of
Parent of any Shares; provided that Parent shall have used all commercially
reasonable efforts to cause any such decree, judgment, injunction or other
order to be vacated or lifted; or
(B) the representations and warranties of the Company contained
in the Merger Agreement (without giving effect to any materiality or
similar qualifications contained therein) shall not be true and correct as
of the date of consummation of the Offer as though made on and as of such
date except (1) for changes specifically permitted by the Merger
I-1
<PAGE>
Agreement, (2) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of
such date, (3) in any case where such failure to be true and correct would
not, in the aggregate, have a Material Adverse Effect, and (iv)
notwithstanding anything in this Agreement or ANNEX I to the contrary, in
the event that any of the representations and warranties of the Company
with respect to any subsidiaries are determined to be inaccurate, and all
such inaccuracies capable of measurement in dollar amounts, in the
aggregate, exceed $3 million, then only the amounts in excess of $3 million
will be taken into account in determining whether such inaccuracies, taken
together with all other breaches of representations and warranties
generally, result in a Material Adverse Effect.
(C) the Company shall not have performed or complied with any of
its obligations, covenants and agreements under the Merger Agreement to be
performed or complied with by it unless all such failures together in their
entirety would not have a Material Adverse Effect;
(D) the Merger Agreement shall have been terminated in
accordance with its terms;
(E) prior to the purchase of Shares pursuant to the Offer, the
Company shall have received any offer (other than pursuant to this
Agreement) for the purchase of Shares, the purchase of substantially all of
the Company's assets, the merger of the Company or any other transaction
which would require the withdrawal or material modification of the Offer,
the Merger Agreement or the Merger and the Board shall have withdrawn or
materially modified or changed (including by amendment of the Schedule
14D-9) in a manner adverse to Purchaser its recommendation of the Offer,
the Merger Agreement or the Merger; or
(F) (1) any person or group shall have entered into a definitive
agreement or agreement in principle with the Company with respect to a
merger, consolidation, sale of a material portion of the assets of the
Company, or other business combination with the Company; (2) (A) the Board
of Directors of the Company or any committee thereof shall have withdrawn,
modified or changed in a manner adverse to Parent or Purchaser its approval
or recommendation of the Offer, the Merger or the Agreement, or approved or
recommended any Competing Transaction, or (B) the Board of Directors of the
Company or any committee thereof shall have resolved to do any of the
foregoing;
(G) there shall have occurred any change, condition event or
development that has a Material Adverse Effect (excluding any change,
condition, event or development arising out of or attributable to general
economic conditions);
(H) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange, the NASDAQ\NMS or the London Stock Exchange for a period in
excess of 24 hours (excluding any coordinated trading halt triggered solely
as a result of a specified decrease in a market index and suspensions or
limitations resulting solely from physical damage or interference with such
I-2
<PAGE>
exchange or association not related to market conditions), (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or the United Kingdom or (iii) any
material limitation (whether or not mandatory) by any government or
governmental authority of the United States or the United Kingdom on the
extension of credit by banks or other lending institutions,
(I) the Stockholders (as defined in the Option Agreements) shall
have failed to comply in any material respect with their obligations
pursuant to the Option Agreements,
which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payments.
The foregoing conditions are for the sole benefit of Purchaser and its
affiliates and may be asserted by Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser, in whole or in
part, from time to time in its sole discretion, except as otherwise provided in
the Agreement. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right and may be asserted at any time and from
time to time. Any determination by Purchaser concerning any of the events
described herein shall be final and binding. Unless otherwise defined herein,
capital terms used herein shall have the meanings ascribed to them in the
Acquisition Agreement among the Parent, Purchaser and the Company to which this
ANNEX I is attached (the "Agreement").
I-3
<PAGE>
EXHIBIT A
CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION
A-1
<PAGE>
EXHIBIT B
BY-LAWS OF SURVIVING CORPORATION
B-1
<PAGE>
OPTION AND VOTING AGREEMENT
OPTION AND VOTING AGREEMENT (the "Agreement"), dated as of April
29, 1999, among the undersigned stockholders (the "Stockholders") of Market
Facts, Inc., a Delaware corporation (the "Company"), and Aegis Group plc, a
company incorporated under the laws of England and Wales ("Aegis").
WHEREAS, concurrently with the execution of this Option and Voting
Agreement, the Company and Aegis have entered into an Agreement and Plan of
Merger (as the same may be amended from time to time, the "Merger
Agreement"), pursuant to which Aegis or a subsidiary of Aegis shall commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934,
as amended (the "1934 Act") an offer to purchase up to 100% of the shares of
the common stock, par value $1.00 per share, of the Company (the "Company
Common Stock") at a price of not less than $31.00 per share net to the
selling stockholder in cash (the "Offer") and, upon the consummation thereof,
shall cause to be effected a merger between the Company and a subsidiary of
Aegis;
WHEREAS, the Offer shall have as one of its conditions that not
less than a majority of the shares of Company Common Stock (on a fully
diluted basis), when added without duplication to the shares that are then
subject to this Agreement but have not been tendered in the Offer, shall have
been tendered and not withdrawn;
WHEREAS, in order to induce Aegis to enter into the Merger
Agreement, the Stockholders wish to agree (i) to grant Aegis an option to buy
the Shares (as defined below) at the Option Price (as defined below), (ii) to
vote the Shares, any other such shares of Company Common Stock and any shares
of Series B Preferred Stock, no par value, of the Company (the "Company
Preferred Stock") owned by the Stockholders (the "Preferred Shares"), so as
to facilitate consummation of the Offer, (iii) not to transfer or otherwise
dispose of any of the Shares or Preferred Shares, or any other shares of
Company Common Stock or Company Preferred Stock acquired hereafter and prior
to the Expiration Date (as defined below) and (iv) to deliver an irrevocable
proxy to vote the Shares and the Preferred Shares to Aegis.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
1. REPRESENTATIONS OF STOCKHOLDERS. Each of the Stockholders
represents and warrants to Aegis that now and at all times during the term of
this Agreement (a) such Stockholder lawfully owns beneficially (as such term
is defined in the Securities Exchange Act of 1934, as amended (the "1934
Act")) and of record each of the shares of Company Common Stock set forth
opposite such Stockholder's name on Exhibit A (such Stockholder's "Shares")
and each of the shares of Company Preferred Stock set forth opposite such
Stockholder's name on Exhibit A, free and clear of all liens, pledges,
claims, charges, security interests or other encumbrances of any kind (except
<PAGE>
as otherwise noted on Exhibit A) and, except for this Agreement, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character to which such Stockholder is a party relating to the pledge,
disposition or voting of any shares of Company Common Stock or Company
Preferred Stock and there are no voting trusts or voting agreements with
respect to such Shares or Preferred Shares, (b) such Stockholder does not
beneficially own any shares of Company Common Stock or Company Preferred
Stock other than such Shares and Preferred Shares and does not have any
options, warrants or other rights to acquire any additional shares of Company
Common Stock or Company Preferred Stock or any security exercisable for or
convertible into shares of Company Common Stock or Company Preferred Stock,
except for options, warrants and/or other rights granted, awarded or issued
pursuant to the Market Facts 1996 Stock Plan, (c) except as noted in Exhibit
A, such Stockholder has full right, power and authority to enter into,
execute and deliver this Agreement and to perform fully its obligations
hereunder, and (d) except as noted in Exhibit A, the execution, delivery and
performance of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, constitute or result in (i) if
applicable, a breach or violation of, or a default under, its certificate or
by-laws or the comparable governing instruments, (ii) a breach or violation
of, or a default under, the acceleration of any obligations or the creation
of a lien on its assets (with or without notice, lapse of time or both)
pursuant to any agreement, lease, contract, note, mortgage, indenture,
arrangement or other obligation binding upon it or any of its assets or any
laws or governmental or non-governmental permit or license to which it is
subject or (iii) any change in the rights or obligations of any party under
any such agreement, lease, contract, note, mortgage, indenture, arrangement
or other obligation, including, without limitation, any change in rights of
reimbursement, termination, cancellation or modification except, with respect
to clauses (ii) and (iii), for any breach, violation, default, acceleration,
creation or change that, individually or in the aggregate, is not reasonably
likely to prevent, materially delay or materially impair the ability of such
Stockholder to consummate the transactions contemplated by this Agreement.
This Agreement has been duly executed and delivered and constitutes the
legal, valid and binding obligation of such Stockholder in accordance with
its terms, except as the enforcement hereof may be limited by general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
2. THE OPTION.
(1) Each Stockholder hereby grants to Aegis or its Permitted
Assign (the "Holder") an unconditional, irrevocable option (the "Option") to
purchase, subject to the terms hereof, all but not fewer than all of the
Shares and New Shares (as defined in Section 7 hereof) at any time on or
prior to the Expiration Date if after the date of this Agreement a Takeover
Proposal (as hereinafter defined) has been made. "Takeover Proposal" means,
any proposal or offer, other than by Aegis or any Affiliate thereof, for a
"Competing Transaction" (as such term is defined in Section 6.5 of the Merger
Agreement). Following the occurrence of a Takeover Proposal, Holder may
purchase the Shares and New Shares at a purchase price of $31.00 per Share
and New Share. The purchase price per share set forth in the immediately
preceding sentence, as adjusted pursuant to paragraph 2(b) below, is
hereinafter referred to as the "Option Price." If the Holder wishes to
exercise the Option, it shall send to the Stockholder a written notice (the
date of which is referred
-2-
<PAGE>
to herein as the "Notice Date") on or prior to the Expiration Date specifying
(i) the total number of shares that the Holder will purchase from such
Stockholder pursuant to such exercise, which must be all of the Shares and
New Shares, and (ii) a place and date (a "Closing Date") not later than the
later of (A) two (2) business days following the expiration or earlier
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and (B) one (1) business day
following the consummation of the Offer, for the closing of such purchase (a
"Closing"). At each Closing, the Holder shall pay to such Stockholder the
aggregate purchase price for the Shares or New Shares purchased pursuant to
the exercise of the Option in immediately available funds by a wire transfer
to a bank account designated by such Stockholder; provided that failure or
refusal of such Stockholder to designate such a bank account shall not
preclude the Holder from exercising the Option. At such Closing,
simultaneously with the payment of the aggregate Option Price by the Holder,
such Stockholder shall deliver to the Holder a certificate or certificates
representing the number of Shares or New Shares purchased by the Holder
accompanied by duly executed stock powers. The Stockholders agree that they
will not tender the Shares into the Offer, without the prior written consent
of the Holder.
(2) Aegis shall purchase all Shares held by each Stockholder
by 11:59 p.m. on the first business day immediately following the purchase of
Company Common Stock pursuant to the Offer at the Option Price. Payment of
the aggregate Option Price for the Shares on such date shall be in
immediately available funds by a wire transfer to a bank account designated
by each Stockholder; provided that failure or refusal of any Stockholder to
designate such a bank account shall not preclude the Holder from purchasing
the Shares. At such Closing, simultaneously with the payment of the aggregate
Option Price by the Holder, such Stockholder shall deliver to the Holder a
certificate or certificates representing the number of Shares or New Shares
purchased by the Holder accompanied by duly executed stock powers.
(3) If at any time the Company shall (i) pay a dividend
(other than regular cash dividends) or otherwise make a distribution to the
holders of Company Common Stock, (ii) subdivide its outstanding shares of
Company Common Stock into a larger number of shares of Company Common Stock
or combine its outstanding shares of Company Common Stock into a smaller
number of shares of Company Common Stock (iii) reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
entity or sell, transfer or otherwise dispose of all or substantially all of
its property, assets or business to another entity or (iv) engage in any
similar dilutive transaction, the parties agree to adjust the Option Price
and/or the number of Shares or New Shares or other securities or property
subject to the Option as necessary and equitable in order to ensure that
Aegis shall receive, upon exercise of the Option, the number of Shares or New
Shares or other securities or property which Aegis would have received in
connection with or as a result of such dividend, distribution or other
transaction, if it had exercised the Option immediately prior to (i) the
record date for any such dividend or other distribution or (ii) the effective
time of any such other transaction.
3. AGREEMENT TO VOTE SHARES; GRANT OF IRREVOCABLE PROXY;
AGREEMENT TO GRANT FURTHER PROXIES. During the term of this Agreement each
of the Stockholders shall vote such
-3-
<PAGE>
Stockholder's Shares and any New Shares and such Stockholder's Preferred
Shares and any New Preferred Shares for the closing of the Merger (a
"Closing"), and cause any holder of record of such Shares or New Shares and
Preferred Shares or New Preferred Shares to vote, (a) in favor of adoption
and approval of the transactions contemplated by the Merger Agreement at
every meeting of the stockholders of the Company at which such matters are
considered and at every adjournment or postponement thereof, (b) against any
action or agreement that could reasonably be expected to impede, interfere
with or otherwise materially adversely affect the Merger or inhibit the
timely consummation of the Merger, (c) against any action or agreement that
could reasonably be expected to result in a breach of any covenant,
representation or warranty or any other obligation of the Company under the
Merger Agreement, and (d) except for the Merger, against any merger,
consolidation, business combination, reorganization, recapitalization,
liquidation or sale or transfer of any material assets of the Company or its
subsidiaries.
The undersigned, for consideration received, hereby appoints
Crispin Davis, Colin Day and Eleonore Sauerwein, and each of them its
proxies, with power of substitution and resubstitution, to vote all Shares
and New Shares and Preferred Shares and New Preferred Shares of the Company
owned by the undersigned at any meeting of stockholders of the Company, and
at any adjournment or postponement thereof or to give consent with respect to
such Shares or New Shares and Preferred Shares or New Preferred Shares (i)
FOR approval and adoption of the Merger and (ii) AGAINST (x) any action or
agreement that could reasonably be expected to impede, interfere with or
otherwise materially adversely affect the Merger or inhibit the timely
consummation of the Merger, (y) any action or agreement that could reasonably
be expected to result in a breach of any covenant, representation or warranty
or any other obligation of the Company under the Merger Agreement and (z)
except for the Merger, any merger, consolidation, business combination,
reorganization, recapitalization, liquidation or sale or transfer of any
material assets of the Company or its subsidiaries. This proxy is coupled
with an interest, revokes all prior proxies granted by the undersigned and is
irrevocable until the Expiration Date or such other time as this Agreement
terminates in accordance with its terms.
Each Stockholder further agrees to deliver to Aegis upon request
one or more additional proxies substantially in the form attached hereto as
Exhibit B, which proxy shall be irrevocable for the period specified for
irrevocability in the prior paragraph to the extent permitted under Delaware
law.
4. NO VOTING TRUSTS. Each of the Stockholders shall not, and
shall not permit any entity under its control to, deposit any of their Shares
or New Shares or Preferred Shares or New Preferred Shares in a voting trust
or subject any of their Shares or New Shares or Preferred Shares or New
Preferred Shares to any arrangement with respect to the voting of such Shares
or New Shares or Preferred Shares or New Preferred Shares (including,
without limitation, the granting of proxies) other than agreements entered
into with Aegis.
5. NO PROXY SOLICITATIONS. Each of the Stockholders shall not,
and shall not permit any entity under such Stockholder's control to, (a)
solicit proxies or become a "participant"
-4-
<PAGE>
in a "solicitation" (as such terms are defined in Regulation 14A under the
1934 Act) in opposition to or competition with the consummation of the Merger
or otherwise encourage or assist any party in taking or planning any action
which could reasonably be expected to impede, interfere with or otherwise
materially adversely affect the Merger or inhibit the timely consummation of
the Merger in accordance with the terms of the Merger Agreement, (b) directly
or indirectly initiate or cooperate in a stockholders' vote or action by
consent of the Company's stockholders in opposition to or in competition with
the consummation of the Merger, or (c) become a member of a "group" (as such
term is used in Section 13(d) of the 1934 Act) with respect to any voting
securities of the Company for the purpose of opposing or competing with the
consummation of the Merger; provided that the foregoing shall not restrict
any director or officer of the Company from taking any action such director
or officer reasonably believes after consultation with outside counsel is
necessary to satisfy such director's or officer's fiduciary duty as a
director or officer of the Company or its stockholders.
6. TRANSFER AND ENCUMBRANCE. On or after the date hereof and
until the Expiration Date, each of the Stockholders shall not transfer, sell,
offer, assign, exchange, pledge or otherwise dispose of or encumber any of
such Stockholder's Shares or New Shares or Preferred Shares or New Preferred
Shares or enter into any contract, option or other arrangement with respect
to any of the foregoing except that a Stockholder may transfer Shares or New
Shares or Preferred Shares or New Preferred Shares held thereby to any
partner of such Stockholder so long as the transferee shall agree to be bound
by this Agreement.
7. ADDITIONAL PURCHASES. Each of the Stockholders shall not
purchase or otherwise acquire beneficial ownership of any shares of Company
Common Stock ("New Shares") or Company Preferred Stock ("New Preferred
Shares") after the execution of this Agreement, nor will any Stockholder
voluntarily acquire the right to vote or share in the voting of any shares of
Company Common Stock or Company Preferred Stock other than the Shares and the
Preferred Shares, respectively, unless such Stockholder agrees to deliver to
Aegis immediately after such purchase or acquisition an irrevocable proxy
substantially in the form attached hereto as Exhibit B with respect to such
New Shares or New Preferred Shares. Each of the Stockholders also severally
agrees that any New Shares or New Preferred Shares acquired or purchased by
him or her shall be subject to the terms of this Agreement to the same extent
as if they constituted Shares or Preferred Shares.
8. SPECIFIC PERFORMANCE. Each party hereto acknowledges that it
will be impossible to measure in money the damage to the other party if a
party hereto fails to comply with any of the obligations imposed by this
Agreement, that every such obligation is material and that, in the event of
any such failure, the other party will not have an adequate remedy at law or
damages. Accordingly, each party hereto agrees that injunctive relief or
other equitable remedy, in addition to remedies at law or damages, is the
appropriate remedy for any such failure and will not oppose the granting of
such relief on the basis that the other party has an adequate remedy at law.
Each party hereto agrees that it will not seek, and agrees to waive any
requirement for, the securing or posting of a bond in connection with any
other party's seeking or obtaining such equitable relief.
-5-
<PAGE>
9. PUBLICITY. Each Stockholder, in its capacity as such, and not
as a director or officer of the Company, hereby agrees that it shall, when
acting in its capacity as a Stockholder of the Company and not as a director
or officer thereof, obtain the written permission of Aegis prior to issuing
any press release or otherwise making public announcements with respect to
the transactions contemplated by this Agreement and prior to making any
filings with any third party and/or any governmental entity (including any
national securities exchange or interdealer quotation service) with respect
thereto, except as may be required by law.
10. EXPENSES. Each party shall bear its own expenses with
respect to the review, execution, delivery and performance of this Agreement.
