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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
AUDITS & SURVEYS WORLDWIDE, INC.
(Name of Subject Company)
AUDITS & SURVEYS WORLDWIDE, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, $.01 PAR VALUE PER SHARE
(Title of Class of Securities)
05083109
(CUSIP Number of Class of Securities)
SOLOMON DUTKA
CHAIRMAN OF THE BOARD
AUDITS & SURVEYS WORLDWIDE, INC.
650 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10011
(212) 627-9700
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
WITH A COPY TO:
MICHAEL J. SHEF, ESQ.
PARKER CHAPIN FLATTAU & KLIMPL, LLP
1211 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 704-6000
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Audits & Surveys Worldwide, Inc., a
Delaware corporation (the "COMPANY"). The Company's principal executive offices
are located at 650 Avenue of the Americas, New York, New York 10011. The title
of the class of equity securities to which this statement relates is the common
stock, $.01 par value per share (the "COMMON STOCK") of the Company.
ITEM 2. TENDER OFFER OF THE BIDDER
This statement relates to the tender offer by United Information Acquisition
Corp. (the "PURCHASER") and United Information Group, Inc. ("Group, Inc."), each
a Delaware corporation, disclosed in a Tender Offer Statement on Schedule 14D-1
dated January 26, 1999 (the "SCHEDULE 14D-1"), to purchase all of the
outstanding shares (the "SHARES") of Common Stock at a price of $3.24 per share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated January 26, 1999 (the "OFFER TO PURCHASE")
and the related Letter of Transmittal (which, together with the Offer to
Purchase, constitute the "OFFER").
The Offer is being made by the Purchaser pursuant to an Agreement and Plan
of Merger dated January 19, 1999 (the "MERGER AGREEMENT") among the Company, the
Purchaser and United News & Media Group Limited, an English limited company (the
"PARENT"), which indirectly owns all of the outstanding stock of the Purchaser.
The Merger Agreement provides that, among other things, as soon as practicable
after consummation of the Offer and satisfaction or waiver of the conditions to
the Merger set forth in the Merger Agreement, the Purchaser will be merged with
and into the Company (the "MERGER") and the Company will continue as the
surviving corporation. A copy of the Merger Agreement is filed as Exhibit (c)(1)
hereto and is incorporated herein by reference.
As set forth in the Schedule 14D-1, the principal executive offices of the
Purchaser and Group, Inc. are located at Two World Trade Center, Suite 5550, New
York, New York 10048.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and understanding and
actual or potential conflict of interest between the Company or its affiliates
and (1) the Company, its executive officers, directors or affiliates or (2) the
Purchaser, the Parent, their executive officers, directors or affiliates, is
described in Annex I hereto or is set forth below.
EMPLOYMENT AGREEMENTS AND AMENDMENTS. Certain contracts, agreements,
arrangements or understandings between the Company and Solomon Dutka ("DR.
DUTKA"), H. Arthur Bellows, Jr. ("MR. BELLOWS"), Carl Ravitch ("MR. RAVITCH"),
Joel S. Klein ("MR. KLEIN") and Alan J. Ritter ("MR. RITTER") are described in
the section entitled "Compensation and Related Matters--Employment Contracts,
Termination, Severance and Change of Control Arrangements" in Annex I attached
hereto. Copies of the agreements described therein are filed as Exhibits (c)(3)
through (c)(14), inclusive, hereto and incorporated herein by reference.
The Company has entered into Employment Agreement Amendments (the
"EMPLOYMENT AGREEMENT AMENDMENTS"), which, effective upon the consummation of
the acquisition (the "ACQUISITION") of the Shares of the Company by Purchaser,
amend the current employment agreements (the "EMPLOYMENT AGREEMENTS") between
the Company and each of Dr. Dutka, Mr. Ravitch, Mr. Klein, and Mr. Ritter (each
an "EMPLOYEE" and collectively, the "EMPLOYEES"). Pursuant to the Employment
Agreement Amendments, among other things, (i) the duties of the Employees are,
in certain cases, modified for the term of the Employment Agreement Amendments,
(ii) the Company agrees that the term of the Employment Agreements would remain
unchanged, (iii) the Company agrees to continue to provide the Employees
following the Merger with the same benefits as enjoyed by them on the date of
the Employment Agreement Amendments, (iv) Mr. Ravitch waives, in connection with
the transactions (the "TRANSACTIONS") contemplated by the Merger Agreement, any
termination rights he may otherwise be entitled to,
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and (v) Mr. Klein agrees that on the date of his Employment Agreement Amendment
and in connection with the Transactions, he does not have an option to and may
not purchase any treasury shares of the Company and that any provisions allowing
him to do so are invalid and ineffective. Under the terms of the Employment
Agreement Amendments, the employment terms of both Dr. Dutka and Mr. Ravitch end
March 24, 2002, Mr. Klein's employment term ends April 1, 2002 and Mr. Ritter's
employment term ends September 13, 2002. Copies of the Employment Agreement
Amendments are filed as Exhibits (c)(15) and (c)(17) through (c)(19), inclusive,
hereto and incorporated herein by reference.
In addition, the Company has entered into a new Employment Agreement (the
"BELLOWS EMPLOYMENT AGREEMENT") with Mr. Bellows which becomes effective upon
consummation of the Acquisition and replaces any prior employment agreements
between Mr. Bellows and the Company. Pursuant to the Bellows Employment
Agreement, Mr. Bellows will perform, for a period through and including March
24, 2002 (automatically extended thereafter for one year terms, unless either
party gives notice) (the "TERM"), such consultative and advisory services
involving, among other things, the finances of and prospective mergers and
acquisitions by, the Company as will be agreed upon by Mr. Bellows and the Board
of Directors of the Company for compensation consisting of $350,000 per year
(plus $36,000 per year for the costs of maintaining a Connecticut office) and
other reasonable business expenses and the benefits currently being enjoyed by
Mr. Bellows. During the Term, Mr. Bellows can devote the balance of his time to
non-competitive businesses. A copy of the Bellows Employment Agreement is filed
as Exhibit (c)(16) hereto and incorporated herein by reference.
STOCK OPTIONS. The Company maintains the 1994 and 1997 Stock Option Plans
(collectively, the "OPTION PLANS"), which provide for the grant of stock options
(collectively, "OPTIONS") to key employees and non-employee directors of the
Company. The Option Plans provide for the grant of non-qualified Options and
Options intended to qualify as incentive stock Options under Section 422 of the
Internal Revenue Code of 1986, as amended. The exercise price of shares of
Common Stock issuable under Options granted under the Option Plans may not be
less than 100% of the fair market value of such Shares. The Merger Agreement
provides, however, that no further Options shall be granted under the Option
Plans or otherwise by the Company. The Merger Agreement provides that, with
respect to all outstanding Options to purchase Shares, each holder of an Option
which is surrendered by the holder for cancellation shall be entitled to receive
from the Company, immediately prior to the Effective Time, for each Share
purchasable under the vested portion (but not the unvested portion) of an Option
issued under the Company's 1997 Stock Option Plan and for each Share purchasable
under both the vested and unvested portion of an Option issued under the
Company's 1994 Stock Option Plan, an amount in cash in cancellation of such
Option equal to the excess, if any, of $3.24 over the per Share exercise price
of such Option (or such greater amount as Purchaser shall agree in writing), as
such amount may be reduced by any required withholding in accordance with
applicable income tax laws. The Merger Agreement requires the Company's Board of
Directors to adopt a resolution terminating the Option Plans effective as of the
Effective Date. The receipt by Purchaser of the binding agreements of all
holders of Options agreeing to the cancellation thereof, as of the Effective
Time, is a condition to the consummation of the Offer, and the Merger Agreement
obligates the Company to use its best efforts to obtain such agreements.
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Set forth below is a table indicating the treatment under the Merger
Agreement of outstanding Options held by non-employee directors and executive
officers of the Company (assuming that the Options are not exercised):
<TABLE>
<CAPTION>
NO. OF SHARES
ISSUABLE/EXERCISE AMOUNT PAYABLE
PRICE UPON CANCELLATION
--------------------- -----------------
<S> <C> <C>
NON-EMPLOYEE DIRECTORS
Charles E. Bradley...................................................... 5,000/ $2.00 $6,200.00
1,667/ $2.75 $816.83
Brian G. Dyson.......................................................... 6,667/ $2.75 $3,266.83
Matthew Goldstein....................................................... 6,667/ $2.75 $3,266.83
Robert C. Miller........................................................ 5,000/ $2.00 $6,200.00
1,667/ $2.75 $816.83
William Newman.......................................................... 6,667/ $2.75 $3,266.83
Joseph T. Plummer....................................................... 51,667/ $2.75 $25,316.83
5,000/ $2.00 $6,200.00
William A. Zebedee...................................................... 5,000/ $2.00 $6,200.00
1,667/ $2.75 $816.83
EXECUTIVE OFFICERS
Solomon Dutka........................................................... 50,000/ $2.00 $62,000.00
H. Arthur Bellows, Jr................................................... 20,000/ $2.00 $24,800.00
16,667/ $2.75 $8,166.83
Carl Ravitch............................................................ 20,000/ $2.00 $24,800.00
Joel S. Klein........................................................... 25,000/ $2.00 $31,000.00
16,667/ $2.75 $8,166.83
Alan J. Ritter.......................................................... 10,000/ $2.00 $12,400.00
5,000/ $2.75 $2,450.00
NON-EMPLOYEE DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
135,000/ $2.00 $167,400.00
120,003/ $2.75 $58,801.47
</TABLE>
TRANSACTIONS WITH RELATED PARTIES. Allen & Company Incorporated ("ALLEN")
provided certain financial advisory services to the Company in 1997 and was paid
a fee of $100,000 for such services. Allen has rendered a fairness opinion dated
January 14, 1999 in connection with the Merger Agreement and is entitled to
receive a fee of $438,720 for its services. See Item 5 herein. Robert C. Miller,
a director of the Company, is a Vice President and Director of Allen.
(c) 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 is filed as
Exhibit (c)(1) hereto and is incorporated herein by reference. Capitalized items
not otherwise defined in the following summary have the respective meanings
ascribed to them in the Merger Agreement.
THE OFFER. The Merger Agreement provides that as promptly as reasonably
practicable after the date of execution of the Merger Agreement, but in no event
later than five business days after the public announcement of the execution of
the Merger Agreement, the Purchaser will commence the Offer for all of the
outstanding Shares at a price of not less than $3.24 per share in cash, net to
the seller, subject to the satisfaction of conditions described below under
"--Certain Conditions of the Offer" and, subject only to the terms and
conditions of the Offer, will pay, as promptly as reasonably practicable after
expiration of the Offer, for all Shares duly tendered thereunder and not
withdrawn. The 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
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Share payable in the Offer or changes the form of consideration payable in the
Offer, which reduces the maximum number of Shares to be purchased in the Offer
or which imposes conditions to the Offer other than those described below in
"--Certain Conditions of the Offer" or which extends the Offer (except as set
forth in the following sentence). Notwithstanding the foregoing, the 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) if, at the scheduled
expiration date of the Offer, any of the conditions to the Purchaser's
obligation to accept for payment, and to pay for, the Shares, shall not be
satisfied or waived, (ii) extend the Offer for any period required by any rule,
regulation or interpretation of the SEC or the staff thereof applicable to the
Offer, or (iii) extend the Offer for an aggregate period of not more than 10
business days beyond the latest applicable date that would otherwise be
permitted under clause (i) or (ii) of this sentence, if as of such date, the
Purchaser expressly waives any condition (other than the Minimum Condition)
defined below in "--Certain Conditions of the Offer" that subsequently may not
be satisfied during such extension of the Offer and the number of Shares validly
tendered and not withdrawn pursuant to the Offer is less than 90 percent of the
outstanding Shares on a fully diluted basis.