11. NON-ASSIGNMENT; ENTIRE AGREEMENT. Aegis shall not assign any
of its rights under this Agreement except to Aegis Acquisition Corp., or to
such other assignee (a "Permitted Assign") as may be permitted under, or
which assumes Aegis' obligations under, the Merger Agreement. This Agreement
supersedes all prior agreements, written or oral, among the parties hereto
with respect to the subject matter hereof and, together with the Merger
Agreement, contains the entire agreement among the parties with respect to
the subject matter hereof. This Agreement may not be amended, supplemented or
modified, and no provisions hereof may be modified or waived, except by an
instrument in writing signed by all the parties hereto. No waiver of any
provisions hereof by any party shall be deemed a waiver of any other
provisions hereof by any such party, nor shall any such waiver be deemed a
continuing waiver of any provision hereof by such party.
12. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
facsimile or like transmission and on the next business day when sent by
Federal Express, Express Mail or other reputable overnight courier service to
the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
If to Aegis:
Aegis Group plc
11A West Halkin Street
London, SW1 X8JL, United Kingdom
Attention: Crispen Davis, Chief Executive Officer
Facsimile: (44) 171 470 5097
With a copy to:
Aegis Group plc
4 Place de Saverne
92971 Paris La Defense
-6-
<PAGE>
Cedex 106
France
Attention: Eleonore Sauerwein, Esq.
Facsimile: (33) 1 41 16 65 39
and to:
Mitchell Silberberg & Knupp LLP
11377 West Olympic Boulevard
Los Angeles, California 90064-1683
Attention: Daniel M. Freedman, Esq.
Facsimile: (310) 312-3785
If to a Stockholder, to the address or facsimile number set forth
for such Stockholder on the signature page hereof.
13. MISCELLANEOUS.
(1) This agreement shall be deemed to be made in and in all
respects shall be interpreted, construed and governed by and in accordance
with the laws of the State of Delaware without regard to the conflict of law
principles of the State of Delaware or any other jurisdiction that would call
for the application of the law of any jurisdiction other than the State of
Delaware. The parties hereby irrevocably submit to the exclusive
jurisdiction of the courts of the State of California and the Federal courts
of the United States of America located in the State of California solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement hereof or of any such
document, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that
the venue thereof may not be appropriate or that this Agreement may not be
enforced in or by such courts, and the parties hereto irrevocably agree that
all claims with respect to such action or proceeding shall be heard and
determined in such a California State or Federal court. The parties hereby
consent to and grant any such court jurisdiction over the person of such
parties and over the subject matter of such dispute and agree that mailing of
process or other papers in connection with any such action or proceeding in
the manner provided in Section 12 or in such other manner as may be permitted
by law shall be valid and sufficient service thereof.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES
-7-
<PAGE>
AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii)
EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER,
(iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 13(a).
(2) The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may
be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or
the application thereof, in any other jurisdiction.
(3) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
(4) This Agreement shall terminate upon the earliest to occur
of (i) the closing of the Merger, (ii) 11:59 p.m. on the first business day
immediately following the expiration of the Offer or the consummation of the
purchase of the Company Common Stock pursuant to the Offer, (iii) in the
event that the Merger Agreement shall have been terminated prior to any
Takeover Proposal having been made, the termination date of the Merger
Agreement, (iv) the date specified in a written agreement duly executed and
delivered by Aegis and each of the Stockholders, and (v) November 2, 1999
(the earliest such date, the "Expiration Date"); provided, however, that if
Aegis shall have exercised the Option in accordance with the terms of Section
2 hereof on or before the date that would otherwise have been the Expiration
Date, the Expiration Date shall be the date of the Closing under Section 2.
(5) Each party hereto shall execute and deliver such
additional documents as may be necessary or desirable to effect the
transactions contemplated by this Agreement.
(6) All Section headings herein are for convenience of
reference only and are not part of this Agreement, and no construction or
reference shall be derived therefrom.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
Aegis Group plc
By: ____________________________
Name:
Title:
THE STOCKHOLDERS:
_____________________________
Name:
Address:
Facsimile:
_____________________________
Name:
Address:
Facsimile:
-9-
<PAGE>
EXHIBIT A
LIST OF STOCKHOLDERS OF
THE COMPANY
<TABLE>
<CAPTION>
NAME # SHARES OF COMMON STOCK
- ---- ------------------------
<S> <C>
Verne B. Churchill 64,198
Lawrence W. Labash 118,171
Jeffery A. Oyster 4,800
Thomas H. Payne 144,494
Sanford M. Schwartz 251,794
Ned L. Sherwood 2,042,732*
Timothy J. Sullivan 134,295
MFI Investors, L.P. 2,037,332
</TABLE>
* Includes 2,037,332 shares held by MFI Investors, L.P.
-10-
<PAGE>
EXHIBIT B
FORM OF PROXY
The undersigned, for consideration received, hereby appoints
Crispin Davis and Colin Day and each of them his or her proxies, with power
of substitution and resubstitution, to vote all shares of common stock, par
value $1.00 per share, and Series B Preferred Stock, no par value (the
"Capital Stock"), of Market Facts, Inc., a Delaware corporation (the
"Company"), owned by the undersigned at any meeting of stockholders of the
Company, and at any adjournment or postponement thereof or to give consent
with respect to such shares (i) FOR approval of a merger between a subsidiary
of Aegis Group plc, a corporation organized under the laws of England and
Wales ("Aegis"), and the Company in accordance with an Agreement and Plan of
Merger, dated as of April 29, 1999, between Aegis and the Company (the
"Merger"), and (ii) AGAINST (x) any action or agreement that could reasonably
be expected to impede, interfere with or otherwise materially adversely
affect the Merger or inhibit the timely consummation of the Merger, (y) any
action or agreement that could reasonably be expected to result in a breach
of any covenant, representation or warranty or any other obligation of the
Company under the Merger Agreement and (z) except for the Merger, any merger,
consolidation, business combination, reorganization, recapitalization,
liquidation or sale or transfer of any material assets of the Company or its
subsidiaries. This proxy is coupled with an interest, revokes all prior
proxies granted by the undersigned and is irrevocable until such time as the
Option and Voting Agreement, dated as of ____________________, 1999, among
certain stockholders of the Company, including the undersigned, and Aegis
terminates in accordance with its terms.
Dated _______________, 1999
__________________________
(Name of Stockholder)
__________________________
(Signature of Stockholder)
<PAGE>
DIRECTORS OF AEGIS GROUP PLC
Frank S Law CBE Non-Executive Chairman
Crispin Davis Chief Executive Officer
Colin Day Group Finance Director
DIRECTORS Kai Hiemstra
AND ADVISERS Ray Kelly
Bruno Kemoun
Eyrck Rebbouh
John Amerman Non-Executive
Douglas Flynn Non-Executive
Sir Kit McMahon Non-Executive
Sir Peter Thompson Non-Executive
Philippe Villin Non-Executive
MEMBERS OF CARAT EXECUTIVE
Crispin Davis
Colin Day
Ray Kelly Executive Directors
Bruno Kemoun of Aegis Group plc
Eryck Rebbouh
Jordi Calvet Chief Executive,
Carat Espana
Pat Doble Group Marketing Director
Eric Drancourt Chief Executive,
Carat International
Hans Germeraad Chief Executive,
HMS & Carat
Germany
Walter Hartsarich Chief Executive,
Carat Italia
Stig Bogh Karlsen Chief Executive,
MMA Carat
Tage Krogh Chief Executive,
Carat Scandinavia
William Skerrett Group Human Resources Director
David Verklin Chief Executive Officer,
Carat North America
Howard Wang Chief Executive Officer,
Carat Asia Pacific
Eleonore Sauerwein Group Legal Director
& Secretary to the
Carat Executive
COMPANY SECRETARY
John Rowland
REGISTERED OFFICE
11A West Halkin Street
London SW1X 8JL
Tel: 0171 470 5000
Fax: 0171 470 5099
REGISTERED NUMBER
1403668 England and Wales
AUDITORS
PricewaterhouseCoopers
1 Embankment Place
London WC2N 6NN
REGISTRARS
Computershare Services PLC
P O Box 435, Owen House
8 Bankhead Crossway North
Edinburgh EH11 4BR
SOLICITORS
Slaughter and May
35 Basinghall Street
London EC2V 5DB
STOCKBROKERS
Hoare Govett Corporate Finance Limited
4 Broadgate
London EC2M 7LE
Aegis Group plc / 25
<PAGE>
The directors have pleasure in submitting their report together
with the audited financial statements for the year ended 31
December 1998.
REPORT OF RESULTS AND DIVIDENDS
THE DIRECTORS
The profit and loss account is set out on page 35 and shows a
profit for the financial year of (pound)35.5 million (1997:
(pound)32.8 million).
An interim dividend of 0.35p per share was paid on 6 October 1998
as a Foreign Income Dividend ("FID") to ordinary shareholders.
The directors recommend a final dividend for the year of 0.50p
per share which, if approved at the Annual General Meeting, will
be paid on 1 July 1999 to ordinary shareholders registered at 11
June 1999. The total dividend for the year will then amount to
0.85p per share (1997: 0.7p).
The remaining profit is transferred to reserves.
PRINCIPAL ACTIVITY
The principal activity of the Company is that of a holding
company based in London. Its subsidiaries and related companies
provide a broad range of services in the field of media
communications.
REVIEW OF BUSINESS AND FUTURE DEVELOPMENTS
A review of the business and likely future developments of the
Group is given in the Chairman's and Chief Executive's statements
on pages 4 to 8.
RESEARCH AND DEVELOPMENT
The Group is involved in media research and development in order
to offer clients the most advanced media communication services.
During the year the Group spent (pound)19.5 million (1997:
(pound)14.8 million) on research and development.
DONATIONS
The Company made charitable donations of (pound)10,200 (1997:
(pound)8,925) during the year in the United Kingdom. There were
no political donations during the year in the United Kingdom
(1997: (pound)nil).
EMPLOYMENT POLICIES
It is the policy of the Group that there should be no unfair
discrimination in considering applications for employment,
including those from disabled persons. Should any employee become
disabled every practical effort is made to provide continued
employment and to arrange appropriate training.
The directors are committed to maintain and develop communication
and consultation procedures with employees, who in turn are
encouraged to become aware of and involve themselves in the
performance of their own company and of the Group as a whole.
Consultation and involvement policies vary from country to
country according to local customs, legal considerations and the
size of the business.
SUPPLIER PAYMENT POLICY
Whilst the Company does not impose a formal code on payment
practice on its subsidiaries, the Group nevertheless does have
the following policy concerning the payment of its suppliers, as
follows:
- > to agree the terms of payment with suppliers in advance
- > to ensure that suppliers are made aware of the terms of
payment
- > to abide by the terms of payment
At 31 December 1998, the Group had 63 days purchases outstanding
(1997: 62 days). The creditor day analysis is not applicable to
the holding company.
DIRECTORS AND DIRECTORS' INTERESTS
The directors in office at the end of the financial year and
their interests in the share capital of the Company are given
within the Remuneration report of the directors on pages 28 to
31.
The Articles of Association require one third of the directors to
retire by rotation at each Annual General Meeting. In accordance
with the Company's Articles of Association, Eyrck Rebbouh, Sir
Peter Thompson and Philippe Villin retire from the Board by
rotation and, being eligible, will offer themselves for
re-election at the forthcoming Annual General Meeting. Sir Kit
McMahon also retires by rotation, but has decided not to stand
for re-election. Douglas Flynn, who was appointed to the Board
subsequent to the Annual General Meeting held in 1998, offers
himself for election. He was appointed on 15 May 1998 and does
not have a service contract with the Company.
Eyrck Rebbouh has a service contract with Carat France SA which
is terminable upon six months' notice, and in the event that his
service agreement is terminated (other than by reason of
misconduct) a payment equivalent to 18 months' remuneration must
be paid.
Neither Sir Peter Thompson nor Philippe Villin has a contract
with the Company for their services as directors.
On 15 May 1998, both Dominic Shorthouse and John Vogelstein, who
were non-executive directors, resigned following the placement of
Warburg, Pincus & Co.'s entire shareholding.
SUBSTANTIAL SHAREHOLDINGS
In accordance with the requirements of the London Stock Exchange,
the following interests in the issued ordinary shares of 5p each
of Aegis Group plc as at 22 March 1999 are noted:
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Deutsche Bank AG & subsidiaries 10.93%
Scottish Widows 9.14%
FMR Corp (Fidelity Investments) 4.60%
- --------------------------------------------------------------------------------
</TABLE>
26 / Aegis Group plc
<PAGE>
SHARE CAPITAL
Details of the movements in authorised and issued share capital
during the year are given in note 18 to the financial statements.
REPORT OF
THE DIRECTORS At the Annual General Meeting, a resolution will be proposed to
continued increase the authorised share capital of the Company by 15% from
(pound)60,000,000 to (pound)75,000,000. This increase, if passed,
will enable the Company to maintain a balance of authorised but
unissued ordinary share capital in order to have the flexibility
to issue shares, subject to having the authority to do so if the
circumstances are such that the directors believe that it would
be beneficial for the Company to do so.
Resolutions will also be proposed to authorise the directors to
allot securities in the Company. Resolution 9 set out in the
Notice of Annual General Meeting on pages 60 and 61 is an
ordinary resolution and provides the directors with authority to
allot securities in the Company up to an aggregate nominal value
of (pound)15,900,000.
If passed, the resolution will enable the directors to allot a
maximum of 318,000,000 ordinary shares which represent
approximately 33% of the issued ordinary share capital as at 22
March 1999. Save for shares to be issued to satisfy existing
legal obligations, the directors have no present intention of
exercising the authority which would be conferred by
resolution 9.
Resolution 10 is a special resolution disapplying pre-emption
rights and granting authority to the directors, without the need
for further specific shareholder approval, to make allotments of
equity securities for cash pursuant to (a) issues by way of
rights and (b) other issues up to an aggregate nominal value of
(pound)2,387,850.
The authority conferred by resolution 10 is limited as regards
issues of shares other than by way of rights issues to 47,757,000
ordinary shares amounting to approximately 5% of the issued
ordinary share capital of the Company as at 22 March 1999. In
relation to the exercise of this authority the Company will have
regard to the guidelines published by the investment committees
of both the Association of British Insurers and the National
Association of Pension Funds. The authorities sought by these
resolutions are to replace the existing powers of the directors
which expire at the conclusion of the Annual General Meeting and
both of these authorities will lapse at the conclusion of the
next Annual General Meeting of the Company.
AUTHORITY FOR THE COMPANY TO PURCHASE ITS OWN SHARES
The existing authority for the Company to purchase its own shares
expires at the conclusion of the Annual General Meeting. No
purchases have been made to the date of this report and there are
no outstanding contracts to purchase shares as of this date. It
is proposed to seek a renewal of this authority to purchase up to
47,996,000 ordinary shares (approximately 5% of the issued
ordinary share capital as at 22 March 1999) at the forthcoming
Annual General Meeting.
The maximum price at which any share may be purchased is the
price equal to 5% above the average of the middle market
quotations of such share as derived from the Daily Official List
of the London Stock Exchange for the five business days
immediately preceding the date of such purchase, exclusive of
expenses, and the minimum price at which any share may be
purchased is the par value of such share. If granted the
directors will exercise the authority only if in their judgement
it is in the best interests of shareholders generally and where
exercise should result in an improvement in earnings per share
for the remaining shareholders.
AUDITORS
Following the merger of Price Waterhouse and Coopers and Lybrand
on 1 July 1998, Price Waterhouse resigned as auditors in favour
of the new firm, PricewaterhouseCoopers, and the directors have
appointed PricewaterhouseCoopers to fill the casual vacancy
created by the resignation.
A resolution to re-appoint PricewaterhouseCoopers as auditors and
to authorise the directors to fix their remuneration will be
proposed at the forthcoming Annual General Meeting. Special
notice has been given to the Company of the intention to propose
this resolution.
CORPORATE GOVERNANCE
Details concerning the Group's arrangements relating to corporate
governance and its compliance with best practice are given on
pages 32 and 33. The Remuneration report is set out on pages 28
to 31.
DIRECTORS' RESPONSIBILITIES
The following statement, which should be read in conjunction with
the auditors' statement of auditors' responsibilities set out on
page 34 is made with a view to distinguishing for shareholders
the respective responsibilities of the directors and of the
auditors in relation to the financial statements.
Company law requires the directors to prepare financial
statements for each financial year which give a true and fair
view of the state of affairs of the Company and the Group as at
the end of that financial year and of the profit or loss of the
Group for that financial year. The directors consider that in
preparing the financial statements on pages 35 to 59, the Company
and the Group have used appropriate accounting policies,
consistently applied and supported by reasonable and prudent
judgements and estimates and that all accounting standards which
they consider to be applicable have been followed, subject to any
explanations disclosed in the notes to the financial statements.
The directors have responsibility for ensuring that the Company
and the Group keep accounting records which disclose with
reasonable accuracy the financial position of the Company and the
Group and to enable them to ensure that the financial statements
comply with the Companies Act 1985. They have general
responsibility for taking such steps as are reasonably open to
them to safeguard the assets of the Group and to prevent and
detect fraud and other irregularities.
Aegis Group plc / 27
<PAGE>
Throughout 1998, the Company complied with the provisions of
Schedule A of the Combined Code of Corporate Governance relating
to the design of performance related remuneration. In preparing
REMUNERATION this report the Board has followed the provisions of Schedule B
REPORT of the Combined Code. The directors have an established
Remuneration Committee.
COMPOSITION OF THE REMUNERATION COMMITTEE
Members of the Remuneration Committee are disclosed on page 32
within the section on Corporate governance.
POLICY ON REMUNERATION OF EXECUTIVE DIRECTORS
Remuneration packages which are offered by the Company to its
executive directors are designed to be competitive and attract,
retain and motivate executive directors of the appropriate
calibre. The Remuneration Committee determines remuneration
packages with regard to the prevailing pay and benefits
conditions across its markets. The directors do not believe there
are any companies which are directly comparable with Aegis Group
plc. However, in determining remuneration packages, the
Remuneration Committee has had regard to packages provided by
companies of a similar size and within the same industry and
markets.
The main elements of the remuneration packages offered are:
--> Basic salary
Basic salary is determined by the Remuneration Committee by
taking into account the performance of the individual against his
set objectives and the performance of the Group and local company
as a whole.
--> Annual bonus
Executive directors are paid bonuses under the Group Bonus Scheme
upon achievement of individual objectives and financial targets
linked to Group and local company performance. This may result in
the payment of bonuses of up to 50% of basic salary. Kai
Hiemstra's bonus is a contractual obligation as laid down in the
agreement entered into in 1993 for the acquisition of the
remaining 50% of HMS Carat.