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions thereof, at the Effective Time, at the election of the Parent, the
Purchaser will be merged with and into the Company and the separate corporate
existence of the Purchaser will cease. At the Effective Time, by virtue of the
Merger and without any action on the part of the Purchaser, the Company or the
holders of Shares, each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by the Purchaser, the Parent or any
direct or indirect wholly-owned subsidiary of the Parent or owned by the Company
or any direct or indirect wholly-owned 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 the Merger Consideration. Pursuant to the Merger Agreement,
each share of common stock, par value $.01 per share, of the Purchaser issued
and outstanding immediately prior to the Effective Time will be converted into
and exchanged for one validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
CHARTER DOCUMENTS; INITIAL DIRECTORS AND OFFICERS. The Certificate of
Incorporation of Purchaser in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the DGCL, provided, that the Certificate
of Incorporation of the Surviving Corporation will (i) state that the name of
the Surviving Corporation is Audits & Surveys Worldwide, Inc. and (ii) for a
period of at least six years after the Effective Time, include certain
exculpation provisions which presently appear as Article Ninth of the Restated
and Amended Certificate of Incorporation of the Company. The Merger Agreement
also provides that the By-Laws of the Purchaser in effect at the Effective Time
shall be the By-Laws of the Surviving Corporation, until duly amended in
accordance with the terms thereof, the Certificate of Incorporation of the
Surviving Corporation and the DGCL, provided, that the By-Laws of the Surviving
Corporation will include, for a period of at least six years after the Effective
Time, certain indemnification provisions which presently appear as Article VII
of the Restated and Amended By-Laws of the Company. Pursuant to the Merger
Agreement, the directors and officers of the Company at the Effective Time shall
be as designated by Purchaser prior to the Effective Time and shall hold office
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and By-Laws.
STOCKHOLDERS MEETING. The Merger Agreement provides that, following
consummation of the Offer, Purchaser and Parent shall, as soon as reasonably
possible, cause the Company to take all action necessary in accordance with the
DGCL, the Company's Certificate of Incorporation and By-Laws and the Exchange
Act to hold a meeting of its stockholders to consider and vote upon the adoption
of this Agreement and the authorization of the Merger. In no event shall such
meeting be held earlier than 20 business days following the date on which a
proxy statement (the "PROXY STATEMENT") is sent to the stockholders of the
Company.
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The Purchaser will vote all Shares directly or indirectly beneficially owned
by it in favor of the Merger Agreement and the Merger. A vote of the Company's
stockholders will be required whether or not Purchaser acquires 90% of the
outstanding Shares.
CONDUCT OF BUSINESS. Pursuant to the Merger Agreement, prior to the
Effective Time, except to the extent that the Purchaser shall otherwise consent
(including by virtue of action by the Board approved by all of the Purchaser's
or the Parent's designees), the Company shall, and shall cause its subsidiaries
(the "SUBSIDIARIES") to, except as expressly permitted by the Merger Agreement,
conduct their respective businesses in, and to not take any action except in,
the ordinary course of business in a manner consistent with past practice. The
Company shall, and shall cause its Subsidiaries to, use their respective
reasonable best efforts to preserve intact the business organization of the
Company and its Subsidiaries, to keep available the services of the current
officers, employees and consultants of the Company and its Subsidiaries and to
preserve the current relationships of the Company and its Subsidiaries with
their respective customers and suppliers. Without limiting the generality of the
foregoing, and except as expressly permitted or specifically contemplated by the
Merger Agreement, between the date of the Merger Agreement and the Effective
Time, without the prior written consent of the Purchaser:
(i) the Company will not, and will not cause or permit any of the
Subsidiaries to, engage in any activities or transactions which will be
outside the ordinary course of their respective businesses consistent
with past practices, except as shall be provided for or specifically
contemplated by the Merger Agreement, and the Company and the
Subsidiaries will consult with the Purchaser (which will be entitled to
have two of its designated representatives present on a full-time basis
at the Company's principal executive offices until the closing or
termination of the Merger Agreement to observe the conduct of the
Company's business and be available for such consultations) prior to
making any material business decisions;
(ii) the Company will not subdivide or reclassify the Shares, issue any
shares of its capital stock, except upon the exercise of outstanding
options under the Option Plans, or amend its Certificate of
Incorporation or By-Laws;
(iii) the Company will not declare or pay any dividend or other distribution
in respect of its shares of capital stock or acquire for value, or
permit any Subsidiary to acquire for value, any shares of capital stock
of the Company;
(iv) the Company will afford to the officers, attorneys, accountants and
other authorized representatives of the Purchaser reasonable access to
its and the Subsidiaries' offices, properties, books, tax returns and
minute books and other corporate records during normal business hours.
If for any reason the Merger is not consummated, the Purchaser will
cause confidential information obtained in connection with such
investigation to be treated as confidential;
(v) the Company will not, and will not cause or permit the Subsidiaries to,
take any action to institute any new severance or termination pay
practices with respect to any directors, officers, or employees of the
Company or any of the Subsidiaries or to increase the benefits payable
under its severance or termination pay practices in effect on the date
of the Merger Agreement;
(vi) the Company will not, and will not cause or permit the Subsidiaries to,
adopt or amend, in any material respect, except as may be required by
applicable law or regulation, any collective bargaining, bonus, profit
sharing, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment or other employee benefit
plan, agreement, trust, fund, plan or arrangement for the benefit or
welfare of any directors, officers or employees of the Company or any
of the Subsidiaries or make any increase in the salaries, compensation
or pay scales of any such directors, officers or employees without the
Purchaser's prior written consent;
(vii) the Company and the Subsidiaries will use their reasonable best efforts
to maintain their relationships with their material suppliers and
customers, and if and as requested by the
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Purchaser, (i) the Company and the Subsidiaries shall make reasonable
arrangements for representatives of the Purchaser to meet with
suppliers and customers of the Company and the Subsidiaries, and (ii)
the Company and the Subsidiaries shall schedule, and the management of
the Company and the Subsidiaries shall participate in, meetings of
representatives of the Purchaser with employees of the Company and the
Subsidiaries;
(viii) the Company will, and will cause the Subsidiaries to, maintain all of
their material properties (taken as a whole) in customary repair, order
and condition, reasonable wear and tear excepted, and will maintain,
and will cause the Subsidiaries to maintain, insurance upon all of its
and their properties and with respect to the conduct of its and their
businesses in such amounts and of such kinds comparable to that in
effect on the date of the Merger Agreement;
(ix) the Company and the Subsidiaries will maintain their books, accounts
and records in the usual, regular and ordinary manners, on a basis
substantially consistent with prior years;
(x) the Company and the Subsidiaries will duly comply with all laws
applicable to each of them and to the conduct of their respective
businesses, consistent with their past practice;
(xi) no change shall be made in the banking and safe deposit arrangements of
the Company or the Subsidiaries existing on the date hereof and no
powers of attorney shall be granted by the Company or any of the
Subsidiaries;
(xii) except as contemplated by the Merger Agreement, the Company will not,
and will not permit any of the Subsidiaries to, acquire or agree to
acquire by merging or consolidating with, purchasing substantially all
of the assets of or otherwise, any business or any corporation,
partnership, association, or other business organization or division
thereof or enter into any joint venture, partnership, limited liability
company operating agreement or other similar business arrangement;
(xiii) the Company will not, and will not permit the Subsidiaries to, enter
into any contract or commitment containing obligations in excess of
$100,000 or take any action which would have a material adverse effect
on the cash flows of the Company; and
(xiv) the Company will promptly advise the Purchaser in writing of any change
in the financial condition, business or operations of the Company and
the Subsidiaries, taken as a whole, and of any breach of its
representations or warranties contained herein which could have a
Material Adverse Effect and will promptly advise the Purchaser in
writing of all material order cancellations.
NO SOLICITATION. The Company will not, directly or indirectly, through any
officer, director, agent, financial advisor or otherwise, solicit, initiate or
encourage submission of proposals or offers from any person relating to any
acquisition or purchase of all or a portion of the assets of (other than
immaterial or insubstantial assets or inventory in the ordinary course of
business or assets held for sale), or any equity interest in, the Company or any
material Subsidiary or any business combination with the Company or any material
Subsidiary (an "ACQUISITION TRANSACTION"), or participate in any negotiations
regarding, or furnish to any other person any information (except for
information which has been previously publicly disseminated by the Company in
the ordinary course of business) with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing; PROVIDED, that
the Company may, in response to an unsolicited Superior Proposal (as hereinafter
defined), furnish information to, and negotiate, explore or otherwise engage in
substantive discussions with such third party, and enter into any agreement,
arrangement or understanding, in each case only if the Board of Directors
determines in good faith, after consultation with and on the basis of advice
from its financial advisors and outside legal counsel, that failing to take such
action would constitute a breach of the fiduciary duties of the Board of
Directors. "Superior Proposal" shall mean a bona fide written proposal made by a
third party to acquire the Company pursuant to a tender or exchange
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offer, a merger, a share exchange, a sale of all or substantially all its assets
or otherwise on terms which a majority of the members of the Board of Directors
of the Company determines in good faith (taking into account the advice of
independent financial advisors) to be more favorable to the Company and its
stockholders than the Merger (and any revised proposal made by Purchaser) and
for which financing, to the extent required, is then fully committed or
reasonably determined to be available by the Board of Directors of the Company.
DIRECTORS. Promptly upon the purchase by the Purchaser of all Shares
subject to the Inducement Agreement or any Shares pursuant to the Offer, and
from time to time thereafter as Shares are acquired by the Purchaser, the
Purchaser 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 appointed or elected pursuant to this sentence and
including current directors serving as officers of the Company) multiplied by
the percentage obtained by dividing (a) the aggregate number of Shares
beneficially owned by the Purchaser or any affiliate of the Purchaser (including
such Shares as are accepted for payment pursuant to the Offer, but excluding
Shares held by the Company) by (b) the number of Shares outstanding (excluding
Shares held by the Company). At such times, if requested by the Purchaser, the
Company will also cause each committee of the Board of Directors to include
persons designated by the Purchaser constituting the same percentage of each
such committee as the Purchaser's designees are of the Board of Directors. The
Company shall, upon request by the Purchaser, promptly increase the size of the
Board of Directors or exercise its best efforts to secure the resignations of
such number of directors as is necessary to enable the Purchaser designees to be
elected to the Board of Directors and shall cause the Purchaser's designee to be
so elected; PROVIDED, HOWEVER, that, in the event that the Purchaser's designees
are appointed or elected to the Board of Directors, until the Effective Time the
Board of Directors shall have at least one director who is a director on the
date of the Merger Agreement and who is neither an officer of the Company nor a
designee, stockholder, affiliate or associate (within the meaning of the Federal
securities laws) of the Purchaser (one or more of such directors, the
"INDEPENDENT DIRECTORS"); PROVIDED FURTHER, that if no Independent Directors
remain, the other directors shall designate one person to fill one of the
vacancies who shall not be either an officer of the Company or a designee,
shareholder, affiliate or associate of the Purchaser, and such person shall be
deemed to be an Independent Director for purposes of the Merger Agreement.
The Merger Agreement provides that, subject to applicable law, the Company
shall take all actions requested by the Parent necessary to effect any such
election, including mailing to its stockholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder by the SEC which is attached hereto as Annex
I.
The Merger Agreement also provides that following the approval of the Merger
Agreement by the stockholders of the Company, any amendment or termination of
the Merger Agreement or waiver of any of the Company's rights thereunder shall
require the concurrence of a majority of the Independent Directors.