--> Share options
Grants of options are made by the Remuneration Committee under
the existing Executive Share Option Schemes which were introduced
in 1995 and the Aegis Group Management Incentive Scheme which was
adopted in May 1998. Grant and exercise of options are subject to
the achievement of specific conditions. The conditions in respect
of the 1995 Executive Share Option Schemes are:
- EPS growth to exceed a European composite retail price index
plus 5% per annum. The European composite index will be
determined by weighting indices calculated for selective
countries to approximate the source of company turnover. The
country indices will be calculated from official retail
inflation data, adjusted for exchange rate fluctuations
against sterling; and
- total shareholder return in capital growth plus dividends
equivalent to that of companies in the top third of the
"FTSE 100".
The conditions in respect of the Aegis Group Management Incentive
Scheme are:
- that the Company's total shareholder return (share price
growth plus re-invested dividends) over the performance
period must reach 15% per annum compound
- that the total shareholder return must match that of the
FTSE Actuaries 500 Index over the same period.
PENSIONS
UK executive directors participate in defined contribution Group
pension schemes. Pensionable salary is limited to basic salary
excluding all bonuses and other benefits. Where UK Plan
contributions exceed Inland Revenue limits, contributions are
made to the Aegis Group plc Unapproved Retirement Benefits Scheme
to increase pension benefits to the level which would have
applied. Non-UK executive directors have arrangements in line
with market conditions and statutory obligations operating in
their own countries.
NOTICE PERIODS
Those executive directors based in the UK have notice periods
ranging from 12 to 24 months. There are no current plans to
reduce these periods which are considered a necessary part of the
remuneration package to attract the right calibre of executive
director and which are felt to be in line with current market
practice. The executive directors based in France have contracts
with six months' notice. However, in the event that Carat France
terminates the agreement other than by reason of misconduct, a
payment equivalent to 18 months' remuneration must be made. Kai
Hiemstra as executive chairman of HMS & Carat Group in Germany
has a service contract which expires on 31 December 1999.
NON-EXECUTIVE DIRECTORS' FEES
Fees for non-executive directors are determined by the Board and
are disclosed below. The non-executive directors do not
participate in the setting of their own remuneration.
The tables which follow provide details of directors'
remuneration, shareholdings and share options.
28 / Aegis Group plc
<PAGE>
DIRECTORS' REMUNERATION
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Basic Annual TOTAL Total PENSIONS Pensions
Salary Fees Benefits Bonus Other 1998 1997 1998 1997
L'000 L'000 L'000 L'000 L'000 L'000 L'000 L'000 L'000
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REMUNERATION John Amerman (a) - 25 - - - 25 - - -
REPORT Crispin Davis (b) 505 - 17 250 - 772 971 254 229
continued Colin Day 230 - 10 101 - 341 319 48 41
Douglas Flynn (c) - 16 - - - 16 n/a - n/a
Kai Hiemstra (d) 232 - 32 447 - 711 774 - -
Ray Kelly (e, j) 212 - 19 106 - 337 218 72 169
Bruno Kemoun (f, j) 270 - 3 - 109 382 355 - -
Frank S Law CBE 100 - 18 - - 118 117 - -
Sir Kit McMahon - 25 - - - 25 25 - -
Eryck Rebbouh (f, j) 270 - 3 - 109 382 355 - -
Dominic Shorthouse (g) - - - - - - - - -
Sir Peter Thompson - 25 - - - 25 25 - -
Philippe Villin (h) - 25 - - 95 120 109 - -
John Vogelstein (i) - - - - - - - - -
Charles Hochman (k) - - - - - - 25 - -
---------------------------------------------------------------------------------------------------------------
Totals 1,819 116 102 904 313 3,254 3,293 374 439
---------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(a) John Amerman has opted to receive his fees in ordinary shares
since his appointment as a non-executive director on 12 December
1997.
(b) A long term bonus, subject to performance criteria including
profitability set by the Remuneration Committee, was paid to
Crispin Davis upon publication of the annual report for the year
ending 31 December 1997. The payment was made half in cash and
half by the allotment of shares in the Company at the then
prevailing market price. The total cost was disclosed under
"Other" remuneration in the 1997 Report and Accounts.
(c) Douglas Flynn was appointed a non-executive director on 15
May 1998. His fees are paid directly to News International plc
and he receives no benefit from them.
(d) The bonus paid forms part of the Company's contractual
obligations to Kai Heimstra under the agreement to purchase the
remaining 50% of HMS Carat entered into on 19 October 1993.
(e) Ray Kelly elected to receive part of his 1998 salary as
additional pension contributions, consistent with previous years.
In past years he has also elected to receive part of his annual
bonus as additional pension contributions.
(f) Bruno Kemoun and Eryck Rebbouh are two of the shareholders of
Societe Internationale de Conseil pour la Communication ("SICC")
which provides international management services to the Group.
Fees are paid to SICC at a fixed amount together with a
performance related element. The salaries received by Bruno
Kemoun and Eryck Rebbouh from SICC are included in "Basic salary"
and their proportion of the profit before tax of SICC is shown as
"Other" emoluments.
(g) Dominic Shorthouse resigned as a non-executive director on 15
May 1998.
(h) Philippe Villin has a consultancy agreement with Carat France
SA which was entered into on 1 June 1995 Fees of FFr882,000 were
paid in 1998 in relation to that agreement.
(i) John Vogelstein resigned as a non-executive director on 15
May 1998.
(j) In addition, a payment of L608,273 each was paid during
the year to Messrs Kelly, Kemoun and Rebbouh by affiliates of
Warburg, Pincus. These payments were established in 1994 for them
in the light of losses incurred on Aegis shares taken as payment
for shares in businesses sold to Aegis and, in the case of Messrs
Kemoun and Rebbouh, for the renunciation of an option to
subscribe for Aegis shares previously granted to them. These
payments were conditional, inter alia, on them remaining in the
employment of Aegis for at least three years.
(k) Charles Hochman resigned on 31 December 1997.
Benefits principally include the provision of company cars and
private medical insurance.
There were three directors who had benefits accruing under the
money purchase schemes. Figures shown for pensions are the
contributions paid by the Company to both approved and unapproved
retirement benefits schemes.
Other than as disclosed in the above paragraphs, none of the
directors was materially or beneficially interested in any
contract of significance with the Company or any of its
subsidiary undertakings during or at the end of the financial
year ended 31 December 1998.
Aegis Group plc / 29
<PAGE>
DIRECTORS' INTERESTS
The directors of the Company in office at the end of the year,
and their interests in the share capital and debentures of the
Company as at 22 March 1999, all of which are beneficial to the
directors and their immediate families, which have been notified
to the Company pursuant to Sections 324 or 328 of the Companies
Act 1985 (the "Act") or are required to be entered into the
Register required to be kept under Section 325 of the Act, and of
REMUNERATION persons connected (within the meaning of Section 346 of the Act)
REPORT with the directors, were as follows:
continued
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Ordinary shares of 5p
-------------------------------------
22 MARCH 31 DECEMBER 31 December
1999 1998 1997
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John Amerman 21,353 21,353 900
Crispin Davis 202,814 202,814 100,300
Colin Day 75,932 75,932 75,905
Douglas Flynn - - n/a
Kai Hiemstra - - -
Ray Kelly 287,188 287,188 287,188
Bruno Kemoun 2,286,432 2,286,432 4,786,432
Frank S Law CBE 1,029,950 1,029,950 1,026,752
Sir Kit McMahon 146,250 146,250 136,860
Eryck Rebbouh 2,286,432 2,286,432 4,786,432
Dominic Shorthouse N/A N/A -
Sir Peter Thompson 197,675 197,675 193,606
Philippe Villin - - -
John Vogelstein N/A N/A -
-----------------------------------------------------------------------------------------------------------
</TABLE>
The middle market price of the ordinary shares of 5p each as
derived from the Stock Exchange Daily Official List on 31
December 1998 was 87.75p and the range during the year was 64.25p
to 112p. The share price on 22 March 1999 was 128.75p.
30 / Aegis Group plc
<PAGE>
Ordinary shares of 5p each for which directors have beneficial
options to subscribe are as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Options Granted Exercised Options Date from
Held at During During Held at Exercise Which Expiry
Director Start of year Year Year End of year Price Exercisable Date
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RENUMERATION Crispin Davis* 9,411,764 - - 9,411,764 25.5p 26.10.1997 25.10.2004
REPORT - 11,700,000 - 11,700,000 87p 15.5.2001 14.5.2004
continued Colin Day 1,132,075 - - 1,132,075 26.5p 21.6.1998 20.6.2005
365,385 - - 365,385 52p 2.7.1999** 1.7.2006
321,569 - - 321,569 63.75p 8.7.2000 7.7.2007
- 2,500,000 - 2,500,000 87p 15.5.2001 14.5.2004
- 113,924 - 113,924 98.75p 2.6.2001 1.6.2008
Kai Hiemstra 1,014,083 - (1,014,083) Nil 26.5p 21.6.1998 20.6.2005
567,973 - - 567,973 52p 2.7.1999** 1.7.2006
Ray Kelly 230,375 - (230,375) Nil 29.3p 5.5.1996 4.5.2003
25,000 - (25,000) Nil 28.5p 25.5.1997 24.5.2004
716,981 - - 716,981 26.5p 21.6.1998 20.6.2005
394,231 - - 394,231 52p 2.7.1999** 1.7.2006
349,804 - - 349,804 63.75p 8.7.2000 7.7.2007
- 2,000,000 - 2,000,000 87p 15.5.2001 14.5.2004
- 127,594 - 127,594 98.75p 2.6.2001 1.6.2008
Bruno Kemoun 256,410 - - 256,410 27.3p 18.9.1995 17.9.2002
963,324 - - 963,324 26.5p 21.6.1998 20.6.2005
510,997 - - 510,997 52p 2.7.1999** 1.7.2006
364,050 - - 364,050 63.75p 8.7.2000 7.7.2007
- 2,000,000 - 2,000,000 87p 15.5.2001 14.5.2004
- 128,697 - 128,697 98.75p 2.6.2001 1.6.2008
Eryck Rebbouh 256,410 - - 256,410 27.3p 18.9.1995 17.9.2002
963,324 - - 963,324 26.5p 21.6.1998 20.6.2005
510,997 - - 510,997 52p 2.7.1999** 1.7.2006
364,050 - - 364,050 63.75p 8.7.2000 7.7.2007
- 2,000,000 - 2,000,000 87p 15.5.2001 14.5.2004
- 128,697 - 128,697 98.75p 2.6.2001 1.6.2008
-----------------------------------------------------------------------------------------------------------
TOTALS 18,718,802 20,698,912 (1,269,458) 38,148,256
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
*As the Company was not able to issue options to Crispin Davis
under the approved Executive Share Option Scheme in October 1994,
there is an arrangement between Crispin Davis and the Company
whereby he may be compensated for certain adverse aspects of the
unapproved options.
**Following discussions with ABI, it was agreed that the options
issued under the Unapproved Executive Share Option Scheme in 1996
should have their initial exercise period reduced from five to
three years.
Options granted during the year are subject to performance
conditions as described in the paragraph headed "Share options"
on page 28. During the year, the following directors or members
of their immediate families exercised and sold options:
- > Ray Kelly exercised and sold two options representing 255,375
shares and realised a gross gain of L96,476.
- > Kai Hiemstra exercised and sold one option representing
1,014,083 shares and realised a gross gain of L633,801.
Since the year end, the following directors or members of
their immediate families exercised and sold share options:
- > Crispin Davis has exercised and sold part of a share option
in respect of 2,000,000 ordinary shares and realised a gross
gain of L2,070,000.
- > Colin Day exercised and sold part of a share option in
respect of 500,000 ordinary shares and realised a gross gain
of L517,500.
- > Ray Kelly exercised and sold part of a share option in
respect of 350,000 ordinary shares and realised a gross gain
of L348,250.
No other directors have exercised or sold options during the
period ended 22 March 1999. In addition, no options have expired
or lapsed during the year in respect of the directors.
Aegis Group plc / 31
<PAGE>
On 25 June 1998 the final version of the Principles of Good
Governance and Code of Best Practice ("The Combined Code") was
issued by the London Stock Exchange. The Combined Code has 14
principles of corporate governance indentified by the Hampel
Report and the Board has reviewed how the Group complies with all
CORPORATE the relevant principles. They believe that they have fully
GOVERNANCE complied with all the principles and the provisions set out in
Section 1 of the Combined Code with the exception of reducing the
notice periods of the executive directors' service contracts to
one year, the appointment of non-executive directors for a
specified term and the constitution of the Remuneration
Committee. These matters are currently under review.
Frank S Law CBE, who was appointed to the Board in 1987 and is
currently non-executive Chairman, also has no specific term of
appointment.
The Board currently has 12 directors, comprising six executive
directors and six non-executive directors, who, with the
exception of Frank S Law CBE and Philippe Villin, are considered
to be independent. The Board meets regularly throughout the year.
Sir Peter Thompson, a non-executive director, has been nominated
as the senior director to whom shareholders may convey their
concerns in the event that they do not wish to involve either the
Chairman or the Chief Executive. Sir Peter Thomson is also
Chairman of the Audit Committee and a member of the Nomination
and Remuneration Committees.
The Company communicates with both institutional and private
shareholders and encourages their attendance and participation at
the Annual General Meeting.
The Board has appointed the following committees:
AUDIT COMMITTEE
The Audit Committee comprises Sir Peter Thompson (Chairman), John
Amerman, Frank S Law CBE and Sir Kit McMahon, and meets at least
twice each year. It has particular responsibility for ensuring
that the Company's financial statements present a true and fair
reflection of the Company's financial position and that
appropriate financial controls are in operation and its duties
include keeping under review the scope and results of the audit
and its cost effectiveness and the independence and objectivity
of the auditors. These meetings are attended by the Group Finance
Director and the external auditors. The Board considers that,
through the Audit Committee, it has an objective and professional
relationship with the auditors.
REMUNERATION AND NOMINATION COMMITTEES
The Remuneration and Nomination Committees both comprise Sir Kit
MacMahon (Chairman), Douglas Flynn, Frank S Law CBE and Sir Peter
Thompson. This is in accordance with the Institute of Directors'
recommendations on the constitution of Remuneration Committees.
The Remuneration Committee meets as and when necessary to review
salaries of Executive directors and senior management together
with incentive schemes for the Group as a whole. It is empowered
to grant share options under the existing Share Option Schemes.
The Nomination Committee meets as and when necessary and has
responsibility for nominating to the Board candidates for
appointment as directors.
INTERNAL FINANCIAL CONTROLS
The Board is responsible for establishing and maintaining the
Group's system of internal financial control. The internal
control systems are designed to address the risks and needs of
operations. Any system can provide only reasonable and not
absolute assurance against material misstatement or loss.
The key procedures which the directors have established are as
follows:
- > The Board of directors has overall responsibility for the
Group's system of internal financial controls. The full Board
meets regularly and has formally adopted a schedule of
matters which are required to be brought to it for
discussion, thus ensuring that it maintains full and
effective control over appropriate financial controls. The
Group's strategic direction is reviewed annually by the Board
and the Chief Executive and the executive directors consider
the strategy for the individual businesses.
- > The Board has put in place an organisational structure with
clearly defined lines of responsibility and delegation of
authority. Annual plans and performance targets for each
business are set by the executive directors and reviewed by
the Board in the light of the Group's overall objectives. The
division of responsibility at Board level is achieved by the
appointment of a non-executive Chairman and a Chief
Executive. Management of the Group's day to day activity is
delegated to the Chief Executive and members of the Executive
Committee.
- > Each operation's Chief Executive is responsible for:
- the conduct and performance of their business
- ensuring an effective system of internal controls is in
place
- meeting defined reporting timetables and ensuring
compliance with the Group's accounting policies, controls
and definitions
- ensuring the integrity and accuracy of the Group's
accounting records
- signing-off their accounts on a monthly basis subject to
the limitations set within the annual business strategy
and the reserved powers and sanctioning limits laid down by
the Board.
- > The Board and the Executive Committee receive, on a monthly
basis, financial results from each business and the Group
reports bi-annually to shareholders based on a standardised
reporting process.
32 / Aegis Group plc
<PAGE>
- > The Audit Committee, comprised exclusively of non-executive
directors, reviews the effectiveness of the internal
financial control environment of the Group and receives
reports from Group Finance and the external auditors on a
CORPORATE regular basis.
GOVERNANCE - > The internal control system is reviewed by Group Finance
continued which operates on a global basis and reports to management
and the Audit Committee. Group Finance and the external
auditors also co-ordinate their work to the extent necessary
for the external auditors to express their audit opinion on
the Group's report and accounts.
The directors confirm that the Audit Committee has carried out a
review of the effectiveness of the system of the Group's system
of internal financial controls as it operated during the year. As
permitted by the London Stock Exchange, the Group has complied
with Code Provision D.2.1. on internal control in accordance with
the guidance given for directors on internal control and
financial reporting that was issued in December 1994.
GOING CONCERN
In accordance with the Combined Code it is recommended that the
directors make a statement of their assessment of the ability of
the Group and the parent company to continue in operational
existence as a going concern.
After making enquiries, the directors have a reasonable
expectation that the Group and the parent company have adequate
resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the accounts.
By order of the Board
/s/ John Rowland
John Rowland FCIS
Company Secretary
11A West Halkin Street
London SW1X 8JL
22 March 1999
Aegis Group plc / 33
<PAGE>
We have audited the financial statements on pages 35 to 59 which have been
prepared under the historical cost convention and the accounting policies set
out on pages 40 and 41.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The directors are responsible for preparing the Annual Report including, as
described on page 27, the financial statements. Our responsibilities, as
independent auditors, are established by statute, the Auditing Practices Board,
the Listing Rules of the London Stock Exchange and our profession's ethical
guidance.
We report to you our opinion as to whether the financial statements give a true
and fair view and are properly prepared in accordance with the Companies Act
1985. We also report to you if, in our opinion, the directors' report is not
consistent with the financial statements, if the Company has not kept proper
accounting records, if we have not received all the information and explanations
we require for our audit, or if information specified by law or the Listing
Rules regarding directors' remuneration and transactions is not disclosed.
We read the other information contained in the Annual Report and consider the
implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the financial statements.
We review whether the statement on pages 32 and 33 reflect the Company's
compliance with those provisions of the Combined Code specified for our review
by the London Stock Exchange, and we report if it does not. We are not required
to form an opinion on the effectiveness of the Group's Corporate governance
procedures or its internal controls.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the Company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
OPINION
In our opinion the financial statements give a true and fair view of the state
of affairs of the Company and the Group at 31 December 1998 and of the profit
and cash flows of the Group for the year then ended and have been properly
prepared in accordance with the Companies Act 1985.