DIRECTORS AND OFFICERS INDEMNIFICATION. The Merger Agreement provides that,
as of the Effective Time and for six years thereafter (or such later time as to
which the statute of limitations shall have been extended by action of the
Surviving Corporation), the Purchaser shall, and shall cause the Surviving
Corporation to, indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of the Company and its Subsidiaries
(each an "INDEMNIFIED PARTY") against all losses, claims, damages or liabilities
arising out of actions or omissions occurring on or prior to the Effective Time
(including, without limitation, the transactions contemplated by the Merger
Agreement) to the full extent permitted or required under Delaware law and by
the relevant provisions of the Certificate of Incorporation and By-laws of the
Company (and requires that such provisions shall be included in the Certificate
of Incorporation and By-laws, respectively, of the Surviving Corporation and
shall not be amended to
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adversely affect such indemnity for the six year period). Also pursuant to the
Merger Agreement, the Surviving Corporation will purchase a non-cancellable
extension of the existing directors' and officers' liability insurance of the
Company covering parties who are currently covered by such policy for a period
of five years after the Effective Time in respect of acts or omissions occurring
prior to the Effective Time on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date of the Merger
Agreement.
COMPANY OPTIONS. The Merger Agreement provides that, with respect to all
outstanding Options to purchase Shares, each holder of an Option which is
surrendered by the holder for cancellation shall be entitled to receive from the
Company, immediately prior to the Effective Time, for each vested Share (but not
unvested Shares) subject to an Option issued under the Company's 1997 Stock
Option Plan and for each Share (both vested and unvested) subject to an Option
issued under the Company's 1994 Stock Option Plan, an amount in cash in
cancellation of such Option equal to the excess, if any, of the Merger
Consideration over the per share exercise price of such Option (or such greater
amount as Acquisition shall agree in writing), as such amount may be reduced by
any required withholding in accordance with applicable income tax laws. The
Merger Agreement requires the Company's Board of Directors to adopt a resolution
terminating the Option Plans effective as of the Effective Date. The receipt by
the Purchaser of the binding agreements of all holders of Options agreeing to
the cancellation thereof, as of the Effective Time, is a condition to the
consummation of the Offer, and the Merger Agreement obligates the Company to use
its best efforts to obtain such agreements.
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 of the Merger Agreement, and consent to the Merger,
by the stockholders of the Company (if required), (ii) the expiration of any
waiting period applicable to the consummation of the Merger under the HSR Act,
(iii) the approval of the Irish Minister for Enterprise, Trade and Employment
and (iv) that no order to restrain, enjoin or otherwise prevent the consummation
of the Merger Agreement or the Merger shall have been entered by any court or
administrative body and shall then remain effective. The Merger Agreement
further provides that the accuracy of representations and warranties of the
Company, and the performance, in all material respects, of agreements and
covenants of the Company contained in the Merger Agreement, and the absence of
any event which has or may have a material adverse effect on the Company, are
conditions to the obligations of the Purchaser and the Parent to consummate the
Merger, and that the accuracy or representations and warranties of the Purchaser
and the Parent, and the performance, in all material respects, of agreements and
covenants of the Purchaser and the Parent contained in the Merger Agreement, are
conditions to the obligations of the Company to consummate the Merger.
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 SEC and other governmental authorities, the absence
of certain changes or events, intellectual property, material contracts,
environmental matters, employee benefit matters, the opinion of the Company's
financial advisor, tax returns, audits, brokers and litigation.
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the
Offer, Purchaser shall not be required to accept for payment or pay for any
Shares tendered, and may terminate or amend the Offer (subject to the provisions
of the Merger Agreement) and may postpone the acceptance of, and, subject to
Rule 14e-1(c) of the Exchange Act, payment for, any Shares tendered, (A) unless
the following conditions shall have been satisfied: (i) there shall be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which represents on a fully diluted basis (including for purposes of such
calculation all Shares issuable upon exercise of all vested stock options and
warrants and conversion of convertible securities or other rights to purchase or
acquire shares) at least 51% of the Shares then
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outstanding (the "MINIMUM CONDITION") and (ii) any applicable waiting period
under the HSR Act shall have expired or been terminated prior to the expiration
of the Offer and any required approval of the Republic of Ireland shall have
been obtained or (B) if at any time after the date of the Merger Agreement and
before the time of payment for any such Shares (whether or not any Shares have
theretofore been accepted for payment or paid for pursuant to the Offer) any of
the following conditions exists:
(a) there shall be in effect an injunction or other order, decree,
judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of competent
jurisdiction or a statute, rule, regulation, executive order or other action
or proceeding shall have been promulgated, enacted, taken, initiated or
instituted by a government or a governmental authority or a governmental,
regulatory or administrative agency or commission of competent jurisdiction
which in any such case (i) seeks to restrain or prohibit the making or
consummation of the Offer or the consummation of the Merger, (ii) seeks to
prohibit or restrict the ownership or operation by the Purchaser (or any of
its affiliates or subsidiaries) of any material portion of the Company's
business or assets, or seeks to compel the Purchaser (or any of its
affiliates or subsidiaries) to dispose of or hold separate any material
portion of the Company's business or assets, (iii) seeks to impose material
limitations on the ability of the Purchaser effectively to acquire or to
hold or to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by the Purchaser
on all matters properly presented to the stockholders of the Company, or
(iv) seeks to impose any material limitations on the ability of the
Purchaser or any of its affiliates or subsidiaries effectively to control in
any material respect the business and operations of the Company; or
(b) the Merger Agreement shall have been terminated by the Company or
the Purchaser in accordance with its terms; or
(c) there shall have occurred and be continuing (i) any general
suspension of, or limitation on prices for, trading in securities on any
national securities exchange or the over-the-counter market, (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, (iii) any limitation (whether or not
mandatory) by any government or Governmental Authority of the United States
on the extension of credit by banks or other lending institutions or (iv) in
the case of any of the foregoing existing at the time of the execution of
the Merger Agreement, a material acceleration or worsening thereof; or
(d) (i) the Board of Directors or any committee thereof shall have
withdrawn, materially modified or changed in a manner adverse to the
Purchaser or Parent the approval or recommendation of the Offer, the Merger
or the Merger Agreement, or approved or recommended any Acquisition
Transaction or any other acquisition of Shares other than the Offer or the
Merger, or (ii) the Board of Directors or any committee thereof shall have
resolved to do any of the foregoing; or
(e) the representations and warranties of the Company in the Merger
Agreement shall not be true and correct as of the date of the Merger
Agreement or as of the expiration of the Offer except for (i) changes
specifically contemplated by the Merger Agreement and (ii) those
representations and warranties that address matters only as of a particular
date (which shall remain true and correct as of such date) and in each case
except in where failure to be so true and correct would not (in the
aggregate for all representations and warranties of the Company) have a
Material Adverse Effect (other than representations and warranties that are
already so qualified or that are qualified as to the prevention or delay of
the consummation of any of the Transactions or as to the performance by the
Company of its obligations under the Merger Agreement, which in each such
case shall be true and correct as written); or
(f) the Company shall have failed to perform any obligation or to comply
with any agreement or covenant of the Company to be performed or complied
with by it under the Merger Agreement unless all such failures together in
their entirety, would not, individually or in the aggregate, have a Material
Adverse Effect; or
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(g) the Company shall not have delivered to the Purchaser binding
agreements signed by the holders of Options representing all of the Shares
issuable upon exercise of all of the outstanding Options (whether or not
exercisable) which are vested or unvested under the Company's 1994 Stock
Option Plan or vested under the Company's 1997 Stock Option Plan, agreeing
to the cancellation of the Options of such holders on the terms described in
Section 10 above (it being understood that the Company additionally shall
use reasonable efforts to obtain acknowledgments from the holders of
unvested Options under the Company's 1997 Stock Option Plan that such
Options shall become null as of the Effective Time by the terms of such
Plan); or
(h) the Employment Agreement Amendments shall not have been executed and
delivered by the parties thereto; or
(i) there shall have occurred since September 30, 1998 any event that,
individually or when considered together with any other matter, has had or
is reasonably likely in the future to have a Material Adverse Effect (other
than as set forth in the reports filed by the Company with the SEC prior to
the date hereof or in the disclosure schedules to the Merger Agreement); or
(j) the Purchaser and the Company shall have agreed that the Purchaser
shall amend the Offer to terminate the Offer or postpone the payment for
Shares pursuant thereto.
As used in the Merger Agreement, "Material Adverse Effect" means, with
respect to the Company or the Subsidiaries, any effect that is materially
adverse to the business, operations, properties, assets, liabilities, results of
operations or condition (whether financial or otherwise) of the Company and the
Subsidiaries, taken as a whole.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may be asserted by Parent or Purchaser regardless of the circumstances
giving rise to any such condition or may be waived by Parent or Purchaser in
whole or in part at any time and from time to time in their sole discretion,
subject in each case to the terms of the Merger Agreement. The failure by Parent
or Purchaser at any time to execute any of the foregoing rights shall not be
deemed a waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances; and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated
and canceled, and the Offer and the Merger may be abandoned at any time prior to
the Effective Time:
(a) by mutual consent of the Purchaser and the Company;
(b) by any party not in material breach of the Merger Agreement, in the
event that any of the mutual conditions described above in "--Conditions
to the Obligations of Each Party" shall not have been satisfied within
the time contemplated by the Merger Agreement;
(c) by the Purchaser if not in material breach of the Merger Agreement, if
any of the conditions of the Acquisition described above in "--Conditions
to the Obligations of Each Party" shall not have been satisfied within
the time contemplated by the Merger Agreement, and the condition is not
or could not be satisfied within ten days of notice thereof;
(d) by the Company if not in material breach of the Merger Agreement, if any
of the conditions of the Company described above in "--Conditions to the
Obligations of Each Party" shall not have been satisfied within the time
contemplated by the Merger Agreement, and the condition is not or could
not be satisfied within ten days of notice thereof;
(e) by the Purchaser if the Offer shall have expired or been terminated
without any Shares being purchased thereunder by the Purchaser and its
affiliates as a result of the occurrence of any of the events described
in Annex I to the Merger Agreement; and
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(f) by the Purchaser if the Board of Directors of the Company shall have
modified or withdrawn its approval of the Merger Agreement or the Merger
in favor of a Superior Proposal.
EXPENSES. The Merger Agreement provides that, if the Purchaser terminates
the Merger Agreement in the manner described in clause (f) above, or in the
manner described in clause (e) above because the failure of any condition set
forth in Annex I to the Merger Agreement resulted from an intentional breach by
the Company of any provision of the Merger Agreement, then promptly after such
termination, the Company shall pay to the Parent $1,250,000 and shall reimburse
the Parent for all of its substantiated out of pocket costs and expenses up to
$500,000.
Except as set forth in the above paragraph, 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 any transaction contemplated by the Merger Agreement is consummated.
INDUCEMENT AGREEMENT. The following is a summary of certain provisions of
an Inducement Agreement dated January 19, 1999, among the Purchaser and Dr.
Solomon Dutka and Carl Ravitch (the "INDUCEMENT AGREEMENT"). Such summary is
qualified in its entirety by reference to the Inducement Agreement, a copy of
which is filed as Exhibit (c)(2) hereto and is incorporated herein by reference.
Under the Inducement Agreement, Dr. Dutka and Mr. Ravitch, holding
approximately 48.7% of the Shares outstanding as of January 19, 1999, have (i)
granted the Purchaser an irrevocable proxy to vote and otherwise act with
respect to the Shares then owned by such stockholder in favor of the approval
and adoption of the Merger Agreement, the Merger and all the transactions
contemplated by the Merger Agreement and the Inducement Agreement and any other
actions required in furtherance thereof and against any other Acquisition
Transaction and any action in furtherance thereof, (ii) granted the Purchaser an
irrevocable option to purchase such stockholder's Shares at a price of $3.24 per
Share, under certain circumstances and (iii) agreed to tender such stockholder's
Shares in the Offer.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
RECOMMENDATION OF THE BOARD OF DIRECTORS. At a special meeting held on
January 19, 1999, the Board of Directors of the Company (the "BOARD") approved
the Merger Agreement and the transactions contemplated thereby and determined
that the Merger and the Offer, taken together, are fair to, and in the best
interests of, the Company and its stockholders. THE BOARD RECOMMENDS THAT
HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER. A copy of a press release communicating such approval and recommendation
is filed as Exhibit (a)(2) hereto and is incorporated herein by reference.
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BACKGROUND OF THE MERGER AND THE OFFER.
On April 23, 1997, the Company executed a letter agreement engaging Allen &
Company Incorporated ("ALLEN") as its financial advisor. A summary of the terms
and provisions of that letter agreement, including the terms of the engagement
and fees payable to Allen upon consummation of the transactions contemplated by
the Merger Agreement, are described below in Item 5. Allen prepared a list of
prospects which included United Information Group Limited ("UIG"). A copy of the
agreements with Allen are filed as Exhibit (c)(20) hereto.
In late May 1997, Alain Tessier, the Chief Executive Officer of Mediamark
Research Inc ("MRI"), a subsidiary of UIG, approached Dr. Dutka as to the
possibility of some type of transaction between UIG and the Company. On June 2,
1997, Mr. Tessier and Graham Hill, the Chief Executive Officer of UIG, met with
Dr. Dutka and Mr Bellows, at the offices of the Company to discuss UIG's
interest in acquiring all of the outstanding common stock of the Company in a
transaction which valued the Company at between $40 million and $60 million. On
June 4, 1997, Mr. Hill sent an initial draft of a Confidentiality Letter and the
Company furnished to UIG a "press kit" containing current SEC filings, press
releases and investment analyst reports about the Company. On June 5, 1997, the
Company and UIG signed the Confidentiality Letter.
On June 27, 1997, Mr. Hill wrote to Mr. Bellows to indicate that based upon
its initial review of the "press kit", UIG valued the Company at $50 million. On
July 2, 1997, Mr. Bellows contacted Mr. Hill by telephone and informed him that
such valuation was not acceptable to the Company and agreed to provide UIG with
additional internal, non-public information with respect to the Company to
assist in UIG's valuation process. In early July 1997, Mr. Bellows provided UIG
with additional internal, non-public information on the Company as well as an
analytical memorandum prepared by Allen.
On July 18, 1997, Mr. Hill contacted Mr. Bellows by telephone and informed
him that all of the data reviewed by UIG suggested a valuation of the Company at
$50 million. Mr. Bellows reiterated to Mr. Hill that such a valuation was not
acceptable to the Company. In August 1997, Mr. Hill contacted Mr. Bellows by
telephone to request updated data on the Company in order for UIG to attempt to
justify a higher valuation for the Company. On September 23, 1997, Mr. Bellows
sent the updated data on the Company to UIG for its review.
On September 25, 1997, Mr. Hill and Michael Spedding, the Finance Director
of UIG, met with Messrs. Bellows, Ritter and Miller, who is also a Vice
President and a Director of Allen, at the offices of the Company to discuss the
updated data. Mr. Hill requested additional data from the Company and set forth
UIG's review process and schedule which would ultimately include its review by
Charles Gregson, the Executive Director of United News & Media plc (the sole
stockholder of the Parent) ("UNITED NEWS").
In early November 1997, Dr. Dutka and Lou Bender, the President of MRI met
at the Company's offices to discuss the involvement Dr. Dutka might have with
the Company in the event the proposed transaction were consummated.
On November 14, 1997, Mr. Hill wrote to Dr. Dutka to indicate that UIG
valued the Company at $55 million, subject to UIG's review of the Company's
audited 1997 financial statements and further due diligence. On November 20,
1997, the Board of Directors of the Company met to review the proposed
transaction and UIG's valuation of the Company and the Board of Directors voted
to end further discussions with UIG.
In early January 1998, Mr. Gregson met with Dr. Dutka at the Company's
offices and reiterated UIG's continuing interest in acquiring all of the
outstanding capital stock of the Company and agreed to reexamine UIG's November
1997 valuation of the Company. On January 14, 1998, Mr. Gregson contacted Dr.
Dutka by telephone and suggested that UIG now valued the Company at $60 million.
On January 15, 1998, Dr. Dutka expressed the Company's interest in considering
the revised valuation, but urged that the transaction proceed on a more
expeditious basis.
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On February 3, 1998, Mr. Gregson wrote to Dr. Dutka to confirm that UIG
valued the Company at $60 million, to define the conditions that justified such
a valuation and to set forth a process to close the transaction. During February
and March 1998, the Company's updated financial statements for 1997 and
additional operating and financial schedules and analyses were furnished to UIG
by the Company.
On April 21, 1998, Messrs. Bellows, Ritter, Klein, Miller, Hill, Spedding
and Bender met at the Company's offices to review the Company's financial
results for the first quarter of 1998. Mr. Hill requested additional analyses of
the Company's financial prospects and Mr. Bellows agreed to provide such
analyses. On April 23, 1998, Messrs. Bellows, Ritter, Klein, Miller, Hill,
Spedding and Bender met at the Company's offices to review the special analyses
and preliminary estimates of the Company's financial results for the remainder
of 1998. On April 24, 1998, Messrs. Bellows, Ritter, Klein, Miller, Hill and
Spedding met at the Company's offices to discuss UIG's reaction to the Company's
lower than projected first quarter earnings for 1998 and the outlook for the
remainder of 1998. Mr. Hill expressed to the Company that a valuation of $60
million could not be justified due to the lower than expected earnings for the
first quarter of 1998. Mr. Bellows suggested that the Company develop additional
analyses of its future performance, Mr. Hill agreed to review such additional
analyses, which were delivered to UIG in mid-May 1998.
On May 20, 1998, Messrs. Hill, Spedding, Bender and Matthew Kirby, Chief
Financial Officer of UIG's affiliate, Bruskin/Goldring Research, Inc., met with
Messrs. Bellows, Klein, Ritter and Miller at the Company's offices to place a
final valuation on the Company based on the additional analyses provided to UIG.
Mr. Hill suggested a possible transaction for $50 million, less the value of any
outstanding employment agreements, vested stock options and any additional
incentives necessary to retain key employees of the Company. This proposal was
deemed unacceptable by the Company's representatives. By letter dated May 29,
1998 Mr. Hill reiterated UIG's offer to Mr. Miller and expressed UIG's hope that
the Company would reconsider the transaction.
On July 8, 1998, Mr. Ravitch contacted James Rose, the new Chief Executive
Officer of UIG in London, and in meetings held that day at the Parent's offices
in London Mr. Rose indicated to Mr. Ravitch that UIG was willing to enter into
new negotiations concerning the acquisition of all of the capital stock of the
Company. Mr. Ravitch informed Mr. Bellows of UIG's renewed interest in the
transaction. Mr. Bellows suggested that Mr. Rose meet with him and Dr. Dutka in
Berlin in mid-September to discuss the matter further.
On September 14, 1998, Dr. Dutka and Mr. Bellows met Mr. Rose at the Adlon
Hotel in Berlin. Mr. Rose indicated that, subject to the satisfaction of a
number of matters and updated due diligence, the Parent would be prepared to
proceed with a transaction which valued the Company at the equivalent of $3.43
per Share in cash ($45 million), which would exclude any deductions for the
value of any outstanding employment agreements, vested stock options and any
additional incentives necessary to retain key employees of the Company. The
Company agreed to explore reopening negotiations on that basis.
On September 23, 1998, Mr. Rose wrote to Mr. Bellows to outline the process
for a final due diligence review of the Company. On October 6, 1998, Messrs.
Bellows and Rose met in New York, where Mr. Bellows presented Mr. Rose with
financial projections for the remainder of 1998 and they agreed to proceed with
the transaction which valued the Company at the equivalent of $3.43 per Share in
cash ($45 million) calculated as agreed at the meeting in Berlin. On October 9,
1998, at a meeting in New York attended by Messrs. Bellows, Ritter, Klein,
Miller, Rose, Bender, Spedding and Kirby, as well as representatives of counsel
to the Company and UIG and the independent auditors of the Company and UIG, the
Company presented additional information and analysis to UIG. The parties and
their counsel also discussed certain provisions that would be contained in the
Merger Agreement and the Inducement Agreement.
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On November 2, 1998, Messrs. Bellows, Ritter, Klein, Miller, Rose, Spedding,
Bender and Kirby met at the offices of the Company's counsel in New York, where
the Company presented its financial projections for the fourth quarter of 1998
and for 1999 to UIG.
The first draft of the Merger Agreement was distributed in early November
1998. Thereafter the parties and their counsel negotiated the terms of the
Merger Agreement, the Inducement Agreement and the Employment Agreement
Amendments.
On November 5, 1998, Mr. Rose met separately with each of Dr. Dutka and Mr.
Bellows in New York to discuss the involvement each of them might have with the
Company in the event the proposed transaction were consummated.
On November 6, 1998, the Company and UIG entered into a new Confidentiality
Agreement and on November 14, 1998, the parties entered into an Exclusivity
Period Letter Agreement. On November 24, 1998, Messrs. Bellows and Rose
confirmed by telephone the closing schedule and the timing of each party's Board
of Directors meeting, each scheduled for December 10, 1998. On November 25,
1998, Peter Andrews of the Company discussed the Company's Y2K compliance with
consultants to UIG at the offices of the Company. On December 1, 1998, Messrs.
Dutka and Rose met at the offices of the Company to discuss Dr. Dutka's future
role in the Company.
On the morning of December 9, 1998, Mr. Rose contacted Mr. Bellows by
telephone and informed him that UIG was prepared to offer the equivalent of
$3.05 per Share in cash ($40 million) and that such proposal would be presented
to the Board of Directors of UIG on December 10, 1998. Mr. Bellows, after
consultation with Dr. Dutka and Mr. Ravitch, contacted Mr. Rose by telephone
later that morning and expressed the Company's position that it was only
prepared to accept the $45 million in cash proposal, without deductions of any
kind and would therefore cancel its Board of Directors meeting scheduled for
December 10, 1998.
On December 14, 1998, Messrs. Rose and Gregson met with Mr. Miller at the
offices of Allen in New York, at which time Mr. Miller reiterated the Company's
position of December 9, 1998. Later that day, Messrs. Rose, Gregson, Dutka,
Bellows and Miller met to discuss certain tax issues that had arisen. UIG
indicated that it was prepared to proceed with the transaction for the
equivalent of $3.24 per Share in cash ($42.5 million) less any deduction for
possible tax liabilities. UIG requested 48 hours to further examine the tax
issue. On December 17, 1998, Messrs. Ritter and Bellows met with Arthur Gelber,
a tax accountant retained by the Company, Richard Block, the Chief Financial
Officer of United News' U.S. Head Office, and a representative of Arthur
Andersen & Co. to discuss the Company's tax issues.
On December 22, 1998, Messrs. Gregson and Spedding contacted Mr. Bellows by
telephone and indicated that the Parent was prepared to proceed with the
transaction at the equivalent of $3.18 per Share in cash ($41.75 million). Later
that day, Mr. Bellows informed Mr. Gregson by telephone that such a valuation
was unacceptable to the Company.
On January 4, 1999, Mr. Gregson contacted Mr. Miller by telephone to inquire
as to the status of the transaction and was informed by Mr. Miller that the
transaction could not proceed at the $41.75 million proposal. Mr. Gregson
requested that Mr. Miller contact the Company to ascertain its willingness to
proceed with the transaction. On January 5, Mr. Miller contacted Dr. Dutka and
Mr. Bellows by telephone, who advised Mr. Miller that the Company was willing to
enter into the transaction at the equivalent of $3.24 per Share in cash ($42.5
million), with no allowance for deductions of any kind. Mr. Miller advised Mr.
Gregson of the Company's position.
On January 6, 1999, Mr. Miller contacted Dr. Dutka by telephone and advised
him that UIG had revised its offer to the equivalent of $3.22 per Share in cash
($42.25 million). Dr. Dutka informed Mr. Miller that the Company would not
accept such a valuation. On January 8, 1999, John Botts, a non-executive
Director of United News, contacted Mr. Miller by telephone and informed Mr.