Chartered Accountants and
Registered Auditors
London
22 March 1999
34 / Aegis Group plc
<PAGE>
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 1998
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997
FINANCIAL Notes L'm L'm
STATEMENTS ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TURNOVER:
- continuing operations 4,035.8 3,447.1
- acquisitions 94.2 205.4
------------------------------------------------------------------------------------------------------------
2 4,130.0 3,652.5
Cost of sales (3,909.0) (3,460.7)
------------------------------------------------------------------------------------------------------------
GROSS PROFIT 221.0 191.8
------------------------------------------------------------------------------------------------------------
Operating expenses before amortisation of goodwill (170.4) (147.9)
Amortisation of goodwill (0.5) -
------------------------------------------------------------------------------------------------------------
Operating expenses (170.9) (147.9)
Income from interests in associated undertakings - 0.5
------------------------------------------------------------------------------------------------------------
OPERATING PROFIT:
- continuing operations 48.7 42.9
- acquisitions 1.4 1.5
------------------------------------------------------------------------------------------------------------
50.1 44.4
Profit on disposal of fixed asset investments 3 - 2.1
Interest and similar charges:
- interest receivable 5.2 4.3
- interest payable 4 (4.4) (4.9)
- amortisation of refinancing costs 4 (0.3) (0.3)
------------------------------------------------------------------------------------------------------------
NET INTEREST RECEIVABLE/(PAYABLE) 0.5 (0.9)
------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2, 5, 6 50.6 45.6
Tax on profit on ordinary activities 7 (14.5) (12.2)
------------------------------------------------------------------------------------------------------------
PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 36.1 33.4
Equity minority interests (0.6) (0.6)
------------------------------------------------------------------------------------------------------------
PROFIT ATTRIBUTABLE TO MEMBERS OF THE PARENT COMPANY 35.5 32.8
Dividends:
- preference 8 0.2 (0.8)
- ordinary 8 (8.0) (5.8)
------------------------------------------------------------------------------------------------------------
RETAINED PROFIT FOR THE FINANCIAL YEAR 27.7 26.2
------------------------------------------------------------------------------------------------------------
EARNINGS PER SHARE: 9
BASIC 4.0p 3.8p
------------------------------------------------------------------------------------------------------------
- Profit on disposal of fixed asset investments - (0.2p)
- Amortisation of goodwill - -
------------------------------------------------------------------------------------------------------------
Underlying basic earnings per share 4.0p 3.6p
------------------------------------------------------------------------------------------------------------
FULLY DILUTED 3.7p 3.4p
------------------------------------------------------------------------------------------------------------
</TABLE>
The underlying basic earnings excludes amortisation of goodwill
of L0.5 million for the year ended 31 December 1998 and, for the
year ended 31 December, the exceptional profit of L2.1 million
realised on the disposal of asset investments (see note 3).
Aegis Group plc / 35
<PAGE>
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
FOR THE YEAR ENDED 31 DECEMBER 1998
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
FINANCIAL 1998 1997
STATEMENTS L'm L'm
continued ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PROFIT FOR THE FINANCIAL YEAR 35.5 32.8
Currency translation differences on foreign currency net investments (0.7) 1.3
------------------------------------------------------------------------------------------------------------
TOTAL RECOGNISED GAINS AND LOSSES RELATING TO THE YEAR 34.8 34.1
------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
FOR THE YEAR ENDED 31 DECEMBER 1998
------------------------------------------------------------------------------------------------------------
Group Company
1998 1997 1998 1997
L'm L'm L'm L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PROFIT FOR THE FINANCIAL YEAR 35.5 32.8 19.7 4.5
Preference dividends 0.2 (0.8) 0.2 (0.8)
Ordinary dividends (8.0) (5.8) (8.0) (5.8)
------------------------------------------------------------------------------------------------------------
Retained profit for the financial year 27.7 26.2 11.9 (2.1)
Issue of shares by the Company 17.4 0.8 17.4 0.8
Goodwill written off in the year - (40.0) - -
Currency translation differences on foreign currency net investments (0.7) 1.3 - -
------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN SHAREHOLDERS' FUNDS 44.4 (11.7) 29.3 (1.3)
Shareholders' funds at 1 January (107.5) (95.8) 243.5 244.8
------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' FUNDS AT 31 DECEMBER (63.1) (107.5) 272.8 243.5
------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE OF HISTORICAL COST PROFITS AND LOSSES
FOR THE YEAR ENDED 31 DECEMBER 1998
There is no material difference between the reported results for
1998 and 1997 and the results for those years restated on an
unmodified historical cost basis.
36 / Aegis Group plc
<PAGE>
BALANCE SHEETS
AT 31 DECEMBER 1998
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Group Company
FINANCIAL 1998 1997 1998 1997
STATEMENTS Notes L'm L'm L'm L'm
continued ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FIXED ASSETS
Intangible assets 1,10 17.0 0.8 - -
Tangible assets 11 16.0 13.5 0.4 0.5
Investments 12 1.8 1.3 426.9 404.5
------------------------------------------------------------------------------------------------------------
34.8 15.6 427.3 405.0
------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
Debtors 13 669.9 578.0 29.8 26.1
Investments 14 0.1 0.8 - -
Cash at bank and in hand 114.0 61.6 36.3 0.8
------------------------------------------------------------------------------------------------------------
784.0 640.4 66.1 26.9
------------------------------------------------------------------------------------------------------------
CREDITORS: amounts falling due within one year 15 (859.3) (733.7) (218.5) (185.9)
------------------------------------------------------------------------------------------------------------
NET CURRENT LIABILITIES (75.3) (93.3) (152.4) (159.0)
------------------------------------------------------------------------------------------------------------
TOTAL ASSETS LESS NET CURRENT LIABILITIES (40.5) (77.7) 274.9 246.0
Creditors: amounts falling due after more than one year 16 (21.1) (27.8) (2.1) (2.3)
Provisions for liabilities and charges 17 - (0.2) - (0.2)
------------------------------------------------------------------------------------------------------------
(61.6) (105.7) 272.8 243.5
------------------------------------------------------------------------------------------------------------
CAPITAL AND RESERVES
Issued, allotted, called up and fully paid share capital: 18
- equity 47.8 41.7 47.8 41.7
- non-equity - 3.2 - 3.2
------------------------------------------------------------------------------------------------------------
47.8 44.9 47.8 44.9
------------------------------------------------------------------------------------------------------------
Share premium account: 19
- equity 59.0 33.8 59.0 33.8
- non-equity - 10.7 - 10.7
------------------------------------------------------------------------------------------------------------
59.0 44.5 59.0 44.5
------------------------------------------------------------------------------------------------------------
Capital redemption reserve 19 0.2 0.2 0.2 0.2
Special reserve 19 4.5 21.9 4.5 21.9
Merger reserve 19 - - 13.0 13.0
Profit and loss account 19 (174.6) (219.0) 148.3 119.0
------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' FUNDS (63.1) (107.5) 272.8 243.5
------------------------------------------------------------------------------------------------------------
Analysed as:
- equity (63.1) (121.4) 272.8 229.6
- non-equity - 13.9 - 13.9
------------------------------------------------------------------------------------------------------------
(63.1) (107.5) 272.8 243.5
------------------------------------------------------------------------------------------------------------
EQUITY MINORITY INTERESTS 1.5 1.8 - -
------------------------------------------------------------------------------------------------------------
(61.6) (105.7) 272.8 243.5
------------------------------------------------------------------------------------------------------------
</TABLE>
Crispin Davis (Director)
Colin Day (Director)
22 March 1999
Aegis Group plc / 37
<PAGE>
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
FINANCIAL 1998 1997
STATEMENTS L'm L'm
continued ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET CASH FLOW FROM OPERATING ACTIVITIES 57.0 54.5
------------------------------------------------------------------------------------------------------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 5.2 4.3
Interest paid (4.3) (4.7)
Interest element of finance lease rental payments (0.1) (0.1)
Preference dividends paid - (0.8)
Dividends paid to minority interests (1.2) (0.5)
------------------------------------------------------------------------------------------------------------
NET CASH FLOW FOR RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (0.4) (1.8)
------------------------------------------------------------------------------------------------------------
TAXATION (13.7) (12.3)
------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS
Purchase of intangible fixed assets - (0.8)
Purchase of tangible fixed assets (8.2) (5.9)
Sale of tangible fixed assets 0.3 0.7
Purchase of investments (0.4) -
Sale of investments (a) 0.9 2.5
------------------------------------------------------------------------------------------------------------
NET CASH FLOW FOR CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTS (7.4) (3.5)
------------------------------------------------------------------------------------------------------------
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings and minority interests (note 20) (9.2) (13.2)
Cash acquired on purchase of subsidiary undertakings (note 20) 4.6 4.4
Investment in associated undertakings (0.4) -
Sale of associated undertaking 0.4 -
Deferred consideration on prior period acquisitions (6.2) (3.5)
------------------------------------------------------------------------------------------------------------
NET CASH FLOW FOR ACQUISITIONS AND DISPOSALS (10.8) (12.3)
------------------------------------------------------------------------------------------------------------
EQUITY DIVIDENDS PAID (6.6) (5.4)
------------------------------------------------------------------------------------------------------------
CASH FLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING 18.1 19.2
------------------------------------------------------------------------------------------------------------
MANAGEMENT OF LIQUID RESOURCES (b)
Purchase of short term equity-indexed notes - (0.8)
Sale of short term money market investments 1.0 -
------------------------------------------------------------------------------------------------------------
NET CASH FLOW FOR MANAGEMENT OF LIQUID RESOURCES 1.0 (0.8)
------------------------------------------------------------------------------------------------------------
FINANCING
Issue of share capital 17.4 0.8
Repayment of secured loan (1.2) (8.4)
Capital element of finance lease rental payments (0.3) (0.3)
------------------------------------------------------------------------------------------------------------
NET CASH FLOW FROM FINANCING 15.9 (7.9)
------------------------------------------------------------------------------------------------------------
INCREASE IN CASH IN THE YEAR 35.0 10.5
------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Sale of investments in the year ended 31 December 1997
include L2.4 million realised on disposal of the Group's
shareholding in Manning Gottlieb Media Limited (note 3).
(b) Readily disposable short-term investments and deposits which
are not repayable on demand without penalty are reported as
liquid resources in the cash flow statement.
Notes to this consolidated cash flow statement are provided
opposite.
38 / Aegis Group plc
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997
L'm L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOW
NOTES TO THE Operating profit 50.1 44.4
CONSOLIDATED Amortisation of goodwill 0.5 -
CASH FLOW Depreciation charges 6.2 5.0
STATEMENT Loss on disposal of tangible fixed assets 0.1 -
for the year Profit on disposal of associated undertakings (0.2) -
ended 31 Increase in debtors (93.9) (33.4)
December 1998 Increase in creditors 94.2 38.5
------------------------------------------------------------------------------------------------------------
NET CASH FLOW FROM OPERATING ACTIVITIES 57.0 54.5
------------------------------------------------------------------------------------------------------------
Subsidiary undertakings acquired in the year contributed L2.4 million to
the Group's net cash flow from operating activities.
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997
L'm L'm
------------------------------------------------------------------------------------------------------------
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
INCREASE IN CASH IN THE YEAR 35.0 10.5
Cash outflow from decrease in debt and lease financing 1.5 8.7
------------------------------------------------------------------------------------------------------------
Change in net debt resulting from cash flows 36.5 19.2
Issue of preference shares by US subsidiary (note 21) - (10.6)
New finance lease obligations - (0.3)
Effect of foreign exchange rate changes 2.6 (2.9)
------------------------------------------------------------------------------------------------------------
MOVEMENT IN NET DEBT IN THE YEAR 39.1 5.4
Net debt at 1 January (2.2) (7.6)
------------------------------------------------------------------------------------------------------------
NET FUNDS/(DEBT) AT 31 DECEMBER 36.9 (2.2)
------------------------------------------------------------------------------------------------------------
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
1 January Other non-cash Exchange 31 December
1998 Cash flow changes movement 1998
L'm L'm L'm L'm L'm
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ANALYSIS OF NET FUNDS/(DEBT)
Cash in hand and at bank 61.6 49.1 - 3.3 114.0
Overdrafts (44.6) (14.1) - (0.6) (59.3)
--------------------------------------------------------------------------------------------------------------------
17.0 35.0 - 2.7 54.7
--------------------------------------------------------------------------------------------------------------------
Debt due within one year (10.6) - - 0.1 (10.5)
Debt due after more than one year (7.9) 1.2 - (0.2) (6.9)
--------------------------------------------------------------------------------------------------------------------
Net funds/(debt) before finance lease obligations (1.5) 36.2 - 2.6 37.3
Finance lease obligations (0.7) 0.3 - - (0.4)
--------------------------------------------------------------------------------------------------------------------
Total (2.2) 36.5 - 2.6 36.9
--------------------------------------------------------------------------------------------------------------------
</TABLE>
There were no loans within subsidiaries acquired in the year.
Aegis Group plc / 39
<PAGE>
1. PRINCIPAL ACCOUNTING POLICIES
-----------------------------------------------------------------
The financial statements have been prepared under the historical
cost convention and in accordance with applicable accounting
standards adopting the following principal accounting policies:
NOTES FORMING
PART OF THE BASIS OF CONSOLIDATION
FINANCIAL
STATEMENTS The consolidated financial statements incorporate the financial
for the year statements of Aegis Group plc and its subsidiary undertakings
ended 31 from the date of acquisition up to 31 December 1998. All
December 1998 inter-company balances and transactions are eliminated. The
financial statements also include the Group's attributable share
of associated undertakings' results up to 31 December 1998.
GOODWILL
Prior to 1 January 1998, it was the Group's policy to write off
purchased goodwill immediately to reserves and charge it to the
profit and loss account only on the subsequent disposal of the
business to which it related. For acquisitions prior to 1 January
1998, the Group has elected to continue with this accounting
policy.
In accordance with FRS10, goodwill arising on each acquisition on
or after 1 January 1998 is capitalised as an asset in the balance
sheet. The directors review the estimated useful economic life of
goodwill arising on each acquisition and, where this is
considered finite, the goodwill is amortised over this period on
a straight line basis. Following the first full year of ownership
of an acquired business, the goodwill capitalised is reviewed for
impairment. The carrying value of goodwill may also be reviewed
at any time if there is a new event or change in circumstance
which may impact upon its recoverable amount.
FOREIGN CURRENCIES
Profit and loss accounts and cash flows in foreign currencies are
translated into sterling at average exchange rates. Assets and
liabilities denominated in foreign currencies are translated
using the rate of exchange ruling at the balance sheet date.
Unrealised exchange adjustments, arising on the translation of
the net assets of subsidiaries, associated undertakings or on
borrowings hedging against these net assets, are taken directly
to reserves in the consolidated financial statements. All other
gains and losses on translation are dealt with in the profit and
loss account.
TURNOVER
Turnover represents the value of media handled by the Group on
behalf of clients (excluding VAT). Turnover is recognised when
charges are made to clients, principally when advertisements
appear in the media. Fees are recognised over the period of the
relevant assignments or agreements.
RESEARCH AND DEVELOPMENT
Research and development expenditure, including purchased
software licences and development costs, is charged to the profit
and loss account in the year in which it is incurred.
FIXED ASSETS AND DEPRECIATION
Tangible fixed assets are stated at historical cost less
accumulated depreciation.
Depreciation is provided to write off the cost of all fixed
assets, except freehold land, to their residual value over their
expected useful lives. It is calculated on the historic cost of
the assets at the following rates:
Freehold buildings 1% - 5% per annum
Leasehold buildings Over the period of the lease
Leasehold improvements 10% - 20% per annum or over the
period of the lease, if shorter
Office furniture, fixtures, 10% - 50% per annum
equipment & vehicles
40 / Aegis Group plc
<PAGE>
1. PRINCIPAL ACCOUNTING POLICIES continued
-----------------------------------------------------------------
LEASED ASSETS
NOTES FORMING Where assets are financed by leasing agreements that give rights
PART OF THE approximating to ownership ("finance leases"), the assets are
FINANCIAL treated as if they had been purchased outright. The amount
STATEMENTS capitalised is the present value of the minimum lease payments
for the year payable during the lease term. The corresponding leasing
ended 31 commitments are shown as amounts payable to the lessor.
December 1998 Depreciation on the relevant assets is charged to the profit and
continued loss account.
Lease payments are split between capital and interest using the
actuarial method. The interest is charged to the profit and loss
account. The capital element reduces the amounts payable to the
lessor.
All other leases are treated as "operating leases". These annual
rentals are charged to the profit and loss account over the lease
term.
SUBSIDIARY UNDERTAKINGS
Investments in subsidiaries are held at cost less any provisions
for permanent diminution in value.
ASSOCIATED UNDERTAKINGS
Companies in which the Group has a participating interest and
over whose operating and financial policies it exercises a
significant influence are treated as associated undertakings.
Investments in associated undertakings are included in the
consolidated balance sheet at cost less any goodwill arising
before 1 January 1998, less provisions for permanent diminution
in value plus attributable post-acquisition retained profits.
OTHER FIXED ASSET INVESTMENTS
Other fixed asset investments are stated at cost less amounts
written off in respect of any permanent diminution in value.
DEFERRED TAXATION
Provision is made for timing differences between the treatment of
certain items for taxation and accounting purposes to the extent
that it is probable that a liability or asset will crystallise in
the foreseeable future.
PENSION COSTS
Retirement benefits for employees of certain companies in the
Group are provided by defined contribution schemes which are
funded by contributions from Group companies and employees. The
amount charged to the profit and loss account is the
contributions payable in the year.
With minor exceptions these funds are placed with separate
trustee administered schemes or insurance companies.
FINANCIAL INSTRUMENTS
The costs of issue of capital instruments such as the issue costs
of new debt are charged to the profit and loss account on an
annual basis over the life of the instrument.
Aegis Group plc / 41
<PAGE>
2. NET LIABILITIES AND OPERATING PERFORMANCE
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Profit/(loss) on
ordinary activities
Net liabilities before taxation Turnover
1998 1997 1998 1997 1998 1997
L'M L'm L'M L'm L'M L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NOTES FORMING GEOGRAPHICAL ANALYSIS
PART OF THE Europe (26.3) (67.5) 48.3 43.1 3,568.8 3,311.2
FINANCIAL North America and Asia Pacific (35.3) (38.2) 2.3 0.8 561.2 341.3
STATEMENTS ------------------------------------------------------------------------------------------------------------
for the year (61.6) (105.7) 50.6 43.9 4,130.0 3,652.5
ended 31 ------------------------------------------------------------------------------------------------------------
December 1998 Income from interests in associated undertakings - 0.5
continued Profit on disposal of fixed asset investments - 2.1
Net interest receivable/(payable) 0.5 (0.9)
Amortisation of goodwill (0.5) -
------------------------------------------------------------------------------------------------------------
Profit on ordinary activities before taxation 50.6 45.6
------------------------------------------------------------------------------------------------------------
</TABLE>
The Group operates in only one business sector: media
communications. The Group's share of the net assets of associated
undertakings of L0.6 million (1997: L0.4 million) are located
in Europe. There is no material difference between turnover
determined by origin and that determined by destination.