Miller that UIG would enter into the transaction for the equivalent of $3.24 per
Share in cash ($42.5 million). Mr. Miller
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contacted Mr. Gregson by telephone to confirm such offer, without allowance for
deductions of any kind, subject to the approval of their respective boards and
the mutually satisfactory negotiation of the remaining terms and conditions of
the Merger Agreement and the Inducement Agreement.
On January 14, 1999, Allen delivered its written opinion to the Board of
Directors of the Company to the effect that, as of such date and based upon and
subject to certain matters stated in such opinion, the cash consideration of
$3.24 per Share to be received by holders of Shares in the Offer and the Merger,
taken together, was fair, from a financial point of view, to such holders. A
copy of Allen's letter is filed as Exhibit (a)(1) hereto, attached as Annex II
to this Statement and incorporated by reference herein. The Board reviewed the
letter as well as the principal terms of the Offer and Merger at a meeting held
on such date.
On January 19, 1999, the Board of Directors of the Company met and (i)
approved the Merger Agreement and the transactions contemplated thereby and
authorized the execution and delivery thereof, (ii) determined that the Offer
and the Merger, taken together, are fair to, and in the best interests of, the
Company and its stockholders, and (iii) recommended that the Company's
stockholders accept the Offer and tender their Shares to the Purchaser.
On January 19, 1999, the Purchaser, the Parent and the Company executed the
Merger Agreement. On January 19, 1999, the Parent, the Purchaser and the Company
separately announced the transaction.
REASONS FOR THE RECOMMENDATION OF THE COMPANY'S BOARD OF DIRECTORS
In determining that the Offer and the Merger, taken together, are fair to,
and in the best interests of, the Company and its stockholders and recommending
and approving the Merger Agreement and the transactions contemplated thereby,
the Board considered a number of factors, including, but not limited to, the
following:
(i) the presentation by Allen at the January 14, 1999 Board of Directors'
meeting and the opinion of Allen to the effect that, as of the date of its
opinion and based upon and subject to certain matters stated therein, the $3.24
per Share cash consideration to be received by the holders of Shares pursuant to
the Offer and the Merger is fair, from a financial point of view, to the public
stockholders of the Company. The full text of Allen's written opinion, which
sets forth the assumptions made, matters considered and limitation on the review
undertaken by Allen is attached hereto as Annex II and is incorporated herein by
reference. STOCKHOLDERS ARE URGED TO READ THE OPINION OF ALLEN CAREFULLY IN ITS
ENTIRETY;
(ii) the proposed structure of the Offer and the Merger involves an
immediate cash tender offer for all outstanding Shares to be followed by a
merger for the same consideration, thereby enabling stockholders to obtain cash
for their Shares at the earliest possible time;
(iii) the terms and conditions of the Merger Agreement, including the fact
that the obligations of the Parent and the Purchaser to consummate the Offer and
the Merger are not conditioned on financing;
(iv) the historical market prices of the Company's Common Stock,
particularly that the $3.24 per Share to be paid in the Offer and as the
consideration in the Merger will enable stockholders of the Company to realize a
premium of approximately 32.9% over the $2.438 closing sale price for the Shares
on the American Stock Exchange on January 15, 1999, the last trading day prior
to the public announcement of the execution of the Merger Agreement, a premium
of approximately 44% over the $2.25 closing sale price for the Shares on the
American Stock Exchange on December 18, 1998, and a premium of approximately
20.6% over the $2.688 closing sale price for the Shares on the American Stock
Exchange on July 7, 1998, the day before Mr. Ravitch met Mr. Rose in London and
renewed the discussions with UIG concerning an acquisition of the Company.
(v) the Merger Agreement permits the Board, in the exercise of its fiduciary
duties, to terminate the Merger Agreement in favor of a Superior Proposal; upon
such termination, the Company will pay the
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Purchaser a fee of $1,250,000 plus reimbursement, in an amount not to exceed
$500,000, of the reasonable out of pocket expenses of the Purchaser and the
Parent (representing, in the aggregate, a maximum of approximately 4% of the
total value of the consideration to be paid in the Offer and the Merger) and,
based upon the advice of Allen that such termination provision was within
acceptable ranges for termination fees in transactions of this type;
(vi) the familiarity of the Board of Directors with the business, results of
operations, properties and financial condition of the Company, based, in part,
upon Allen's presentations to the Board and upon discussions with management,
including the prospects of the Company if it were to remain independent;
(vii) the fact that Dr. Solomon Dutka, founder and Chief Executive Officer
of the Company, and Carl Ravitch, Executive Vice President--Marketing of the
Company, are in favor of the Offer and the Merger, agreed to tender their Shares
in the Offer, to grant the Purchaser an option to purchase Shares beneficially
owned by them at $3.24 per Share, and to forego additional consideration that
may be payable upon consummation of a Superior Proposal in order to provide
stockholders with the opportunity to realize the $3.24 per Share in the Offer
and the Merger; and
(viii) the compatibility of the business of the Purchaser's affiliates and
the Company and the potential efficiencies and synergies expected to be realized
by combining the operations of the Purchaser's affiliates and the Company.
The Board did not assign relative weights to the above factors or determine
that any factor was of particular importance. Rather, the Board viewed its
position and recommendations as being based on the totality of the information
presented to and considered by it.
The Board recognized that, while the consummation of the Offer gives the
Company's stockholders the opportunity to realize a significant premium over the
price at which the Shares were traded prior to the public announcement of the
Offer, tendering in the Offer would eliminate the opportunity for such
stockholders to participate in the future growth and profits, if any, of the
Company. The Board also recognized that there can be no assurance as to the
level of growth or profits to be attained by the Surviving Corporation in the
future.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Allen was retained by the Company as the Company's agent for the purpose of
reviewing and evaluating (i) the Company's financial condition and historical
and projected results, (ii) the Company's current operations and business
prospects, and (iii) the current condition of the industry, as well as any
recent trends, and the Company's competitive position therein, all with a view
toward assisting the Company in evaluating alternatives to maximize shareholder
value. Allen has rendered its opinion that the transactions contemplated by the
Merger Agreement are fair, from a financial point of view, to the stockholders
of the Company. Allen received a fee of $100,000 in connection with its
retention. Under the terms of its engagement letter with the Company, Allen is
entitled to receive an additional fee of $438,720 upon consummation of the
transactions contemplated by the Merger Agreement.
Neither the Company nor any person acting on its behalf has retained any
other person to make solicitations or recommendations to the stockholders of the
Company on its behalf with respect to the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) To the best of the Company's knowledge, during the last 60 days, none of
the Company nor any of its executive officers, directors, affiliates or
Subsidiaries have effected any transactions in shares of Common Stock.
16
<PAGE>
(b) To the best of the Company's knowledge, each of its executive officers,
directors, affiliates and Subsidiaries intend to tender, pursuant to the
Offer, the shares of Common Stock owned of record and beneficially by
such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the tender offer which relates to or
would result in (i) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any Subsidiary of the Company;
(ii) a purchase, sale or transfer of a material amount of assets by the
Company or any Subsidiary of the Company; (iii) a tender offer for or
other acquisition of securities by or of the Company; or (iv) any
material change in the present capitalization or dividend policy of the
Company.
(b) None
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The Information Statement attached hereto as Annex I is being furnished in
connection with the contemplated designation by the Purchaser, pursuant to the
Merger Agreement, of certain persons to be appointed to the Board of Directors
of the Company, other than at a meeting of the Company's stockholders, following
the purchase by the Purchaser of the number of Shares pursuant to the Offer as
would entitle the Purchaser to make such designation.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
(a)(1) Opinion of Allen & Company Incorporated dated January 14, 1999.*
(a)(2) Press Release of the Company dated January 19, 1999.
(a)(3) Letter to stockholders of the Company from Dr. Solomon Dutka, Chairman of the Board of the Company.*
(b) none.
(c)(1) Merger Agreement among the Purchaser, the Parent and the Company dated January 19, 1999.
(c)(2) Inducement Agreement among the Purchaser, Solomon Dutka and Carl Ravitch dated January 19, 1999.
(c)(3) Employment Agreement between the Company and Solomon Dutka, dated March 24, 1995. Incorporated by
reference to Exhibit 10.2 to the Company's Report on Form 10-Q/A for the quarter ended March 31,
1995.
(c)(4) Amendment dated March 25, 1997 to Employment Agreement between the Company and Solomon Dutka dated
March 24, 1995. Incorporated by reference to Exhibit 10.14 to the Company's Report on Form 10-Q for
the quarter ended June 30, 1997.
(c)(5) Employment agreement between the Company and H. Arthur Bellows, Jr., dated March 24, 1995.
Incorporated by reference to Exhibit 10.3 to the Company's Report on Form 10-Q/A for the quarter
ended March 31, 1995.
(c)(6) Amendment dated March 25, 1997 to Employment Agreement between the Company and H. Arthur Bellows, Jr.
dated March 24, 1995. Incorporated by reference to Exhibit 10.15 to the Company's Report on Form 10-Q
for the quarter ended June 30, 1997.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
(c)(7) Amendment dated June 30, 1997 to Employment Agreement between the Company and H. Arthur Bellows, Jr.
dated March 24, 1995. Incorporated by reference to Exhibit 10.17 to the Company's Report on Form 10-Q
for the quarter ended June 30, 1997.
(c)(8) Employment Agreement between the Company and Carl Ravitch, dated March 24, 1995. Incorporated by
reference to Exhibit 10.4 to the Company's Report on Form 10-Q/A for the quarter ended March 31,
1995.
(c)(9) Amendment dated March 25, 1997 to Employment Agreement between the Company and Carl Ravitch dated
March 24, 1995. Incorporated by reference to Exhibit 10.16 to the Company's Report on Form 10-Q for
the quarter ended June 30, 1997.
(c)(10) Amendment dated June 30, 1997 to Employment Agreement between the Company and Carl Ravitch dated
March 24, 1995. Incorporated by reference to Exhibit 10.18 to the Company's Report on Form 10-Q for
the quarter ended June 30, 1997.
(c)(11) Amendment dated October 1, 1997 to Employment Agreement between the Company and Carl Ravitch dated
March 24, 1995. Incorporated by reference to Exhibit 10.16 to the Company's Report on Form 10-K for
the year ended December 31, 1997.
(c)(12) Employment Agreement between the Company and Joel S. Klein, dated October 1, 1997. Incorporated by
reference to Exhibit 10.06 to the Company's Report on Form 10-K for the year ended December 31, 1997.
(c)(13) Employment Agreement between the Company and Alan J. Ritter, dated September 13, 1995. Incorporated
by reference to Exhibit 10 to the Company's Report on Form 10-Q for the quarter ended September 30,
1995.
(c)(14) Amendment dated June 30, 1997 to Employment Agreement between the Company and Alan J. Ritter dated
September 13, 1995. Incorporated by reference to Exhibit 10.19 to the Company's Report on Form 10-Q
for the quarter ended June 30, 1997.
(c)(15) Amendment No. 2 to Employment Agreement with Solomon Dutka dated January 19, 1999.
(c)(16) Employment Agreement with H. Arthur Bellows Jr. dated January 19, 1999.
(c)(17) Amendment No. 3 to Employment Agreement with Carl Ravitch dated January 19, 1999.
(c)(18) Amendment No. 1 to Employment Agreement with Joel S. Klein dated January 19, 1999.
(c)(19) Amendment No. 2 to Employment Agreement with Alan J. Ritter dated January 19, 1999.
(c)(20) Letter Agreements dated April 23, 1997 between the Company and Allen & Company Incorporated.
</TABLE>
- ------------------------
* Included in copies mailed to stockholders.
18
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 26, 1999 AUDITS & SURVEYS WORLDWIDE, INC.
By: /s/ SOLOMON DUTKA
-----------------------------------------
Name: Solomon Dutka
Title: Chairman of the Board
19
<PAGE>
ANNEX I
AUDITS AND SURVEYS WORLDWIDE, INC.
650 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10011
------------------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
------------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
------------------------
This Information Statement, which is being mailed on or about January 26,
1999 to the holders of shares of the Common Stock, $.01 par value per share (the
"COMMON STOCK"), of Audits & Surveys Worldwide, Inc., a Delaware corporation
(the "COMPANY"), is being furnished in connection with the designation by United
Information Acquisition Corp. (the "PURCHASER"), of persons (the "PURCHASER
DESIGNEES") to the Board of Directors of the Company (the "BOARD"). Such
designation is to be made pursuant to an Agreement and Plan of Merger dated as
of January 19, 1999 (the "MERGER AGREEMENT") among the Company, the Parent and
United News & Media Group Limited (the "PARENT"). Pursuant to the Merger
Agreement, among other things, the Purchaser is to commence a cash tender offer
no later than January 26, 1999 to purchase all of the issued and outstanding
shares of Common Stock (the "SHARES") at $3.24 per share, net to the seller in
cash as described in the Purchaser's Offer to Purchase dated January 26, 1999
(the "OFFER TO PURCHASE") and the related Letter of Transmittal, which Offer to
Purchaser and related Letter of Transmittal together constitute the "OFFER". The
Offer expires 12:00 midnight, New York City time, on February 25, 1999, unless
extended. The Offer is conditioned upon, among other things, at least a majority
of the outstanding shares of Common Stock on a fully diluted basis (the "MINIMUM
NUMBER OF SHARES") being validly tendered prior to the expiration of the Offer
and not withdrawn. The Merger Agreement also provides for the merger (the
"MERGER") of the Purchaser with and into the Company as soon as practicable
after consummation of the Offer. Following the consummation of the Merger (the
"EFFECTIVE TIME"), the Company will be the surviving corporation (the "SURVIVING
CORPORATION") and a wholly-owned subsidiary of United Information Group, Inc.,
the sole stockholder of the Purchaser. In the Merger, each share of Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares of Common Stock held by the Parent, the Purchaser or any affiliate of the
Parent, or in the treasury of the Company or by any subsidiary of the Company,
all of which will be canceled, and other than shares of Common Stock, if any,
held by stockholders who have perfected rights as objecting stockholders under
Delaware law) will be converted into the right to receive in cash an amount
equal to the highest price paid per share pursuant to the Offer, without
interest (the "MERGER CONSIDERATION").
Promptly upon the purchase by the Purchaser of all Shares subject to the
Inducement Agreement among the Purchaser, Solomon Dutka and Carl Ravitch
pursuant to which Dr. Dutka and Mr. Ravitch have agreed, among other things, to
tender all of their Shares, which equal approximately 48.7% of the outstanding
Shares of the Company, or any Shares pursuant to the Offer, and from time to
time thereafter as Shares are acquired by the Purchaser, the Purchaser shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board as will give the Purchaser, subject to compliance with
Section 14(f) of the Securities Exchange Act of 1934 (the "EXCHANGE ACT"),
representation on the Board equal to at least that number of directors which
equals the product of the total number of directors on the Board (giving effect
to the directors appointed or elected pursuant to this sentence and including
current directors serving as officers of the Company) multiplied by the
percentage obtained by
A-1
<PAGE>
dividing (a) the aggregate number of Shares beneficially owned by the Purchaser
or any affiliate of the Purchaser (including such Shares as are accepted for
payment pursuant to the Offer, but excluding Shares held by the Company) by (b)
the number of Shares outstanding (excluding Shares held by the Company). At such
times, if requested by the Purchaser, the Company will also cause each committee
of the Board to include persons designated by the Purchaser constituting the
same percentage of each such committee as the Purchaser Designees are of the
Board. The Company shall, upon request by the Purchaser, promptly increase the
size of the Board or exercise its best efforts to secure the resignations of
such number of directors as is necessary to enable the Purchaser Designees to be
elected to the Board and shall cause the Purchaser Designees to be so elected;
PROVIDED, HOWEVER, that, in the event that the Purchaser's designees are
appointed or elected to the Board, until the Effective Time the Board shall have
at least one director who is a director on the date of the Merger Agreement and
who is neither an officer of the Company nor a designee, stockholder, affiliate
or associate (within the meaning of the Federal securities laws) of the
Purchaser (one or more of such directors, the "INDEPENDENT DIRECTORS"); PROVIDED
FURTHER, that if no Independent Directors remain, the other directors shall
designate one person to fill one of the vacancies who shall not be either an
officer of the Company or a designee, shareholder, affiliate or associate of the
Purchaser, and such person shall be deemed to be an Independent Director for
purposes of the Merger Agreement.
The Merger Agreement provides that, subject to applicable law, the Company
shall take all actions requested by the Parent necessary to effect any such
election, including mailing to its stockholders this Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder by the Securities and Exchange Commission (the
"COMMISSION").
The Merger Agreement also provides that following the approval of the Merger
Agreement by the stockholders of the Company, any amendment or termination of
the Merger Agreement or waiver of any of the Company's rights thereunder shall
require the concurrence of a majority of the Independent Directors.
The terms of the Merger Agreement, a summary of the events leading up to the
Offer and the execution of the Merger Agreement and other information concerning
the Offer and the Merger are contained in the Offer to Purchase and the
Solicitation/Recommendation Statement on Schedule 14D-9 of the Company (the
"SCHEDULE 14D-9") with respect to the Offer, copies of which are being delivered
to stockholders contemporaneously herewith. Certain other documents (including
the Merger Agreement) were filed with the Commission as exhibits to the Tender
Offer Statement on Schedule 14D-1 (the "SCHEDULE 14D-1") of the Purchaser and as
exhibits to the Schedule 14D-9. The exhibits to Schedule 14D-1 and the Schedule
14D-9 may be examined and copies thereof may be obtained from the Commission
(except that the exhibits thereto cannot be obtained from the regional offices
of the Commission) in the manner set forth in Section 8 of the Offer to
Purchase.
No action is required by the stockholders of the Company in connection with
the election or appointment of the Purchaser Designees to the Board. However,
Section 14(f) of Exchange Act requires the mailing to the Company's stockholders
of the information set forth in this Information Statement prior to a change in
a majority of the Company's directors otherwise than at a meeting of the
Company's stockholders.
The information contained in this Information Statement concerning the
Parent, the Purchaser and the Purchaser Designees has been furnished to the
Company by such persons, and the Company assumes no responsibility for the
accuracy or completeness of such information. The principal executive offices of
the Purchaser and the Parent are located at Two World Trade Center, Suite 5550,
New York, New York 10048.
A-2
<PAGE>
VOTING SECURITIES
GENERAL
As of January 19, 1999 there were issued and outstanding 13,116,136 shares
of Common Stock. Each share of Common Stock outstanding on the Record Date is
entitled to one vote. There are no other classes of voting securities.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of January 19, 1999, information with
respect to the beneficial ownership of the Company's Common Stock by each person
who is known by the Company to beneficially own more than 5% of the outstanding
shares of Common Stock.
<TABLE>
<CAPTION>
APPROXIMATE
AMOUNT AND NATURE PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OF
OF BENEFICIAL OWNER OWNERSHIP (1) CLASS
- -------------------------------------------------------------- ------------------------------------ ------------
<S> <C> <C>
Solomon Dutka................................................. 5,192,418(2) 39.44%
2600 Netherland Avenue
Riverdale, New York 10463
Carl Ravitch.................................................. 1,548,713 11.79%
2602 Woodsview Drive
Bensalem, Pennsylvania 19020
Marilyn Roshwalb.............................................. 707,364(3) 5.39%
9 Sycamore Drive
Great Neck, New York 11024
H. Arthur Bellows, Jr......................................... 680,570(4) 5.17%
<CAPTION>
15 Upper Cross Road
Greenwich, Connecticut 06831
</TABLE>
- ------------------------
(1) Unless otherwise indicated, each person has sole voting and investment power
with respect to such shares. For purposes of this table, a person is deemed
to have "beneficial ownership" of any shares which such person has the right
to acquire within 60 days of January 19, 1999. For purposes of computing the
percent of outstanding shares held by each person named above as of a given
date, any shares which such person has the right to so acquire are deemed to
be outstanding, but are not deemed to be outstanding for purpose of
computing the percentage owned by any other person. Includes options to
purchase the Company's common stock which are currently exercisable as
follows: Messrs. Dutka 50,000; Ravitch 20,000 and Bellows 36,667.
(2) Includes an aggregate of 281,513 shares of Common Stock held in a trust for
the benefit of Dr. Dutka's wife, as to which shares Dr. Dutka disclaims
beneficial ownership.
(3) Includes an aggregate of 400,000 shares held by the Irving Roshwalb Trust of
which Marilyn Roshwalb is a trustee and sole beneficiary.
(4) Includes 76,200 shares owned by Mr. Bellows' wife and children, as to which
shares Mr. Bellows disclaims beneficial ownership.
A-3
<PAGE>
The following table sets forth information as at January 19, 1999, with
respect to the holdings of Common Stock of the Company of each Named Executive
Officer (as defined on page A-7) and all executive officers and directors of the
Company as a group:
<TABLE>
<CAPTION>
APPROXIMATE
AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF
NAME OWNERSHIP (1) CLASS
- ------------------------------------------------------------------------------- ------------------ ------------
<S> <C> <C>
Solomon Dutka.................................................................. 5,192,418(2) 39.44%
Carl Ravitch................................................................... 1,548,713 11.79%
H. Arthur Bellows, Jr.......................................................... 680,570(3) 5.17%
Joel S. Klein.................................................................. 203,537 1.55%
Alan J. Ritter................................................................. 18,927(4) *
All directors and executive officers as a group (12 persons)................... 7,746,542(5) 57.98%
</TABLE>
- ------------------------
* Less than 1%.
(1) Unless otherwise indicated, each person or group has sole voting and
investment power with respect to such shares. For purposes of this table, a
person or group of persons is deemed to have "beneficial ownership" of any
shares which such person or group has the right to acquire within 60 days of
January 19, 1999. For purposes of computing the percent of outstanding
shares held by each person or group named above as of a given date, any
shares which such person or group has the right to so acquire are deemed to
be outstanding, but are not deemed to be outstanding for purpose of
computing the percentage owned by any other person or group. Includes
options to purchase the Company's common stock which are currently
exercisable as follows: Messrs. Dutka 50,000; Ravitch 20,000; Bellows
36,667; Klein 41,667 and Ritter 11,667; all directors and executive officers
as a group 245,002.
(2) Includes an aggregate of 281,513 shares of Common Stock held in a trust for
the benefit of Dr. Dutka's wife, as to which shares Dr. Dutka disclaims
beneficial ownership.
(3) Includes 76,200 shares owned by Mr. Bellows, wife and children, as to which
shares Mr. Bellows disclaims beneficial ownership.
(4) Includes 7,260 shares owned by Mr. Ritter's children, as to which shares Mr.
Ritter disclaims beneficial ownership.
(5) Includes 367,629 shares owned by wives, children and trusts for their
benefit of officers or directors of the Company, as to which shares such
officers and directors disclaim beneficial ownership.
A-4
<PAGE>
DIRECTORS
THE PURCHASER DESIGNEES
As of the date of this Information Statement, the Parent has not determined
who it will designate as directors of the Company. However, the Purchaser
Designees shall be selected from the executive officers and directors of Group,
Inc. or the Purchaser. Certain information regarding such persons is contained
in Schedule I annexed hereto. None of such persons is a director of, or holds
any position with, the Company or owns any Common Stock.
CONTINUING DIRECTORS
The Company anticipates that Dr. Dutka will be the only director of the
Company who will be continuing after the Effective Time.