A further analysis of turnover in Europe is set out below:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
LOCAL'M Local'm L'M L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
France 9,774.1 8,765.8 1,001.2 919.9
Germany 2,432.1 2,252.5 835.1 795.5
UK 667.9 630.1 667.9 630.1
Scandinavia 4,868.9 4,280.9 368.3 342.3
Spain 77,978.4 72,077.8 315.2 301.0
Italy 483,093.0 322,543.0 167.8 115.7
Rest of Europe N/A n/a 213.3 206.7
------------------------------------------------------------------------------------------------------------
N/A n/a 3,568.8 3,311.2
------------------------------------------------------------------------------------------------------------
</TABLE>
A further analysis of profits has not been given since, in the
opinion of the directors, this would be seriously prejudicial to
the interests of the Group.
3. PROFIT ON DISPOSAL OF FIXED ASSET INVESTMENTS
-----------------------------------------------------------------
On 31 October 1997, the Group disposed of its 19.9% holding in
Manning Gottlieb Media Limited for cash consideration of
L2.4 million realising a gain of L2.1 million, during the year
ended 31 December 1997. Due to the availability of brought
forward capital losses, there was no tax payable on the profit
realised on the disposal of this investment.
42 / Aegis Group plc
<PAGE>
4. INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997
L'm L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NOTES FORMING INTEREST PAYABLE:
PART OF THE On bank loans and overdrafts repayable 2.4 2.9
FINANCIAL Other loans repayable 0.7 0.6
STATEMENTS Interest payable under finance lease and hire purchase contracts 0.1 0.1
for the year Other charges 1.2 1.3
ended 31 ------------------------------------------------------------------------------------------------------------
December 1998 4.4 4.9
continued Amortisation of refinancing costs 0.3 0.3
------------------------------------------------------------------------------------------------------------
4.7 5.2
------------------------------------------------------------------------------------------------------------
</TABLE>
The cost of the existing banking facilities of L1.0 million
was capitalised in 1996 and is being be written off over three
years, representing the minimum period of those arrangements.
5. STAFF COSTS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997
L'm L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STAFF COSTS CONSIST OF:
Wages and salaries 90.9 76.2
Social security costs 16.1 15.0
Other pension costs 1.9 1.6
------------------------------------------------------------------------------------------------------------
108.9 92.8
------------------------------------------------------------------------------------------------------------
</TABLE>
The average number of full-time employees of the Group during the
year, all of whom were employed in the field of media
communications, was 2,838 (1997: 2,266). At 31 December 1998,
there were 2,869 employees (1997: 2,510). The average number of
full-time employees in the UK during the year was 491 (1997:
483).
Directors' remuneration is disclosed in the Remuneration report
on page 29. The total amount of directors' remuneration in 1998
was L3.3 million (1997: L3.3 million).
6. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997
L'm L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
THIS IS STATED AFTER CHARGING:
Auditors' remuneration and expenses - audit services - UK* 0.2 0.1
- audit services - overseas 0.3 0.4
------------------------------------------------------------------------------------------------------------
0.5 0.5
Auditors' remuneration and expenses - non-audit services - UK - -
- non-audit services - overseas 0.1 0.1
------------------------------------------------------------------------------------------------------------
0.1 0.1
------------------------------------------------------------------------------------------------------------
Depreciation of fixed assets 6.2 5.0
Operating lease rentals on other assets 8.3 7.4
Research and development costs 19.5 14.8
Loss on disposal of tangible fixed assets 0.1 -
Profit on disposal of associated undertakings 0.2 -
Profit on sale of fixed asset investments - 2.1
------------------------------------------------------------------------------------------------------------
</TABLE>
*Auditors' remuneration and expenses payable by the Company were
L0.1 million (1997: L0.1 million).
All operating expenses are administration expenses.
Aegis Group plc / 43
<PAGE>
7. TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997
L'm L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UK corporation tax - -
Overseas taxation 14.4 12.1
Associated undertakings 0.1 0.1
------------------------------------------------------------------------------------------------------------
14.5 12.2
------------------------------------------------------------------------------------------------------------
</TABLE>
The effective rate of tax on the Group's underlying profits is
28.4% based on profits before amortisation of goodwill (1997:
28%). As disclosed in note 3 above, there was no tax arising in
1997 on the profit on disposal of the Group's 19.9% shareholding
in Manning Gottlieb Media Limited.
8. DIVIDENDS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997
L'm L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NON-EQUITY: PREFERENCE
Variable rate convertible cumulative redeemable preference shares 2003 of 5p each
- conventional dividend paid (31 December 1997: 0.68p) - 0.4
- foreign income dividend paid (31 December 1997: 0.3p) - 0.2
- foreign income dividend lost at 0.4p per share (31 December 1997: 0.4p)* (0.2) 0.2
------------------------------------------------------------------------------------------------------------
(0.2) 0.8
------------------------------------------------------------------------------------------------------------
EQUITY: ORDINARY
Ordinary shares of 5p each
- interim dividend rate per share paid as a foreign income dividend 0.35p 0.3p
- final dividend rate per share proposed 0.5p 0.4p
------------------------------------------------------------------------------------------------------------
0.85p 0.7p
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
L'm L'm
------------------------------------------------------------------------------------------------------------
ORDINARY SHARES OF 5p EACH
- interim dividend paid as a foreign income dividend 3.2 2.5
- final dividend proposed 4.8 3.3
------------------------------------------------------------------------------------------------------------
8.0 5.8
------------------------------------------------------------------------------------------------------------
</TABLE>
*During the year, the Company's preference shares were converted
into ordinary shares thereby losing their right to the 1997 final
dividend of 0.4p per share but ranking for all ordinary dividends
thereafter. As a result of the conversion, the Company's 1997
final dividend of 0.4p per share was deemed to be a foreign
income dividend.
Under the Finance Act 1994, Aegis Group plc elected to treat its
interim dividend for 1998 as a Foreign Income Dividend ("FID").
With effect from 6 April 1999, the Government has abolished FIDs
and Advance Corporation Tax.
The final dividend, if approved, will be paid as a conventional
dividend on 1 July 1999 to all ordinary shareholders on the
register on 11 June 1999.
44 / Aegis Group plc
<PAGE>
9. EARNINGS PER ORDINARY SHARE
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
As reported Underlying As restated Underlying
1998 1998 1997 1997
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NOTES FORMING Earnings per ordinary share is calculated as follows:
PART OF THE BASIC
FINANCIAL Profit for the period L35.7m L36.2m L32.0m L29.9m
STATEMENTS Weighted average number of ordinary shares in issue 898.4m 898.4m 831.2m 831.2m
for the year Basic earnings per share 4.0p 4.0p 3.8p 3.6p
ended 31 ----------------------------------------------------------------------------------------------------------
December 1998 FULLY DILUTED
continued Profit for the period L35.5m L36.0m L32.8m L30.7m
Weighted average number of ordinary shares in issue and the
weighted average number of dilutive securities 971.3m 971.3m 950.8m 950.8m
Fully diluted earnings per share 3.7p 3.7p 3.4p 3.2p
----------------------------------------------------------------------------------------------------------
</TABLE>
The calculation of basic earnings per share is based on profit
net of tax, minority interests and preference dividends. The
calculation of fully diluted earnings per share is based on
profit for basic earnings per share adjusted for preference
dividends. The fully diluted earnings per share for 1997 has been
restated to comply with Financial Reporting Standard 14 which was
issued in 1998.
At 31 December 1998, there were 955.1 million ordinary shares in
issue (1997: 833.3 million), no convertible preference shares
(1997: 63.8 million), no warrants outstanding (1997: 48.0
million) and 94.2 million options outstanding (1997: 57.6
million). The total proceeds that would be received on exercise
of the outstanding options at 31 December 1998 is L63.7 million.
The table below sets out the effect of the dilutive securities
on fully diluted earnings per share calculation:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
NO. OF NO. OF
ORDINARY ORDINARY
SHARES SHARES
1998 1997
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Convertible preference shares 15.6m 63.8m
Warrants 22.6m 25.5m
Options 34.7m 30.3m
---------------------------------------------------------------------------------------------------------
TOTAL WEIGHTED AVERAGE NUMBER OF DILUTIVE SECURITIES 72.9m 119.6m
---------------------------------------------------------------------------------------------------------
</TABLE>
Underlying profits are calculated by adding back amortisation of
goodwill of L0.5 million in 1998 and the profit on disposal of
fixed asset investments of L2.1 million (note 3) in 1997, in
order to eliminate the effect of these distorting items.
10. INTANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Development
Goodwill Costs Total
L'm L'm L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GROUP:
Cost at 1 January 1998 - 0.8 0.8
Additions (note 20) 17.5 - 17.5
In subsidiaries disposed - (0.8) (0.8)
------------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 1998 17.5 - 17.5
------------------------------------------------------------------------------------------------------------
Amortisation at 1 January 1998 - - -
Provided for in the year 0.5 - 0.5
------------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 1998 0.5 - 0.5
------------------------------------------------------------------------------------------------------------
Net book value
AT 31 DECEMBER 1998 17.0 - 17.0
------------------------------------------------------------------------------------------------------------
At 31 December 1997 - 0.8 0.8
------------------------------------------------------------------------------------------------------------
</TABLE>
Development costs related to the costs incurred in the initial
compilation of the mailing lists and databases held by Consodata
Espana SA. These costs were capitalised and amortised over their
useful economic life of three years on a straight line basis.
Consodata Espana SA was sold at no profit to Consodata France SA
during the year.
Aegis Group plc / 45
<PAGE>
11. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Office
furniture,
fixtures,
Freehold land & Leasehold equipment &
buildings improvements vehicles Total
L'm L'm L'm L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NOTES FORMING GROUP:
PART OF THE Cost at 1 January 1998 3.9 6.1 24.1 34.1
FINANCIAL Additions - 1.9 6.3 8.2
STATEMENTS In subsidiaries acquired - 0.1 0.8 0.9
for the year Disposals (0.3) - (5.1) (5.4)
ended 31 Exchange adjustments 0.2 0.1 0.7 1.0
December 1998 ------------------------------------------------------------------------------------------------------------
continued AT 31 DECEMBER 1998 3.8 8.2 26.8 38.8
------------------------------------------------------------------------------------------------------------
Depreciation at 1 January 1998 0.8 4.9 14.9 20.6
Provided for in the year 0.2 0.4 5.6 6.2
In subsidiaries acquired - - 0.3 0.3
Disposals (0.1) - (4.9) (5.0)
Exchange adjustments 0.1 - 0.6 0.7
------------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 1998 1.0 5.3 16.5 22.8
------------------------------------------------------------------------------------------------------------
Net book value
AT 31 DECEMBER 1998 2.8 2.9 10.3 16.0
------------------------------------------------------------------------------------------------------------
At 31 December 1997 3.1 1.2 9.2 13.5
------------------------------------------------------------------------------------------------------------
COMPANY:
Cost at 1 January 1998 - 0.1 0.7 0.8
Additions - - 0.1 0.1
------------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 1998 - 0.1 0.8 0.9
------------------------------------------------------------------------------------------------------------
Depreciation at 1 January 1998 - - 0.3 0.3
Provided for in the year - - 0.2 0.2
------------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 1998 - - 0.5 0.5
------------------------------------------------------------------------------------------------------------
Net book value
AT 31 DECEMBER 1998 - 0.1 0.3 0.4
------------------------------------------------------------------------------------------------------------
At 31 December 1997 - 0.1 0.4 0.5
------------------------------------------------------------------------------------------------------------
</TABLE>
The cost of the Group's tangible fixed assets includes L0.9
million (1997: L1.3 million) and the net book value includes
L0.3 million (1997: L0.6 million) in respect of assets held
under finance leases. Depreciation on these assets in the year
was L0.2 million (1997: L0.2 million).
The net book value of the Company's tangible fixed assets
includes no amount (1997: Lnil) in respect of assets held
under finance leases.
The Group has no capital commitments, contracted for but not
provided (1997: L1.2 million). The Company has no capital
commitments contracted for but not provided (1997: Lnil).
46 / Aegis Group plc
<PAGE>
12. FIXED ASSET INVESTMENTS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Share of
associated Other
undertakings' fixed asset Total
net assets investments Own shares investments
L'm L'm L'm L'm
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NOTES FORMING GROUP:
PART OF THE Net book value at 1 January 1998 0.4 0.3 0.6 1.3
FINANCIAL Additions 0.4 0.4 - 0.8
STATEMENTS Disposals (0.2) - (0.2) (0.4)
for the year Revaluation - - 0.1 0.1
ended 31 --------------------------------------------------------------------------------------------------------------
December 1998 NET BOOK VALUE AT 31 DECEMBER 1998 0.6 0.7 0.5 1.8
continued --------------------------------------------------------------------------------------------------------------
COMPANY:
Net book value at 1 January 1998 - 404.2 0.3 404.5
Additions - 22.6 - 22.6
Disposals - - (0.2) (0.2)
--------------------------------------------------------------------------------------------------------------
NET BOOK VALUE AT 31 DECEMBER 1998 - 426.8 0.1 426.9
--------------------------------------------------------------------------------------------------------------
</TABLE>
ASSOCIATED UNDERTAKINGS
A list of the Group's associated undertakings is disclosed
in note 25.
OTHER FIXED ASSET INVESTMENTS
The Group and Company have UK listed fixed asset investments with
a market value at 31 December 1998 of L14,180 (1997: L12,977).
The Company's fixed asset investments principally relate to
shares in subsidiary undertakings. A list of the Group's
principal subsidiary undertakings is disclosed in note 25. The
historical cost of the Company's fixed asset investments is
L436.3 million before provisions for diminution in value.
OWN SHARES
The nominal value of own shares held at 31 December 1998 was
Lnil (1997: L0.1 million). Options over some of these
shares have been granted to certain senior employees exercisable
at any time ranging up to 4 May 2003 and 24 May 2004 at a price
of 28.5p or 29.3p. Under the terms of the trust, all dividends on
the shares owned by a trust, the purchase of which was funded by
an interest free loan to the trust by Aegis Group plc, are
waived. All expenses incurred by the trust are settled directly
by Aegis Group plc and are charged in the accounts as incurred.
13. DEBTORS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Group Company
1998 1997 1998 1997
L'M L'm L'M L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trade debtors 616.8 515.9 - -
Amounts due from Group undertakings - - 25.1 21.1
Amounts due from associated undertakings 7.1 3.5 - -
Other debtors 35.3 26.9 4.4 4.8
Prepayments and accrued income 10.7 31.7 0.3 0.2
------------------------------------------------------------------------------------------------------------
669.9 578.0 29.8 26.1
------------------------------------------------------------------------------------------------------------
</TABLE>
Aegis Group plc / 47
<PAGE>
14. CURRENT ASSET INVESTMENTS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Group Company
1998 1997 1998 1997
L'M L'm L'M L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Other investments 0.1 0.8 - -
------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES FORMING
PART OF THE Current asset investments comprise unlisted investments.
FINANCIAL
STATEMENTS
for the year
ended 31 15. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
December 1998
continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Group Company
1998 1997 1998 1997
L'M L'm L'M L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bank loans and overdrafts 69.8 55.2 109.0 79.1
Less issue costs of debt to be amortised (0.2) (0.3) (0.2) (0.3)
------------------------------------------------------------------------------------------------------------
69.6 54.9 108.8 78.8
Trade creditors 679.4 589.6 - -
Finance leases and hire purchase contracts 0.2 0.3 - -
Amounts due to Group undertakings - - 99.4 96.7
Amounts due to associated undertakings - 0.2 - -
Taxation and social security 16.8 13.2 0.1 0.1
Corporation tax 9.5 7.7 - -
Dividends payable 4.8 3.5 4.8 3.5
Other creditors 45.4 40.7 2.7 4.2
Accruals and deferred income 33.6 23.6 2.7 2.6
------------------------------------------------------------------------------------------------------------
859.3 733.7 218.5 185.9
------------------------------------------------------------------------------------------------------------
</TABLE>
16. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Group Company
1998 1997 1998 1997
L'M L'm L'M L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bank loans 6.9 7.9 - -
Less issue costs of debt to be amortised - (0.2) - (0.2)
------------------------------------------------------------------------------------------------------------
6.9 7.7 - (0.2)
Finance leases and hire purchase contracts 0.2 0.4 - -
Other creditors 14.0 19.7 2.1 2.5
------------------------------------------------------------------------------------------------------------
21.1 27.8 2.1 2.3
------------------------------------------------------------------------------------------------------------
</TABLE>
On 25 June 1996, the Group entered into new banking facilities
under which the Group obtained a multi-currency term loan of
L30 million, a revolving credit facility of L70 million and a
media guarantee facility of L70 million. On 1 September 1998,
the Group cancelled the media guarantee facility of L70
million, and replaced it with an Insurance Bond of L60 million.
During the year, the Group repaid L1.2 million of the term loan.
Interest is payable on the term loan and the revolving credit
facility at LIBOR plus a maximum of 1.125%. The remaining
facilities are secured by fixed and floating charges over the
shares of certain subsidiary undertakings.
L6.9 million (1997:L7.9 million) is repayable between two and
five years. No amount (1997:Lnil) is repayable after more than
five years. There is no amount in other creditors (1997:Lnil)
repayable in instalments more than five years from the date of
the balance sheet.
48 / Aegis Group plc
<PAGE>
17. PROVISIONS FOR LIABILITIES AND CHARGES
-----------------------------------------------------------------
GROUP AND COMPANY:
NOTES FORMING During the period, provisions of L0.2 million relating to
PART OF THE surplus UK property were utilised.
FINANCIAL
STATEMENTS No provision for deferred taxation is recorded due to the
for the year availability of tax losses carried forward which offset the full
ended 31 potential effect of timing differences between the treatment of
December 1998 certain items for taxation and accounting purposes. There was no
continued material unprovided liability for deferred taxation at 31
December 1998 or 31 December 1997.
18. SHARE CAPITAL
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
1998 1997
EQUITY NON-EQUITY TOTAL Equity Non-equity Total
L'M L'M L'M L'm L'm L'm
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AUTHORISED:
1,200,000,000 (1997: 1,200,000,000)
ordinary shares of 5p each 60.0 - 60.0 60.0 - 60.0
Nil (1997: 68,181,820) variable rate
convertible cumulative redeemable
preference shares 2003 of 5p each - - - - 3.4 3.4
-----------------------------------------------------------------------------------------------------------
60.0 - 60.0 60.0 3.4 63.4
-----------------------------------------------------------------------------------------------------------
ISSUED, ALLOTTED, CALLED UP AND FULLY PAID:
955,140,221 (1997: 833,304,722)
ordinary shares of 5p each 47.8 - 47.8 41.7 - 41.7
Nil (1997: 63,753,338) variable rate
convertible cumulative redeemable
preference shares 2003 of 5p each - - - - 3.2 3.2
-----------------------------------------------------------------------------------------------------------
47.8 - 47.8 41.7 3.2 44.9
-----------------------------------------------------------------------------------------------------------
</TABLE>
ORDINARY SHARES
The ordinary shares of 5p each have full voting rights.