<TABLE>
<CAPTION>
HAS SHARES
SERVED BENEFICIALLY
PRINCIPAL OCCUPATION AND AS A OWNED APPROXIMATE
OTHER DIRECTORSHIPS WITH DIRECTOR TERM JANUARY 19, PERCENT OF
NAME PUBLIC COMPANIES AGE SINCE EXPIRES IN 1999 CLASS
- -------------------------------- ------------------------ --- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Solomon Dutka................... Chairman and Chief 75 1995 4/00 5,192,418 39.44%
Executive Officer of the
Company
</TABLE>
CERTAIN INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During the year ended December 31, 1998, the Board held four meetings.
During 1998, each director attended at least 75% of the total number of meetings
of the Board and each Committee on which he served, except Joseph Plummer and
Brian G. Dyson.
The Board has established certain Committees to assist it in the discharge
of its responsibilities. The following table identifies the current members of
the committees.
<TABLE>
<CAPTION>
COMPENSATION
AND STOCK
EXECUTIVE AUDIT OPTION NOMINATING
COMMITTEE COMMITTEE COMMITTEE COMMITTEE
------------- ------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Solomon Dutka................................................ X X
H. Arthur Bellows, Jr........................................ X X
Carl Ravitch................................................. X
Charles E. Bradley........................................... X X
Brian G. Dyson............................................... X X
Matthew Goldstein............................................ X X X
Robert C. Miller............................................. X
William Newman............................................... X X X
William A. Zebedee........................................... X
</TABLE>
The Executive Committee exercises the power of the Board during intervals
between Board meetings and acts as an advisory body to the Board by reviewing
various matters prior to their submission to the Board. The Executive Committee
did not hold any formal meetings during 1998, however, its members met
informally from time to time.
The Audit Committee recommends engagement of the independent auditors,
reviews the arrangement and scope of the audit and reviews internal accounting
procedures and controls with the independent
A-5
<PAGE>
auditors and the Company's financial and accounting staff. The Audit Committee
held two meetings during 1998; in addition, its members met informally from time
to time.
The Compensation and Stock Option Committee (the "COMPENSATION COMMITTEE")
reviews and makes recommendations regarding salaries, compensation and benefits
to be paid to officers and key employees of the Company as well as reviewing and
making recommendations regarding the benefit programs of the Company as a whole.
In addition, the Compensation Committee reviews and makes recommendations
regarding stock options to be granted to employees, directors and consultants.
The Compensation Committee did not hold any formal meetings during 1998,
however, its members met informally from time to time.
The Nominating Committee considers and nominates persons for election to the
Board. The Nominating Committee did not hold any formal meetings during 1998,
however, its members met informally from time to time.
SECTION 16(A) REPORTING
Based solely on a review of the copies of the reports furnished to the
Company, or written representations that no reports were required, the Company
believes that all reports required to be filed by officers and directors with
respect to the Company's fiscal year ended December 31, 1997 were timely made,
except that Messrs. Sol Young (then a director) and William A. Zebedee each
failed to timely file an Annual Statement of Beneficial Ownership of Securities
on Form 5 with regard to one transaction, a stock option grant. Such late
reports have been filed.
A-6
<PAGE>
COMPENSATION AND RELATED MATTERS
SUMMARY OF CASH AND CERTAIN OTHER INFORMATION
The following table sets forth information concerning annual and long-term
compensation, paid or accrued, for the Chief Executive Officer and the four
other most highly compensated executive officers of the Company (the "NAMED
EXECUTIVE OFFICERS") for services in all capacities to the Company and its
subsidiaries and their respective predecessors during the three fiscal years
ended December 31, 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION (1) -------------
------------------------------------------------ NUMBER OF
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (2) OPTIONS (3)(4)(5)(6)
- -------------------------------------------- --------- ---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Solomon Dutka............................... 1997 $ 386,346 -- 150,000 -- -- $ 10,535
Chairman of the Board of Directors and 1996 $ 350,000 $ -- 50,000 $ 3,391
Chief Executive Officer 1995 $ 350,000 -- -- -- $ 2,861
H. Arthur Bellows, Jr....................... 1997 $ 336,646 -- 120,000 -- 45,187 50,000 $ 23,204
President--Chief Operating Officer 1996 $ 300,000 $ -- 20,000 $ 3,254
1995 $ 301,250 -- $ -- $ 545,000
Carl Ravitch................................ 1997 $ 286,346 -- 100,000 -- -- $ 4,426
Executive Vice President--Marketing 1996 $ 250,000 $ -- 20,000 $ 3,358
1995 $ 250,000 -- -- -- $ 2,834
Joel S. Klein............................... 1997 $ 225,000 -- 75,000 -- 50,000 $ 4,426
Executive Vice President-- Operations and 1996 $ 203,846 $ -- 25,000 $ 3,373
Secretary 1995 $ 125,000 -- -- -- $ 2,845
Alan J. Ritter.............................. 1997 $ 151,539 -- 40,000 -- 4,711 5,000 $ 4,285
Senior Vice President, Treasurer and Chief 1996 $ 120,000 $ -- 10,000 $ 3,253
Financial Officer 1995 $ 111,333 -- $ -- --
</TABLE>
- ------------------------
(1) In 1995, 1996 and 1997 none of the Named Executive Officers received
perquisites or other personal benefits in excess of the lesser of $50,000 or
10% of the total of his salary and bonus for that year, as reported in this
table.
(2) The amounts shown include premiums for whole life insurance and medical
reimbursement insurance paid for 1995 on behalf of Messrs. Bellows and
Ritter.
(3) Includes contributions to the Named Executive Officer's account under a
401(k) plan as follows: Dr. Dutka-$2,400 (1997), $750 (1996) and $1,278
(1995); Mr. Bellows-$2,400 (1997) and $750 (1996); Mr. Ravitch-$2,400
(1997), $750 (1996) and $1,271 (1995); Mr. Klein-$2,400 (1997), $750 (1996)
and $1,274 (1995); Mr. Ritter-$2,273 (1997) and $750 (1996).
(4) Includes personal transportation in 1997 for Dr. Dutka of $6,109 and Mr.
Bellows of $18,792.
(5) Includes annual cash remuneration given to all employees in varying amounts
under a year-end holiday point system as follows: Dr. Dutka-$2,026 (1997),
$2,641 (1996) and $1,583 (1995); Mr. Bellows-$2,012 (1997) and $2,504
(1996); Mr. Ravitch-$2,026 (1997), $2,608 (1996) and $1,563 (1995); Mr.
Klein-$2,026 (1997), $2,623 (1996) and $1,571 (1995); Mr. Ritter-$2,012
(1997) and $2,503 (1996).
(6) In 1995 Mr. Bellows received a payment of $545,000 from a predecessor in
connection with the termination of his employment agreement which gave him
the right to receive both a lump sump payment of $915,000 and certain
insurance coverage estimated to aggregate an additional $75,000 in payments.
A-7
<PAGE>
STOCK OPTIONS
The following table sets forth information as to all grants of options to
the Named Executive Officers during 1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1997(1) POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------- ANNUAL RATES OF STOCK
NUMBER OF % OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS FOR
UNDERLYING GRANTED TO OPTION TERM(2)
OPTIONS EMPLOYEES EXERCISE EXPIRATION ---------------------
NAME GRANTED(3) IN 1997 PRICE DATE AT 5% AT 10%
- ----------------------------------------- ----------- ----------- ----------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Solomon Dutka............................ -- -- -- -- -- --
H. Arthur Bellows, Jr.................... 50,000 14.90% $ 2.75 11/19/2007 $ 86,500 $ 219,000
Carl Ravitch............................. -- -- -- -- -- --
Joel S. Klein............................ 50,000 14.90% $ 2.75 11/19/2007 $ 86,500 $ 219,000
Alan J. Ritter........................... 5,000 1.49% $ 2.75 11/19/2007 $ 8,650 $ 21,900
</TABLE>
- ------------------------
(1) The Company did not grant any stock appreciation rights during 1997.
(2) The dollar amounts set forth under these columns are the result of
calculations at the 5% and 10% rates established by the Commission and are
not intended to forecast future appreciation of the Company's stock price.
The Company did not use an alternative formula for a grant date valuation as
it is unaware of any formula which would determine with reasonable accuracy
a present value based upon future unknown factors. In order to realize the
potential values set forth under the columns headed "At 5%" and "At 10%",
the price per share of the Company's Common Stock at the end of the ten year
option term would be $4.48 and $7.13, respectively.
(3) The option was awarded at the fair market value of the Company's Common
Stock at November 20, 1997, the date of the award, and becomes exercisable
in cumulative annual installments of 33 1/3% per year on each of the first
three anniversaries of the grant date. The option is exercisable over a ten
year period.
A-8
<PAGE>
The following table sets forth information with respect to the exercise of
stock options by the Named Executive Officers during 1997 and unexercised
options held by them on December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997
AND DECEMBER 31, 1997 OPTION VALUES (1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED DECEMBER 31, 1997 AT DECEMBER 31, 1997(2)
ON VALUE -------------------------- --------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Solomon Dutka................................. -- -- 16,667 33,333 $ 12,500 $ 25,000
H. Arthur Bellows, Jr......................... -- -- 6,667 63,333 $ 5,000 $ 10,000
Carl Ravitch.................................. -- -- 6,667 13,333 $ 5,000 $ 10,000
Joel S. Klein................................. -- -- 8,333 66,667 $ 6,250 $ 12,500
Alan J. Ritter................................ -- -- 3,333 11,667 $ 2,500 $ 5,000
</TABLE>
- ------------------------
(1) There were no stock appreciation right exercises during 1997 and no such
rights were outstanding at December 31, 1997.
(2) The closing price of the Company's Common Stock as reported on the American
Stock Exchange on December 31, 1997 was $2.75 per share. Value is calculated
by multiplying (a) the difference between the closing price and the option
price by (b) the number of shares of Common Stock underlying the option.
RETIREMENT AND OTHER BENEFIT PLANS
Until December 31, 1996 the Company maintained a retirement plan covering
only the former employees of The Triangle Corporation (the "TRIANGLE PLAN").
Messrs. Bellows and Ritter were participants in the Triangle Plan. Effective
January 1, 1997, the Triangle Plan was amended to, among other things, (i)
change the name of the plan to the Audits & Surveys Worldwide, Inc. Account
Balance Retirement Plan, (ii) include all employees of the Company completing
one year of service and (iii) establish participant accounts which shall be
credited each year with an amount equal to one and one half percent of the
participant's plan compensation (as defined) and interest on the account balance
at the rate applicable to 30 year U.S. Treasury securities.
As of December 31, 1997, accounts for each of Dr. Dutka and Messrs. Ravitch
and Klein had been credited with an initial contribution of $2,400 (1 1/2% of
$160,000, the maximum allowable compensation). Accounts were established as of
January 1, 1997 for Mr. Bellows of $483,791 and Mr. Ritter of $127,140 based on
the lump-sum present value of the calculated benefits due to each of them
pursuant to the Triangle Plan. Mr. Bellows' and Mr. Ritter's account balances as
of December 31, 1997 were $520,202 and $138,351, respectively.
DIRECTOR COMPENSATION
Each director who is not an employee of the Company receives an annual
retainer of $12,000 plus $1,000 for each Board meeting attended, $1,000 for each
committee meeting attended and $400 for each telephonic meeting attended. All
directors are reimbursed for out-of-pocket expenses incurred in connection with
attendance at meetings or other Company business.
A-9
<PAGE>
EMPLOYMENT CONTRACTS, TERMINATION, SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS
The Company has entered into employment agreements with each of its Named
Executive Officers. The employment agreement with Dr. Dutka, as amended on March
25, 1997, provides that he will be employed through March 24, 2002 at a salary
of $400,000 per annum. At any time after March 1998, Dr. Dutka may elect to
terminate his status as a full-time employee and become a consultant to the
Company for the balance of the term of his employment agreement. In such event,
Dr. Dutka would receive a consulting fee for his services in an amount equal to
$200,000 per annum.