During the year the following issues of ordinary shares were
made:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
No. of ordinary shares Nominal value of
Reason for issue issued ordinary shares issued Consideration
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Conversion of preference shares 63,753,338 L3,187,667 -
Subscription of warrants 47,995,000 L2,399,750 L14,398,500
Exercise of share options 10,087,161 L504,358 L3,026,566
-----------------------------------------------------------------------------------------------------
TOTAL 121,835,499 L6,091,775 L17,425,066
-----------------------------------------------------------------------------------------------------
</TABLE>
The Company received L17.4 million as consideration on exercise
of share options and subscription of warrants. There are no
preference shares or warrants outstanding at 31 December 1998.
Under the executive share option schemes there were outstanding
at 31 December 1998, options over 94,220,289 ordinary shares of
5p each for which the participants have the right to exercise
their options at prices ranging from 25.5p to 165.80p. These
options are exercisable between 1 January 1997 and 1 June 2008.
Aegis Group plc / 49
<PAGE>
19. RESERVES
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Share Share
premium premium Capital Profit and
account account redemption Special loss
(equity) (non-equity) reserve reserve account
L'm L'm L'm L'm L'm
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NOTES FORMING GROUP:
PART OF THE At 1 January 1998 33.8 10.7 0.2 21.9 (219.0)
FINANCIAL Retained profit for the financial year - - - - 27.7
STATEMENTS Issue of shares by the Company 14.5 - - - -
for the year Conversion of preference shares 10.7 (10.7) - - -
ended 31 Transfers - - - (17.4) 17.4
December 1998 Currency translation differences on
continued foreign currency net investments - - - - (0.7)
----------------------------------------------------------------------------------------------------------------
AT 31 DECEMBER 1998 59.0 - 0.2 4.5 (174.6)
----------------------------------------------------------------------------------------------------------------
</TABLE>
Goodwill arising on acquisitions up to 31 December 1997 of
L565.2 million, which has been written off immediately to
reserves, is included within the profit and loss reserve account.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Share Share
premium premium Capital Profit and
account account redemption Special Merger loss
(equity) (non-equity) reserve reserve reserve account
L'm L'm L'm L'm L'm L'm
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY
At 1 January 1998 33.8 10.7 0.2 21.9 13.0 119.0
Retained profit for the financial year - - - - - 11.9
Issue of shares by the Company 14.5 - - - - -
Conversion of preference shares 10.7 (10.7) - - - -
Transfers - - - (17.4) - 17.4
--------------------------------------------------------------------------------------------------------------
At 31 December 1998 59.0 - 0.2 4.5 13.0 148.3
--------------------------------------------------------------------------------------------------------------
</TABLE>
Following the issue of shares during the year a further L17.4
million has been transferred from the special reserve to the
profit and loss reserve account in accordance with a court
approved share premium account reduction scheme implemented in
1994.
The Company has not presented its own profit and loss account as
permitted by Section 230 (1) of the Companies Act 1985. The
profit dealt with in the accounts of the Company for the 12
months to 31 December 1998 was L19.7 million (12 months to
31 December 1997:L4.5 million). Accumulated reserves for the
Company include L111.3 million (1997:L111.3 million) which is not
available for distribution under the terms of the court approved
share premium account reduction scheme.
50 / Aegis Group plc
<PAGE>
20. ACQUISITIONS
-----------------------------------------------------------------
During the year the Group acquired subsidiaries and minority
interests (all acquisition accounted for) as detailed below:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Accounting
Book value policy Other Fair value
acquired alignment adjustments of net assets
L'm L'm L'm L'm
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NOTES FORMING NET ASSETS/(LIABILITIES) ACQUIRED:
PART OF THE Tangible fixed assets 0.7 (0.1)(a) - 0.6
FINANCIAL Debtors 5.4 (0.2)(b) (0.1)(d) 5.1
STATEMENTS Cash at bank and in hand 4.6 - - 4.6
for the year Creditors (9.9) (0.1)(c) (0.2)(e) (10.2)
ended 31 Minority interest extinguished 0.7 - - 0.7
December 1998 -------------------------------------------------------------------------------------------------------------------
continued 1.5 (0.4) (0.3) 0.8
-------------------------------------------------------------------------------------------------------------------
Goodwill capitilised in the year 17.5
-------------------------------------------------------------------------------------------------------------------
18.3
-------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
L'm
------------------------------------------------------------------------------------------------------------
<S> <C>
SATISFIED BY:
Cash consideration 8.7
Direct costs of acquisition 0.5
Deferred consideration (note 21) 9.1
------------------------------------------------------------------------------------------------------------
18.3
------------------------------------------------------------------------------------------------------------
</TABLE>
Accounting policy adjustments have been made to the book value of
net assets acquired as set out below:
(a) Adjustments have been made to the book value of tangible
fixed assets of certain of the acquisitions detailed below to
bring them into alignment with the Group's accounting policies on
depreciation.
(b) Where the Group operates as principal with the media in a
market where credit insurance is either not available or not
available at commercial rates, general bad debt provisions have
been established consistent with the Group's accounting policy
for that market.
(c) Adjustments have been made to change the basis of accounting
from cash to accruals.
Other adjustments have been made for pre-acquisition items, not
reflected in the acquisition balance sheet, as set out below:
(d) Provisions against specific bad debts of L0.1 million have
been made against irrecoverable balances in Freeman Associates.
(e) In Freeman Associates and the Strategem Group, provisions
have been made for redundancy costs of L0.1 million each.
Goodwill arising in the year arose as a result of the acquisition
of the following:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
Effective interest in issued
Country of ordinary share capital
incorporation % acquired at 31 December 1998
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bray Australia 100% 100%
Freeman Associates Inc USA 100% 100%
Halmarick Australia 100% 100%
Strategem Group Canada 100% 100%
David Cairns and Company Media Management Ltd Canada 100% 100%
Saverne Conseil SA France 100% 100%
Carat Media Services (Thailand) Co Ltd Thailand 49% 49%
MW Office GmbH Germany 24% 75%
Micom Carat SA Switzerland 20% 100%
Micom Carat AG Switzerland 40% 100%
Carat Turkey Turkey 30% 100%
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
Aegis Group plc / 51
<PAGE>
20. ACQUISITIONS CONTINUED
-----------------------------------------------------------------
Further details on the aquisitions in the year are set out below:
NOTES FORMING BRAY
PART OF THE
FINANCIAL With effect from 1 January 1998, the Group acquired the business
STATEMENTS of Bray Limited in Sydney, Australia (now renamed "Carat
for the year Australia Media Services"). The initial cash consideration was
ended 31 L0.8 million (A$2.1 million). Further contingent consideration
December 1998 payable in cash of up to L0.9 million (A$2.4 million) may also
continued be paid between 2000 and 2001 subject to specified growth
criteria.
FREEMAN ASSOCIATES INC
With effect from 1 January 1998, the Group acquired a 100%
interest in Freeman Associates Inc based near Boston, USA (now
renamed "Carat Freeman"). The initial cash consideration was
L3.3 million (US$5.3 million). Further contingent consideration
payable in cash of up to L4.5 million (US$7.5 million) may also
be paid between 1999 and 2001 subject to specified growth
criteria.
HALMARICK
With effect from 1 January 1998, the Group acquired the business
of Halmarick Limited in Sydney, Australia (now renamed "Carat
Australia Media Services"). The initial cash consideration was
L1.5m (A$4.0 million). Further contingent consideration payable
in cash of up to L1.1 million (A$3.0 million) may also be paid
between 1999 and 2001 subject to specified growth criteria.
STRATEGEM GROUP
With effect from 1 January 1998, the Group acquired 49% of the
voting rights and 100% of the equity shares in the Strategem
Group in Montreal, Canada (now renamed "Groupe Carat Strategem").
The Group is entitled, inter alia, to 100% of the dividends
arising from Groupe Carat Strategem and these entities are
consolidated on that basis. The initial cash consideration was
L0.7 million (CAN$1.8 million). Further contingent consideration
payable in cash of up to L1.3 million (CAN$3.0 million) may also
be paid between 1999 and 2001 subject to specified growth
criteria.
DAVID CAIRNS AND COMPANY MEDIA MANAGEMENT LIMITED
On 22 December 1998, the Group acquired 49% of the voting rights
and 100% of the equity shares in David Cairns and Company Media
Management Limited (now renamed "Carat Cairns") in Toronto,
Canada. The Group is entitled, inter alia, to 100% of the
dividends arising from Carat Cairns and has been consolidated on
that basis. The initial cash consideration was L0.4 million
(CAN$1.0 million). Further contingent consideration payable in
cash of up to L0.9 million (CAN$2.3 million) may also be
paid between 1999 and 2001 subject to specified growth criteria.
SAVERNE CONSEIL SA
With effect from 1 July 1998, the Group acquired a 100% interest
in the Saverne Conseil SA in Paris, France. The initial cash
consideration was L0.1 million (FFr1.6 million) paid in
cash. Further fixed consideration of L0.1 million is payable
in 1999 in cash and contingent consideration payable in cash
of up to L0.3 million (FFr3.4 million) may also be paid between
1999 and 2001 subject to specified growth criteria.
CARAT MEDIA SERVICES (THAILAND) CO LIMITED
On 6 August 1998, the Group acquired the media business of Chuo
Senko Thailand Company Limited for L1.0 million (Baht 70
million) paid in cash. The Group has established a joint venture
company with Chuo Senko called Carat Media Services (Thailand)
Company Limited in which the Group has voting rights of 51% and
equity stake of 49%. Aegis has the right to appoint four out of
the seven directors.
MW OFFICE GmbH
On 31 December 1998, the Group acquired a further 24% interest in
MW Office GmbH for L0.6 million (DM1.9 million) paid in cash.
MICOM CARAT SA AND MICOM CARAT AG
On 24 August 1998, the Group acquired the remaining 20% interest
in Micom Carat SA in Lausanne for L0.1 million (CHF0.2
million) in cash and the remaining 40% interest in Micom Carat AG
in Zurich for L0.1 million (CHF0.2 million) in cash.
CARAT TURKEY
On 14 December 1998, the Group acquired the remaining 30%
interest in Carat Turkey for L0.1 million (DM0.2 million).
52 / Aegis Group plc
<PAGE>
21. CONTINGENT LIABILITIES AND OTHER COMMITMENTS
-----------------------------------------------------------------
DEFERRED CONSIDERATION
NOTES FORMING Deferred consideration, which has been fully provided for in
PART OF THE creditors, may be made to the vendors of certain subsidiary
FINANCIAL undertakings in the years to 2002. Such payments are either fixed
STATEMENTS under the terms of the acquisition or are contingent on the
for the year future financial performance. The directors estimate that, at the
ended 31 rates of exchange ruling at the balance sheet date, the maximum
December 1998 liability at 31 December 1998 for payments that may be due is as
continued follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997
L'm L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Within one year 12.1 5.6
Between one and two years 7.4 6.5
Between two and five years 4.3 9.4
------------------------------------------------------------------------------------------------------------
23.8 21.5
------------------------------------------------------------------------------------------------------------
</TABLE>
All of the contingent deferred payments noted above are payable
in cash. The minimum liability is L9.4 million.
In addition to the deferred payments disclosed above, in 1997, as
partial consideration for the acquisition of a 100% interest in
International Communications Group, a wholly-owned, US subsidiary
holding company of Aegis Group plc issued preference shares to
the vendors of the International Communications Group. The
preference shares are redeemable in cash by the vendors at any
time and by Aegis Group plc no earlier than 12 May 2002. In
accordance with Financial Reporting Standard 4, the redemption
value of these preference shares is included within debt due
within one year and amounted to L10.5 million (US$17.4
million) at 31 December 1998.
PUT OPTIONS HELD BY OUTSTANDING MINORITY INTERESTS
Put options are held by minority interests in respect of Carat
companies in Germany, Greece, Thailand and the United Kingdom,
exercisable between 1998 and 2002. The value of the put options
is based upon the profitability of the individual companies. The
directors estimate the value of these contingent liabilities to
be approximately L6.1 million, payable in a combination of
cash and ordinary shares.
GUARANTEES
Guarantees of L17.0 million (1997: L13.9 million) have been
given by the Company on behalf of its subsidiaries together
with other guarantees and contingencies arising in the normal
course of business.
LEASE COMMITMENTS
At 31 December 1998, there were the following annual commitments
in respect of non-cancellable operating leases for the following
years:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Group Company
Land and Land and
buildings Other buildings
L'm L'm L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING LEASES THAT EXPIRE:
Within one year 3.3 0.6 -
Between one and five years 3.8 1.1 0.3
After more than five years 2.3 0.7 1.4
------------------------------------------------------------------------------------------------------------
31 DECEMBER 1998 9.4 2.4 1.7
------------------------------------------------------------------------------------------------------------
31 December 1997 7.8 1.3 1.7
------------------------------------------------------------------------------------------------------------
</TABLE>
Aegis Group plc / 53
<PAGE>
22. RELATED PARTIES
-----------------------------------------------------------------
In addition to the disclosures set out in the Report of the
directors' and note 20 of these accounts, the Group had the
following related party transactions in 1998:
NOTES FORMING
PART OF THE RELATED PARTY TRANSACTIONS WITH ASSOCIATED UNDERTAKINGS
FINANCIAL
STATEMENTS The Group had the following transactions and balances with its
for the year associated undertakings:
ended 31
December 1998 Carat Espana SA purchased media space on behalf of Mediasal 2000
continued SA, an associated undertaking, totalling L15,312,868 in 1998. The
balance due at the year end was L5,027,139 (1997: L3,053,548).
Carat Hellas SA provided planning and media buying services to JV
Bonds, an associated undertaking, for a fee of L139,749 in 1998.
The balance due at year end was L59,352 (1997: Lnil).
Carat France SA provided administration services to Consodata SA,
an associated undertaking, for a fee of L51,217 in 1998. The
balance due at the year end was L24,209 (1997: L36,571). Carat
France also provided a loan to Consodata SA of L1,491,285 (1997:
L202,051).
Carat Espana SA was paid an outstanding balance due from
Consodata Espana SA of L3,031 for costs incurred on its behalf;
there was no balance outstanding at the year end (1997: L3,031).
Consodata Europe Limited provided management and other services
to Consodata UK Limited of L400,000 and to Consodata Espana SA
of L60,000. The balance due at the year end was L470,000 (1997:
Lnil) from Consodata UK Limited and L60,000 (1997: Lnil) from
Consodata Espana SA. In addition, Consodata Europe Limited
settled its outstanding balance with Consodata SA of L234,985.
23. FINANCIAL INSTRUMENTS
-----------------------------------------------------------------
TREASURY MANAGEMENT AND FINANCIAL INSTRUMENTS
The Group's Treasury department is responsible for managing the
Group's financing and treasury risks. The Board of directors sets
formal parameters and guidelines on the use of financial
instruments to manage risk and reviews these regularly. The Group
does not trade in financial instruments nor engage in speculative
arrangements and it is the Group's policy not to use any complex
financial instruments, unless, in exceptional circumstances, it
is necessary to cover defined risks.
MANAGEMENT OF FINANCIAL RISK
The Group considers its major financial risks to be credit risk,
liquidity, interest rate risk and currency risk. The Group's
policies with regard to these risks and how financial instruments
are used to manage these risks are set out below:
CREDIT RISK
The Group's exposure with banks and other institutions is limited
by the use of dealing limits set by reference to ratings provided
by the major credit rating agencies.
LIQUIDITY
It is the Group's policy that funding required by an overseas
operation should be provided locally where appropriate and that
these should be adequate to cover the needs of the business. A
further analysis of local and Group facilities is set out below.
At 31 December 1998, the Group had net funds (before finance
lease obligations) of L37.3 million (1997: Net debt of
L1.5 million). The Group had cash balances of L114.0
million at 31 December 1998 (1997: L61.6 million) which
were held mainly in the Group's trading companies and gross
borrowings of L76.7 million (1997: L63.1 million).
INTEREST RATE RISK
The Group's policy is not to enter into any long-term arrangement
that fixes or caps any portion of debt. All borrowings are
floating rate. The Group's cash and borrowings currently offset
each other and any arrangement to fix the interest rate would
result in the Group having a potential exposure.
CURRENCY RISK
The Group's foreign currency management policy requires
subsidiaries to use short-term forward exchange contracts to
hedge all transactions with material currency exposures. The
Group's accounting policy is to translate the profits of overseas
investments at the average exchange rate for the year and to
translate the net assets at year end rates. It is the Group's
policy not to hedge exposures arising from profit translation.
54 / Aegis Group plc
<PAGE>
23. FINANCIAL INSTRUMENTS continued
-----------------------------------------------------------------
CURRENCY RISK continued
NOTES FORMING The Group's policy is to borrow locally wherever possible to act
PART OF THE as a hedge against the translation risk arising from its net
FINANCIAL investments overseas. Gains and losses arising on net investments
STATEMENTS overseas are recognised in the statement of total recognised
for the year gains and losses.
ended 31
December 1998 SHORT TERM DEBTORS AND CREDITORS
continued
Short-term debtors and creditors have been excluded from all
disclosures, other than the currency risk disclosures.
ANALYSIS OF INTEREST RATE RISK PROFILE OF FINANCIAL LIABILITIES
OF THE GROUP
The currency and interest rate risk profile of the financial
liabilities of the Group at 31 December, all of which were at
floating interest rates, was:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
FLOATING RATE Floating rate
FINANCIAL financial
LIABILITIES liabilities
1998 1997
L'M L'm
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sterling 48.4 33.6
Deutschemark 6.5 6.1
French Franc 2.6 3.6
Spanish Peseta 5.3 7.6
Other EU currencies 0.2 -
US Dollar 12.7 12.0
Other currencies 1.0 0.2
----------------------------------------------------------------------------------------------------------------
76.7 63.1
----------------------------------------------------------------------------------------------------------------
</TABLE>
Interest is payable on the above financial liabilities based on
the relevant national LIBOR plus a maximum of 1.125%. The
weighted average interest rate for the year ended 31 December
1998 was 6.2% (1997: 5.9%).
There were no fixed rate financial liabilities at 31 December
1998 (1997: (L)nil). In addition to the liabilities above,
the Group had creditors due after more than one year of
L14.0 million (1997: L19.7 million) on which no interest
is paid (principally representing deferred consideration
on acquisitions) and finance lease obligations of L0.4
million (1997: L0.7 million) which are mostly held in
Sterling.
ANALYSIS OF INTEREST RATE RISK PROFILE OF FINANCIAL ASSETS OF THE
GROUP
The currency and interest rate risk profile of the financial
assets of the Group at 31 December, all of which were at floating
interest rates, was:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
CASH AT BANK CURRENT ASSET Cash at bank Current asset
AND IN HAND INVESTMENTS TOTAL and in hand investments Total
1998 1998 1998 1997 1997 1997
L'M L'M L'M L'm L'm L'm
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sterling 24.7 - 24.7 2.9 - 2.9
Deutschemark 24.3 - 24.3 24.9 - 24.9
French Franc 8.0 - 8.0 4.2 - 4.2
Spanish Peseta 6.2 - 6.2 0.1 - 0.1
Other EU currencies 28.7 - 28.7 23.5 - 23.5
US Dollar 13.4 - 13.4 3.3 - 3.3
Other currencies 8.7 0.1 8.8 2.7 0.8 3.5
-----------------------------------------------------------------------------------------------------------------------
114.0 0.1 114.1 61.6 0.8 62.4
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
Current asset investments comprise short-term money market
investments. Floating rate cash earns interest based on the
relevant national LIBID equivalent. In addition to the financial
assets above, the Group had other fixed asset investments of
L0.7 million, L0.4m in Deutschemarks and L0.3 million in
French Francs (1997: L0.3 million, all in French Francs),
which do not yield an interest-related income and which do not
have a fixed maturity date.
Aegis Group plc / 55
<PAGE>
FAIR VALUES OF THE GROUP'S FINANCIAL ASSETS AND LIABILITIES
The fair value of the Group's floating rate financial
liabilities, as calculated by discounting the book value of
current obligations as at 31 December 1998, was L72.3
million (1997: L62.5 million). The floating rate financial
liabilities have been discounted using the Group's weighted
average cost of debt. There are no material differences between
NOTES FORMING the book and fair values of the Group's financial assets and
PART OF THE other financial liabilities.
FINANCIAL
STATEMENTS MATURITY OF FINANCIAL LIABILITIES
for the year
ended 31 The maturity profile of the Group's financial liabilities is set
December 1998 out in notes 15, 16 and 21.
continued
BORROWING FACILITIES
The Group had the following undrawn, committed borrowing
facilities available at 31 December in respect of which all
conditions precedent had been met at that date:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997
L'M L'm
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Expiring within one year 49.0 -
Expiring between one and two years 16.0 70.0
Expiring between two and five years - -
------------------------------------------------------------------------------------------------------------
65.0 70.0
------------------------------------------------------------------------------------------------------------
</TABLE>
Of the amounts disclosed above at 31 December 1998 L49.0
million may be extended by the Group for up to a further two
years. All covenants at 31 December 1998 were met.
MARKET RISK
At 31 December 1998, on the basis of existing net cash balances,
it is estimated that a general movement of 1% in interest rates
would impact 1998 profit before tax by L0.1m.
It is also estimated that a general movement of Sterling by 1%
would impact 1998 profit before tax by approximately L0.4
million.
CURRENCY EXPOSURES
No Group companies have material monetary assets and liabilities
in currencies other than that of the local functional currency.
HEDGES OF FUTURE TRANSACTIONS
At 31 December 1998 and 1997, there were no material foreign
exchange contracts to hedge against future transaction flows.
FINANCIAL INSTRUMENTS HELD FOR TRADING PURPOSES
The Group does not trade in financial instruments.
24. POST BALANCE SHEET EVENTS
-----------------------------------------------------------------
On 18 January 1999, the Group disposed of its 46.82% interest in
the Consodata Group based in France for L6.5 million
(FFr60.8 million) to the existing management and to the Alpha
investment Group. As part of this disposal, Carat France will
make a loan to Consodata of L3.3 million (FFr31.7 million)
half of which is repayable on 31 December 1999 and the remainder
of which is repayable on 31 December 2000. In the event that
Consodata floats before either date, any outstanding loan amount
becomes immediately repayable. The Group will realise a profit on
disposal of approximately L1.5 million in 1999 after
providing for this loan (the remaining profit relating to the
loan will be recognised when the cash is received).
56 / Aegis Group plc
<PAGE>
<TABLE>
<CAPTION>
25. PRINCIPAL SUBSIDIARY AND ASSOCIATED UNDERTAKINGS
----------------------------------------------------------------------------------------------------------
Effective interest
Country of in issued ordinary
incorporation share capital at
PRINCIPAL SUBSIDIARY UNDERTAKINGS: Office and operation 31 December 1998
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NOTES FORMING Carat Australia Media Services Sydney Australia 100%
PART OF THE Carat Bray Sydney Australia 100%
FINANCIAL Carat Halmarick Sydney Australia 100%
STATEMENTS HMS Carat Vienna Austria 100%
for the year Carat Crystal Brussels Belgium 100%
ended 31 Carat Canada Montreal Canada 100%
December 1998 Groupe Carat Strategem Montreal Canada 100% (49% voting)
continued K2 Media Montreal Canada 100% (49% voting)
Carat Cairns Toronto Canada 100% (49% voting)
HMS Carat Prague Czech Republic 100%
Carat Danmark Copenhagen Denmark 100%
Carat Media Research Copenhagen Denmark 100%
Carat Group UK London England and Wales 100%
Carat London England and Wales 100%
Carat Direct London England and Wales 100%
Carat Manchester Manchester England and Wales 100%
Carat Direct Manchester Manchester England and Wales 100%
BBJ Media Services London England and Wales 75%
Carat Business London England and Wales 100%
Posterscope London England and Wales 100%
Posterscope in the North Manchester England and Wales 100%
Carat Insight London England and Wales 100%
Carat Interactive London England and Wales 100%
Carat International London England and Wales 100%
Carat Media Services London England and Wales 100%
Consodata Europe London England and Wales 100%
Carat Finland Helsinki Finland 100%
Oy Inter Media Helsinki Finland 100%
Carat France Paris France 100%
Carat Expansion Paris France 100%
Carat 2010 Paris France 100%
Carat Expert Paris France 100%
Carat MCI Paris France 100%
Carat Prospective Paris France 100%
Carat SPFD Paris France 100%
Carat Sponsorship Paris France 100%
Saverne Developpement Paris France 100%
Granite Paris France 100%
Carat Direct Paris France 100%
Cyclades Carat Paris France 100%
IPC Paris France 100%
Saverne Conseil Paris France 100%
Grap & Gides Lille France 100%
Carat Media Service Wiesbaden Germany 100%
HMS Media Service Wiesbaden Germany 100%
HMS and Carat Central Services Wiesbaden Germany 100%
Carat Visions Wiesbaden Germany 100%
----------------------------------------------------------------------------------------------------------
</TABLE>
Aegis Group plc / 57
<PAGE>
<TABLE>
<CAPTION>
25. PRINCIPAL SUBSIDIARY AND ASSOCIATED UNDERTAKINGS continued
----------------------------------------------------------------------------------------------------------
Effective interest
Country of in issued ordinary
incorporation share capital at
Principal subsidiary undertakings: Office and operation 31 December 1998
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NOTES FORMING Carat Expert Wiesbaden Germany 100%
PART OF THE Carat Hamburg Media Service Hamburg Germany 100%
FINANCIAL Panmedia Eschborn Germany 100%
STATEMENTS MW Office Munich Germany 75%
for the year PAP Hamburg Germany 51%
ended 31 Carat Hellas Athens Greece 75.5%
December 1998 Carat Creative Athens Greece 75.5%
continued HMS Carat Budapest Hungary 100%
Carat Italia Milan, Turin, Florence, Rome Italy 100%
Carat Expert Milan Italy 100%
Carat Visions Milan Italy 100%
Carat India Mumbai, Delhi India 75%
Carat Nederland Amsterdam Netherlands 100%
Carat MediaBase Kuala Lumpur Malaysia 90%
Carat Inter-Media Oslo Norway 100%
Carat Media and Research Oslo Norway 100%
Carat Mediakanalen Oslo Norway 100%
Carat Consulting Oslo Norway 51%
HMS Carat Polska Warsaw Poland 100%
Carat Portugal Lisbon Portugal 100%
Carat Russ-Media Moscow Russia 51%
HMS Carat Slovakia Bratislava Slovak Republic 100%
Carat Espana Madrid, Barcelona Spain 100%
Carat Scandinavia Stockholm Sweden 100%
Carat Sverige Stockholm, Gothenburg, Malmo Sweden 100%
Carat Research Stockholm Sweden 100%
Mediekompetens Gothenburg, Stockholm Sweden 100%
Micom Carat Lausanne Switzerland 100%
Micom Carat Zurich Switzerland 100%
Carat Media Services (Thailand) Bangkok Thailand 49% (51% voting)
Carat Turkey Istanbul Turkey 100%
Carat Ukraine Kiev Ukraine 100%
Carat North America New York USA 100%
Carat ICG Los Angeles, San Francisco,
Atlanta, Chicago, Memphis,
Portland, Denver and St. Louis USA 100%
MMA Carat Wilton USA 100%
Carat MBS New York USA 100%
Carat Freeman Boston, San Francisco USA 100%
----------------------------------------------------------------------------------------------------------
</TABLE>
All shareholdings are of ordinary shares and all activities are
in the field of media communications. The subsidiary undertakings
listed, all of which are consolidated in the accounts of the
Group, are those which, in the opinion of the directors,
principally affected the results or financial position of the
Group during or at the end of the financial year.
With the exception of 100% shareholdings in Carat Group UK
Limited, Carat International Limited and Carat Media Services
Limited, all of the principal subsidiary and associated
undertakings disclosed above are indirectly held. The effective
interest in the issued share capital is equivalent to the
percentage of voting rights held by the Group, unless otherwise
stated. A full list of all subsidiary undertakings, and the
information shown above with respect to them, is filed with the
Company's annual return.
58 / Aegis Group plc
<PAGE>
<TABLE>
<CAPTION>
25. PRINCIPAL SUBSIDIARY AND ASSOCIATED UNDERTAKINGS continued
----------------------------------------------------------------------------------------------------------
Effective interest
Country of in issued ordinary
incorporation share capital at
Principal associated undertakings: Office and operation 31 December 1998
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NOTES FORMING Consodata Paris France 46.82%
PART OF THE Aerlig Talt Oslo Norway 34%
FINANCIAL Mediasal 2000 Bilbao Spain 23.9%
STATEMENTS Carat Philippines Manila Philippines 30%
for the year Feldt Visions Communication Eltville Germany 30%
ended 31 CPM Media Prague Czech Republic 35%
December 1998 CPM Media Bratislava Slovak Republic 50%
continued JV Bonds Athens Greece 40%
----------------------------------------------------------------------------------------------------------
</TABLE>
All shareholdings are of ordinary shares and all activities are
in the field of media communications. All the results of the
above associated undertakings have been equity accounted. At the
year end, the Group owned 46.82% of the share capital of
Consodata SA, of which 4% carries no voting rights or rights to
dividends.
Aegis Group plc / 59
<PAGE>
Notice is hereby given that the Annual General Meeting of the
Company will be held at 11 a.m. on Friday 21 May 1999 at 11A West
Halkin Street, London SW1X 8JL for the purpose of transacting the
ordinary business of the Annual General Meeting set out in
resolutions 1 to 7, and special business, as set out in
resolutions 8 to 11 and resolutions 10 and 11 will be proposed as
special resolutions.
NOTICE OF ORDINARY BUSINESS
MEETING
1. To receive the statement of accounts for the financial year
ended 31 December 1998 and the reports of the directors and
auditors thereon.
2. To declare a final dividend of 0.50 pence per ordinary share.
3. To re-elect Eryck Rebbouh as a director of the Company, who
retires by rotation and, being eligible, offers himself for
re-election.
4. To re-elect Sir Peter Thompson as a director of the Company,
who retires by rotation and, being eligible, offers himself
for re-election.
5. To re-elect Philippe Villin as a director of the Company, who
retires by rotation and, being eligible, offers himself for
re-election.
6. To elect Douglas Flynn as a director of the Company, who was
appointed since the last Annual General Meeting, and being
eligible offers himself for election.
7. To re-appoint PricewaterhouseCoopers as auditors of the
Company and to authorise the directors to fix their
remuneration.
SPECIAL BUSINESS
8. That the authorised share capital of the Company be increased
from L60,000,000 to L75,000,000 by the creation of 300,000,000
additional ordinary shares of 5 pence each.
9. That, subject to the passing of resolution 8 above, the
directors be and are hereby generally and unconditionally
authorised to exercise all the powers of the Company to allot
relevant securities (within the meaning of Section 80 of the
Companies Act 1985) up to an aggregate nominal amount of
L15,900,000 provided that this authority shall expire (unless
previously revoked or varied by the Company in general
meeting) at the conclusion of the next Annual General Meeting
of the Company, save that the Company may before such expiry
make an offer or agreement which would or might require
relevant securities to be allotted after such expiry and the
directors may allot relevant securities in pursuance of such
an offer or agreement as if the authority conferred hereby had
not expired.
10.That, subject to the passing of resolution 9 above, the
directors be and are hereby empowered, pursuant to Section 95
of the Companies Act 1985, to allot equity securities (within
the meaning of Section 94 of the said Act) for cash, pursuant
to the authority conferred by the said resolution 9 above, as
if Section 89 of the said Act did not apply to any such
allotment, provided that this power shall be limited:
(a) to the allotment of equity securities in connection with
or pursuant to an offer by way of rights issue, open offer or
any other pre-emptive offer in favour of holders of ordinary
shares where the equity securities attributable to the
interests of such persons are proportionate (as nearly as may
be) to the numbers of ordinary shares held by them, subject to
such exclusions or other arrangements as the directors may
deem necessary or expedient in relation to fractional
entitlements or legal or practical problems arising under the
laws of, or the requirements of any regulatory body or stock
exchange in, any territory or otherwise howsoever; and
(b) to the allotment (otherwise than pursuant to sub-paragraph
(a) above) of equity securities up to an aggregate nominal
value of L2,387,850 and shall expire (unless previously
revoked or varied by the Company in general meeting) at the
conclusion of the next Annual General Meeting of the Company
save that the Company may before such expiry make an offer or
agreement which would or might require equity securities to be
allotted after such expiry and the directors may allot equity
securities in pursuance of such an offer or agreement as if
the power conferred hereby had not expired.
11.That the Company be and is hereby generally and
unconditionally authorised to make one or more market
purchases (as defined in Section 163 of the Companies Act
1985) of its ordinary shares of 5 pence each provided that:
(a) the maximum number of shares which may be purchased is
47,996,000 ordinary shares;
(b) the maximum price at which any share may be purchased is
the price equal to 5% above the average of the middle market
quotations of such share as derived from the London Stock
Exchange Daily Official List for the five business days
immediately preceding the date of such purchase, exclusive of
expenses, and the minimum price at which any share may be
purchased is the par value of such share; and
60 / Aegis Group plc
<PAGE>
(c) the authority conferred by this resolution, unless
previously renewed, shall expire on 20 November 2000 or, if
earlier, at the conclusion of the next Annual General Meeting
of the Company, save that the Company may before such expiry
make a contract to purchase shares which will or might be
completed or executed wholly or partly after such expiry and
may make a purchase of shares pursuant to such contract as if
the authority conferred by this resolution had not expired.
NOTICE OF
MEETING By order of the Board
continued
/s/ John Rowland
John Rowland FCIS
Company Secretary
11A West Halkin Street
London SW1X 8JL
22 March 1999
Notes:
A member entitled to attend and vote at the meeting may appoint
one or more proxies to attend and, on a poll, vote instead of
him. A proxy need not be a member of the Company. A proxy form is
enclosed for your use and, if used, should be deposited with the
Company's Registrars (Computershare Services PLC, PO Box 457,
Owen House, 8 Bankhead Crossway North, Edinburgh EH11 0XG) not
less that 48 hours before the time appointed for the holding of
the meeting. Return of the proxy form will not affect the right
of a member to attend and vote at the meeting.
Copies of all directors' service contracts with the Company or
its subsidiaries of more than one year's duration, and the
register of directors' interests, will be available for
inspection at 11A West Halkin Street, London SW1X 8JL during
normal business hours on any business day from the date of this
notice until the conclusion of the meeting.
Aegis Group plc / 61
<PAGE>
AEGIS GROUP PLC
11A West Halkin Street
GROUP London SW1X 8JL
DIRECTORY Tel: (44) 171 470 5000
Fax: (44) 171 470 5099
E-mail:
[email protected]
CARAT INTERNATIONAL LONDON
Broadway House
2-6 Fulham Broadway
London SW6 1AA
Tel: (44) 171 381 8010
Fax: (44) 171 385 3233
E-mail:
[email protected]
CARAT INTERNATIONAL PARIS
4 Place de Saverne
Cedex 106
92971 Paris La Defense
France
Tel: (33) 1 41 16 17 18
Fax: (33) 1 41 16 65 48
E-mail:
[email protected]
CARAT INTERNATIONAL WIESBADEN
Kreuzberger Ring 19
D-65205 Wiesbaden
Germany
Tel: (49) 611 9788 0
Fax: (49) 611 9788 500
E-mail:
[email protected]
AUSTRALIA
CARAT HALMARICK
39-41 Chandos Street
St. Leonards NSW 2065
Tel: (61) 2 9906 6512
Fax: (61) 2 9901 3212
E-mail:
[email protected]
CARAT BRAY
L3 27 Belgrave Street
Manly NSW 2096
Tel: (61) 2 9977 6555
Fax: (61) 2 9976 3852
E-mail:
[email protected]
AUSTRIA
HMS CARAT
Landstrasser Haupstrasse 71
A-1030 Vienna
Tel: (43) 17 17 56 100
Fax: (43) 17 17 56 500
E-mail:
[email protected]
BELGIUM
CARAT CRYSTAL
Chausee de la Hulpe 189
1170 Brussels
Tel: (32) 2 663 51 11
Fax: (32) 2 663 51 09
E-mail:
[email protected]
CANADA
CARAT CANADA
GROUP CARAT STRATEGEM
K2 MEDIA
4446 Blvd. St. Laurent
Suite 500, Montreal
Quebec H2W 1Z5
Tel: (1) 514 284 4446
Fax: (1) 514 284 6663
E-mail:
www.strategem.com
CARAT CAIRNS
130 Spadina Avenue
Suite 806, Toronto
Ontario M5V 2L4
Tel: (1) 416 504 3965
Fax: (1) 416 504 3945
[email protected]
CZECH REPUBLIC
HMS CARAT
Celetna 19
CS-11622 Praha 1
Tel: (42) 2 241 90611
Fax: (42) 2 232 8370
E-mail:
[email protected]
DENMARK
CARAT SCANDINAVIA
Pilestraede 58, 5 sal
P.O. Box 2050
DK-1012 Copenhagen K
Tel: (45) 33 15 71 20
Fax: (45) 33 15 36 18
E-mail:
[email protected]
CARAT DANMARK
Pilestraede 58, 5 sal
P.O. Box 2050
DK-1012 Copenhagen K
Tel: (45) 33 15 71 20
Fax: (45) 33 15 70 20
E-mail:
[email protected]
FINLAND
CARAT FINLAND
Unioninkatu 17
SF-00130 Helsinki
Tel: (358) 9 6200 230
Fax: (358) 9 6222 199
E-mail:
[email protected]
FRANCE
CARAT FRANCE
CARAT DIRECT
CARAT AFFICHAGE
CARAT CYCLADES
CARAT EXPANSION
CARAT 2010
CARAT EXPERT
CARAT MCI/AEA
CARAT PRESSE
CARAT PROSPECTIVE
CARAT SPFD
CARAT SPONSORSHIP
CARAT TV AND CINEMA
CARAT KIDS
CARAT MULTIMEDIA
CARAT RADIO
4 Place de Saverne
Cedex 106
92971 Paris La Defense
Tel: (33) 1 41 16 17 18
Fax: (33) 1 41 16 65 39
E-mail:
[email protected]
GRAP ET GIDES
27 rue L'Abbe Lemire
BP 1004
59701 Marcq en Baroeul Cedex
Tel: (33) 3 20 65 93 20
Fax: (33) 3 20 98 29 32
E-mail:
[email protected]
GERMANY
CARAT WIESBADEN
HMS WIESBADEN
HMS & CARAT CENTRAL SERVICES
CARAT VISIONS
CARAT EXPERT
Kreuzberger Ring 19
D-65205 Wiesbaden
Tel: (49) 611 9788 0
Fax: (49) 611 9788 500
E-mail:
[email protected]
CARAT HAMBURG MEDIA SERVICE
Dorotheenstrasse 60
D-22301 Hamburg
Tel: (49) 40 27 15 90
Fax: (49) 40 27 92 746
E-mail:
[email protected]
PANMEDIA
Mergenthaleerallee 1-3
D-65760 Eschborn
Tel: (49) 6196 9004 0
Fax: (49) 6196 9004 222
E-mail:
[email protected]
MWO
Osterwaldstrasse 40
80805 Munchen
Tel: (49) 89 361 9450
Fax: (49) 89 361 94550
E-mail:
[email protected]
PAP
Hermannstrasse 40
D-20095 Hamburg
Tel: (49) 40 3395 60
Fax: (49) 40 3395 6193
E-mail:
[email protected]
FELDT VISIONS
Gutenbergstrasse 13
D-65343 Eltville
Tel: (49) 6123 678-0
Fax: (49) 6123 678 389
GREECE
CARAT HELLAS
CARAT CREATIVE
392 Mesogion Ave
153 43-Agia Paraskevi
Athens
Tel: (30) 1 600 8200
Fax: (30) 1 600 8500
E-mail:
[email protected]
HONG KONG
CARAT ASIA PACIFIC
Room 2201-3
Kinwick Centre
32 Hollywood Road
Central, Hong Kong
Tel: (852) 2523 4222
Fax: (852) 2523 2380
E-mail:
[email protected]
HUNGARY
HMS CARAT
Koztelek utca 6
H-1092 Budapest
Tel: (36) 1 216 9660/2
Fax: (36) 1 216 9661
E-mail:
[email protected]
INDIA
CARAT INDIA
802 Raheja Chambers
Nariman Point
Bombay 400 021
Tel: (91) 22 284 0404
Fax: (91) 22 282 8558
E-mail:
[email protected]
CARAT INDIA
H23 South Extension, Part 1
New Delhi 110 049
Tel: (91) 11 460 1357
Fax: (91) 11 469 3915
E-mail:
[email protected]
ITALY
GROUP CARAT ITALIA
CARAT EXPERT
CARAT COMMUNICATION
CARAT ITALIA
CARAT VISION
Via Durini 28
20122 Milano
Tel: (39) 02 77 6961
Fax: (39) 02 77 696299
E-mail:
[email protected]
CARAT OUTDOOR
CARAT ITALIA
C. so G. Ferraris, 22 bis
10121 Torino
Tel: (39) 011 563 661
Fax: (39) 011 562 2376
CARAT ITALIA
HORIZON
Via L. il Magnifico, 10
50129 Firenze
Tel: (39) 055 462 231
Fax: (39) 055 496 612
CARAT ITALIA
Viale Parioli, 60
00197 Roma
Tel: (39) 06 808 8178
Fax: (39) 06 807 8456
HORIZON
VIA CUSANI 10
20121 Milano
Tel: (39) 02 776 96500
Fax: (39) 02 890 10901
HORIZON
Viale Pariole 60
00197 Roma
Tel: (39) 06 807 7360
Fax: (39) 06 807 8456
MALAYSIA
CARAT MEDIABASE
43c Jalan SS 25/2
Taman Bukit Emas
47301 Petaling Jaya, Malaysia
Tel: (60) 3 704 8366
Fax: (60) 3 704 8291
E-mail:
[email protected]
62 / Aegis Group plc
<PAGE>
NETHERLANDS
CARAT NEDERLANDS
Museum Plaza
Weteringschans 87B
GROUP 1017 RZ Amsterdam
DIRECTORY Tel: (31) 20 530 4500
continued Fax: (31) 20 530 4530
E-mail:
[email protected]
NORWAY
CARAT INTER-MEDIA
CARAT MEDIA & RESEARCH
CARAT MEDIAKANALEN
CARAT CONSULTING
Pilestredet 8
N-0180 Oslo
Tel: (47) 22 82 82 82
Fax: (47) 22 82 82 80
E-mail:
[email protected]
PHILIPPINES
CARAT PHILIPPINES
6/F Athenaeum Building
160 Alfaro St, Salcedo Village
Makati City, Philippines
Tel: (632) 750 0989
Fax: (632) 750 0975
E-mail :
[email protected]
POLAND
HMS CARAT POLSKA
Ul Goszczynskiego 12
PL-02-616 Warszawa, Poland
Tel: (48) 22 646 17889
Fax: (48) 22 646 1790
E-mail:
[email protected]
PORTUGAL
CARAT PORTUGAL
Rua General Firmino Miguel
3-6 Floor, 1600 Lisboa
Tel: (35) 11 727 7599
Fax: (35) 11 727 7585
E-mail:
[email protected]
RUSSIA
CARAT RUSS-MEDIA
Olympic Plaza, Prospect Mira 33
Moscow
Tel: (7) 095 797 5806
Fax: (7) 095 797 5803/04/05
E-mail:
[email protected]
SLOVAK REPUBLIC
HMS CARAT SLOVAKIA
Budkova 13
811 04 Bratislava
Slovak Republic
Tel: (421) 7 547 899 662/664
Fax: (421) 7 547 5595
E-mail:
[email protected]
SPAIN
CARAT ESPANA
CARAT EXPERT
Felix Boix 7-9
28036 Madrid
Tel: (34) 9 1 345 60 66
Fax: (34) 9 1 350 12 60
E-mail:
[email protected]
CARAT ESPANA
CARAT EXPERT
Avenida Diagonal, 601
08028 Barcelona
Tel: (34) 9 3 430 03 03
Fax: (34) 9 3 419 89 02
E-mail:
[email protected]
MEDIASAL
Edf. Metroalde
Ctra. Bilbao - Galdacano, 64
48004 Bilbao
Tel: (34) 9 4 459 8600
Fax: (34) 9 4 411 7880
E-mail:
[email protected]
SWEDEN
CARAT SWEDEN
Sveavagen 24-26
P.O. Box 7054
S-103 86 Stockholm
Tel: (46) 8 698 68 00
Fax: (46) 8 791 84 64
E-mail:
[email protected]
CARAT SWEDEN
Ostra Larmgatan 13
P.O. Box 318, S-40125 Goteberg
Tel: (46) 31 743 05 00
Fax: (46) 31 743 05 01
E-mail:
[email protected]
CARAT SWEDEN
Stortorget 11
Box 4223, S-203 13 Malmo
Tel: (46) 40 664 6500
Fax: (46) 40 664 6501
E-mail:
[email protected]
MEDIEKOMPETENS
Sodra Hamngatan S3
Goteberg
Tel: (46) 31 801 801
Fax: (46) 31 806 806
E-mail:
[email protected]
MEDIEKOMPETENS
Sveavagen 9
P.O. Box 7783
S-10396 Stockholm
Tel: (46) 8 566 14650
Fax: (46) 8 566 14690
SWITZERLAND
MICOM CARAT
5 Chemin des Paleyres
Case Postale 54
CH-1000 Lausanne 19
Tel: (41) 21 617 8841
Fax: (41) 21 616 9832
E-mail:
[email protected]
MICOM CARAT
Rotbuckstrasse 46
CH - 8037 Zurich
Tel: (41) 1 365 2525
Fax: (41) 1 365 2526
E-mail:
[email protected]
TURKEY
CARAT TURKEY
Tepecik Yolu, Edincik Sokak
No: 1, Kat: 1
Etiler 80630, Istanbul
Tel: (90) 212 270 7077
Fax: (90) 212 279 8594
E-mail:
[email protected]
THAILAND
CARAT MEDIA SERVICES
26th Floor, Serm-mit Tower
159 Soi Asoke, Sukhumvit 21 Rd
Klontoey Nua, Wattana
Bangkok 10110
Tel: (662) 661 7412-5
Fax: (662) 661 7421
E-mail:
[email protected]
UNITED KINGDOM
CARAT GROUP UK
CARAT
CARAT DIRECT
CARAT BUSINESS
CARAT INSIGHT
CARAT INTERACTIVE
Parker Tower
43-49 Parker Street
London WC2B 5PS
Tel: (44) 171 430 6300
Fax: (44) 171 430 6319
E-mail:
[email protected]
BBJ MEDIA SERVICES
Orion House
5 Upper St Martin's Lane
London WC2H 9EA
Tel: (44) 171 379 9000
Fax: (44) 171 497 1177
E-mail:
[email protected]
CARAT (MANCHESTER)
CARAT DIRECT (MANCHESTER)
3rd Floor, Blackfriars House
The Parsonage, Manchester M3 2JA
Tel: (44) 161 834 9793
Fax: (44) 161 835 1363
E-mail:
[email protected]
POSTERSCOPE
POSTERSCOPE INTERNATIONAL
55 North Wharf Road
London W2 1LA
Tel: (44) 171 724 7244
Fax: (44) 171 724 7620
E-mail:
[email protected]
POSTERSCOPE IN THE NORTH
Building 22
Exchange Quay, Salford Quays
Greater Manchester M5 3EQ
Tel: (44) 161 848 8997
Fax: (44) 161 848 8961
E-mail:
[email protected]
USA
CARAT NORTH AMERICA
CARAT INSIGHT
3 Park Avenue
New York NY 10016
Tel: (1) 212 252 0050
Fax: (1) 212 252 1250
E-mail:
[email protected]
CARAT USA
3 Park Avenue
New York NY 10016
Tel: (1) 212 689 6800
Fax: (1) 212 689 6005
E-mail:
[email protected]
[email protected]
CARAT USA
1925 Century Park East
Suite 1850
Los Angeles CA 90067
Tel: (1) 310 557 2585
Fax: (1) 310 557 3009
E-mail:
[email protected]
MMA CARAT
15 River Road
Wilton, Connecticut 06897
Tel: (1) 203 834 3300
Fax: (1) 203 834 3333
E-mail:
[email protected]
CARAT USA
5830 Mt. Moriah, Suite 6
Memphis TN 38115
Tel: (1) 901 362 0254
Fax: (1) 901 365 4223
E-mail:
[email protected]
CARAT USA
CARAT ICG
1 IBM Plaza
330 North Western Avenue
Suite 3201, Chicago, IL 60611
Tel: (1) 312 464 8400
Fax: (1) 312 464 1863
E-mail:
[email protected]
CARAT USA
Prentice Point, Suite 500
5299 DTC Boulevard
Englewood, CO 80111
Tel: (1) 303 779 9191
Fax: (1) 303 779 8815
E-mail:
[email protected]
CARAT USA
3400 Peachtree Road N.E.
Suite 1800
Atlanta GA 30326
Tel: (1) 404 231 1232
Fax: (1) 404 239 9755
E-mail:
[email protected]
CARAT FREEMAN
CARAT FACE TO FACE
CARAT INTERACTIVE
Two Wells Avenue
Newton MA 02459
Tel: (1) 617 303 3000
Fax: (1) 617 303 3015
E-mail:
[email protected]
CARAT FREEMAN
CARAT USA
201 Filbert Street, Suite 201
San Francisco, CA 94133
Tel: (1) 415 705 5370
Fax: (1) 415 362 5651
E-mail:
[email protected]
UKRAINE
CARAT UKRAINE
Sichnegovo Povstannia Wulitza 3
2512010 Kiev, Ukraine
Tel: (380) 44 290 8531
Fax: (380) 44 290 0825
E-mail:
[email protected]
Aegis Group plc / 63
<PAGE>
DAILY SHARE PRICE LISTING IN LONDON
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
System Share type Access code
--------------------------------------------------------------------------------------
<S> <C> <C>
SHAREHOLDER TOPIC 3 (mid prices) Ordinary 205
INFORMATION SEAQ (level 2) Ordinary 50032
REUTERS Ordinary AGS.L
--------------------------------------------------------------------------------------
</TABLE>
FINANCIAL CALENDAR
<TABLE>
<S> <C>
1 March 1999 Preliminary announcement of full year results
19 April 1999 Publication of annual report
21 May 1999 Annual General Meeting
September 1999 Announcement of interim results
--------------------------------------------------------------------------------------
</TABLE>
CREST
On 13 January 1997, Aegis commenced trading in CREST, the
electronic share settlement system. CREST is a voluntary system
which gives shareholders the choice of whether to hold shares in
electronic or paper form.
SHARE PRICE
From 1 January 1998 to 28 February 1999 (pence per ordinary
share).
[GRAPH]
<TABLE>
<S> <C>
Total number of shares traded in 1998: *828,142,000
Average monthly volume of shares traded in 1998: *69,012,000
</TABLE>
*The above figures exclude the placing trade reported on
27 April 1998
ANALYSIS OF ORDINARY SHAREHOLDINGS AT 31 DECEMBER 1998
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
Size of holdings No. of holders % No. of shares %
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 - 1,000 1,065 38.89 409,215 0.04
1,001 - 10,000 916 33.44 3,347,410 0.35
10,001 - 25,000 165 6.02 2,692,938 0.28
25,001 - 50,000 89 3.25 3,261,862 0.34
50,001 - 100,000 85 3.10 6,269,478 0.66
100,001 - 250,000 139 5.08 24,018,669 2.52
250,001 - 500,000 79 2.88 27,315,887 2.86
500,001 - 1,000,000 65 2.37 47,129,343 4.93
1,000,001 - 10,000,000 119 4.35 366,062,387 38.33
10,000,001 - 25,000,000 11 0.40 175,250,486 18.35
25,000,000 and over 6 0.22 299,382,546 31.34
-------------------------------------------------------------------------------------------------------------
2,739 100.00 955,140,221 100.00
-------------------------------------------------------------------------------------------------------------
</TABLE>
SHAREHOLDER CONTACT
In accordance with the recommendation of the Hampel Report on
Corporance Governance published in January 1998, Sir Peter
Thompson, a non-Executive director, has been nominated as the
senior director to whom shareholders may convey their concerns in
the event that they do not wish to involve either the Chairman or
the Chief Executive.
Sir Peter Thomson is also Chairman of the Audit Committee and a
member of the Nomination and Remuneration Committees.
64 / Aegis Group plc
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PROFIT AND LOSS:
Turnover L4,130.0m L3,652.5m L3,452.5m L3,400.9m L2,969.9m
- ----------------------------------------------------------------------------------------------------------------------------------
Gross profit L221.0m L191.8m L179.5m L165.2m L149.6m
- ----------------------------------------------------------------------------------------------------------------------------------
% GROSS PROFIT TO TURNOVER 5.4% 5.3% 5.2% 4.8% 5.0%
- ----------------------------------------------------------------------------------------------------------------------------------
Operating profit (before amortisation of goodwill
and exceptional items) L50.6m L44.4m L41.9m L36.7m L30.5m
- ----------------------------------------------------------------------------------------------------------------------------------
Profit before tax, amortisation of goodwill
and exceptional items L51.1m L43.5m L41.0m L33.6m L27.4m
- ----------------------------------------------------------------------------------------------------------------------------------
Profit before tax L50.6m L45.6m L39.6m L33.6m L20.1m
- ----------------------------------------------------------------------------------------------------------------------------------
EFFECTIVE UNDERLYING TAX RATE 28.4% 28.0% 27.0% 25.3% 18.2%
- ----------------------------------------------------------------------------------------------------------------------------------
Profit for the financial year L35.5m L32.8m L28.0m L23.5m L13.1m
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
CASH FLOW:
Operating cash flow L57.0m L54.5m L42.7m L35.0m L(1.0)m
- ----------------------------------------------------------------------------------------------------------------------------------
Net funds/(debt) at the year end L36.9m L(2.2)m L(7.6)m L(17.9)m L(29.2)m
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET:
Goodwill on acquisitions L17.0m - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Other fixed assets L17.8m L15.6m L15.4m L16.6m L16.4m
- ----------------------------------------------------------------------------------------------------------------------------------
Net current liabilities L(75.3)m L(93.3)m L(79.6)m L(70.4)m L(59.8)m
- ----------------------------------------------------------------------------------------------------------------------------------
Creditors; amounts falling due after
more than one year L(21.1)m L(27.8)m L(28.5)m L(42.5)m L(42.0)m
- ----------------------------------------------------------------------------------------------------------------------------------
Provisions for liabilities and charges - L(0.2)m L(2.3)m L(7.0)m L(25.0)m
- ----------------------------------------------------------------------------------------------------------------------------------
Net liabilities L(61.6)m L(105.7)m L(95.0)m L(103.3)m L(110.4)m
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDER RETURNS:
Basic earnings per share 4.0p 3.8p 3.3p 2.8p 1.6p
- ----------------------------------------------------------------------------------------------------------------------------------
Fully diluted earnings per share 3.7p 3.4p* 3.0p* 2.6p* 1.5p*
- ----------------------------------------------------------------------------------------------------------------------------------
Ordinary dividend rate per share 0.85p 0.7p 0.6p - -
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*As restated under Financial Reporting Standard 14
Designed and produced by Merchant with Langsford Corporate Design. Printed by
The White Dove Press. Directors and Board Photography by Martin Black. Stills
Photography by Chris Gonta. Technical illustration by Line and Line. Various
images supplied by Action Images (page 10), Images (pages 10, 17), Telegraph
colour library (page 17).