The Company's employment agreements with Messrs. Bellows and Ravitch, as
amended on March 25, 1997 and June 30, 1997, provide that they will be employed
through March 24, 2002 at annual salaries of $350,000 and $300,000,
respectively. Mr. Klein's employment agreement with the Company provides for his
employment through March 31, 2002 at a salary of $225,000 per annum. Mr.
Ritter's employment agreement with the Company, as amended on June 30, 1997,
provides for his employment through September 2002 at a salary of $160,000 per
annum.
The Company has entered into a new agreement with Mr. Bellows and amendments
to the employment agreements with Messrs Dutka, Ravitch, Klein and Ritter as
described in "Employment Agreements and Amendments" in Item 3 of the Schedule
14D-9.
TRANSACTIONS WITH RELATED PARTIES
Allen & Company Incorporated provided certain financial advisory services to
the Company in 1997 and was paid a fee of $100,000 for such services. Robert C.
Miller, a director of the Company, is a Vice President and Director of Allen &
Company Incorporated. See Item 5 of Schedule 14D-9 for additional information as
to services performed by Allen & Company Incorporated in connection with the
Merger and the fee to be paid to it therefor.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE FILINGS,
INCLUDING THIS INFORMATION STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING REPORT
AND THE PERFORMANCE GRAPH ON PAGE A-12 SHALL NOT BE INCORPORATED BY REFERENCE IN
ANY SUCH FILINGS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee makes all decisions relating to the compensation
and granting of stock options for the executive officers of the Company. It is
the philosophy of the Compensation Committee that compensation of executive
officers should be closely aligned with the financial performance of the
Company. This is particularly true since each of the Named Executive Officers
has an employment agreement with the Company. Accordingly, benefits are provided
through stock option incentives and bonuses which are generally consistent with
the goal of coordinating the rewards to management with a maximization of
stockholder return. In reviewing Company performance, consideration is given to
the Company's earnings. Also taken into account are external economic factors
that affect results of operations. An attempt is also made to maintain
compensation within the range of that afforded like executive officers at
companies whose size and business is comparable to that of the Company. In order
to provide incentives to executive officers of the Company, from time to time in
1997 the Committee granted options to purchase 105,000 shares of stock to
executive officers. Based on the Company's 1997 operating performance, financial
results and condition, no bonuses were granted to the executive officers by the
Compensation Committee.
A-10
<PAGE>
CEO COMPENSATION
In the case of the Chief Executive Officer, the Compensation Committee
evaluates the Company's mid and long range strategic planning and its
implementation as well as the considerations impacting the compensation of
executive officers generally which are described above. Based on the Company's
1997 operating performance, financial results and condition, no stock options or
bonus were granted to Dr. Dutka by the Compensation Committee.
The foregoing report is approved by all members of the Compensation
Committee.
Compensation Committee
Charles E. Bradley
Brian G. Dyson
Matthew Goldstein
William Newman
A-11
<PAGE>
PERFORMANCE GRAPH
Set forth below is a graph comparing the yearly change in the cumulative
stockholder return on the Company's Common Stock, the Amex Market Value Index, a
peer group selected by the Company and the NASDAQ 100 Index. The graph assumes
$100 invested on December 31, 1992 in the Common Stock of The Triangle
Corporation (as the Company was then known) and in each of the indices and that
all dividends on stocks included in the two indices and in the stock of the peer
group were reinvested. The peer group consists of the Company and five other
companies in the market research industry: Market Facts, Inc., M/A/R/C, Inc.,
NFO Research, Inc., Opinion Research Corporation and Total Research Corporation
during the period that their stock was publicly traded. The returns of each
component company in the peer group have been weighted based on such company's
relative market capitalization. The stockholder return shown on the graph below
is not necessarily indicative of future performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURNS
<S> <C> <C> <C> <C>
Audits & Surveys Worldwide Inc. Peer Group Amex Market Value Nasdaq 100 Index
12/31/92 $100 $100 $100 $100
12/31/93 $41 $118 $120 $120
12/31/94 $179 $137 $109 $132
12/31/95 $90 $211 $137 $199
12/31/96 $168 $290 $146 $293
12/31/97 $154 $416 $171 $361
</TABLE>
COMPARISON OF CUMULATIVE TOTAL SHAREHOLDER RETURNS
<TABLE>
<CAPTION>
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Audits & Surveys Worldwide, Inc................................ $ 100 $ 41 $ 179 $ 90 $ 168
Peer Group..................................................... $ 100 $ 118 $ 137 $ 211 $ 290
Amex Market Value Index........................................ $ 100 $ 120 $ 109 $ 137 $ 146
NASDAQ 100 Index............................................... $ 100 $ 120 $ 132 $ 199 $ 293
<CAPTION>
12/31/97
-----------
<S> <C>
Audits & Surveys Worldwide, Inc................................ $ 154
Peer Group..................................................... $ 416
Amex Market Value Index........................................ $ 171
NASDAQ 100 Index............................................... $ 361
</TABLE>
A-12
<PAGE>
SCHEDULE I
UNITED INFORMATION ACQUISITION CORP.
JANUARY 26, 1999
SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS OF GROUP, INC.
1. DIRECTORS AND EXECUTIVE OFFICERS OF GROUP, INC. The following table
sets forth the name, current business address, citizenship and present principal
occupation or employment and material occupations and positions, offices or
employments and business addresses thereof for the past five years, of each
member of the Board of Directors and each executive officer Group, Inc. Unless
otherwise indicated, each such person (i) has held his principal occupation for
the past five years, (ii) has as his or its current business address, Ludgate
House, 245 Blackfriars Road, London SE1 9UY, England, and (iii) has not been
convicted in a criminal proceeding and has not been party to a proceeding
related to U.S. state and federal securities laws.
<TABLE>
<CAPTION>
CITIZENSHIP OR PRESENT PRINCIPAL OCCUPATION
PLACE OF OR EMPLOYMENT POSITION AND
NAME AND BUSINESS ADDRESS INCORPORATION FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------- -------------------- --------------------------------------------
<S> <C> <C>
James Rose................................... United States Chief Executive Officer, United Information
Group Limited, since July 1998. Chief
Executive Officer, Blackwell Information
Services division of B.H. Blackwell Ltd.,
December 1996 - July 1998. Managing
Director, A.C. Nielsen, Inc., 1990 -
December 1996.
Charles R. Stern............................. British Finance Director, United News & Media plc,
since 1992.
David C. Bender.............................. United States President and Chief Operating Officer,
Mediamark Research, Inc. Mediamark Research Inc., since 1990.
708 Third Avenue
8th Floor
New York, NY 10017
Richard M. Block............................. United States Executive Vice President and Chief Financial
2 World Trade Center Officer, United News & Media, since April
Suite 5550 1996. Vice President - Director of Taxation,
New York, NY 10048 MAI North America, Inc., 1985 - April 1996.
Anne W. Gurnsey.............................. United States Corporate Counsel and Secretary, United News
2 World Trade Center & Media, since April 1996. Corporate
Suite 5550 Secretary, MAI North America, Inc., 1990 -
New York, NY 10048 April 1996.
</TABLE>
S-1
<PAGE>
Exhibit 99(a)(1)
[LETTERHEAD OF ALLEN & COMPANY]
January 14, 1999
The Board of Directors
Audits & Surveys Worldwide, Inc.
The Audits & Surveys Building
650 Avenue of the Americas
New York, NY 10011
Members of the Board of Directors:
You have requested our opinion, as of this date, as to the fairness, from
a financial point of view, to the holders of the outstanding shares of Common
Stock, par value $.01 per share (the "Common Stock"), of Audits & Surveys
Worldwide, Inc., a Delaware corporation ("Analyze"), of the terms of the Merger
Transaction referred to hereinafter.
Pursuant to the proposed Agreement and Plan of Merger (the "Merger
Agreement"), to be entered into by and among Analyze, Unifier Investments
Limited, an English limited company ("Unifier"), and Unifier Acquisition Corp.,
a Delaware corporation ("Acquisition"), Analyze will enter into a business
combination transaction pursuant to which Acquisition will be merged with and
into Analyze, with Analyze surviving the merger (the "Merger Transaction").
Pursuant to the Merger Transaction, Unifier or Acquisition (which is an indirect
wholly-owned subsidiary of Unifier) will make a cash tender offer to acquire all
outstanding shares of Common Stock of Analyze for $3.24 per share, or such
higher price as more fully set forth in the Merger Agreement. Unless otherwise
specifically defined herein, all capitalized terms used herein shall have the
meanings ascribed to such terms in the Merger Agreement.
We understand that all approvals required for the consummation of the
Merger Transaction have been or, prior to consummation of the Merger
Transaction, will be obtained. As you know, Allen & Company Incorporated
("Allen") has from time to time provided various investment banking and
financial advisory services to Analyze and has acted as its financial advisor in
connection with the Merger Transaction and will receive a fee for its services
to Analyze pursuant to the letter agreement dated April 23, 1997. In addition,
as you know, Mr. Robert C. Miller, a Vice President and Director of Allen, is
also a director and stockholder of Analyze. From time to time in the ordinary
course of its business as a broker-dealer, Allen may hold positions and trade in
securities of Analyze.
<PAGE>
The Board of Directors
Audits & Surveys Worldwide, Inc.
January 14, 1999
Page 2
In arriving at our opinion, we have among other things:
(i) reviewed the terms and conditions of the Merger Transaction,
including the draft Merger Agreement and the draft agreements
ancillary thereto (none of which prior to the delivery of this
opinion has been executed by the parties);
(ii) analyzed publicly available historical business and financial
information relating to Analyze, as presented in documents filed
with the Securities and Exchange Commission;
(iii) reviewed a draft of the preliminary tender offer statement on
Schedule 14D-1 to be filed with the Securities and Exchange
Commission;
(iv) reviewed certain financial forecasts and other data provided to us
by Analyze relating to its business;
(v) conducted discussions with certain members of the senior management
of Analyze with respect to the financial condition, business
operations, strategic objectives and prospects of Analyze, as well
as trends prevailing in Analyze's business;
(vi) reviewed and analyzed public information, including certain stock
market data and financial information relating to selected public
companies in lines of business which we believe to be comparable to
Analyze's;
(vii) reviewed trends in the marketing research industry;
(viii) reviewed the trading history of Analyze's Common Stock, including
its performance in comparison to market indices and to selected
companies in comparable businesses, and the market reaction to
selected public announcements regarding Analyze;
(ix) reviewed public financial and transaction information relating to
merger and acquisition transactions we deemed to be comparable to
the Merger Transaction; and
(x) conducted such other financial analyses and investigations as we
deemed necessary or appropriate for the purposes of the opinion
expressed herein.
<PAGE>
The Board of Directors
Audits & Surveys Worldwide, Inc.
January 14, 1999
Page 3
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information respecting Analyze and any
other information provided to us, and we have not assumed any responsibility for
any independent verification of such information or any independent valuation or
appraisal of any of the assets of Analyze. With respect to the financial
forecasts referred to above, we have assumed that they have been reasonably
prepared on a basis reflecting the best currently available information and the
good faith estimates and judgments of the management of Analyze as to the future
financial performance of Analyze.
In addition to our review and analysis of the specific information set
forth above, our opinion herein reflects and gives effect to our assessment of
general economic, monetary and market conditions existing as of the date hereof
as they may affect the business and prospects of Analyze.
Our engagement and the opinion expressed herein are solely for the benefit
of the Board of Directors of Analyze in its evaluation of the Merger Transaction
and may not be used for any other purpose without our prior written consent,
except that this opinion may be included in its entirety and referred to in any
filing made by Analyze with the Securities and Exchange Commission with respect
to the Merger Transaction. Furthermore, the opinion rendered herein does not
constitute a recommendation that Analyze pursue the Merger Transaction over any
other alternative transactions which may be available to Analyze or that any
stockholder of Analyze vote to approve the Merger Transaction.
Based on and subject to the foregoing, we are of the opinion that, as of
this date, the terms of the Merger Transaction are fair, from a financial
point of view, to the holders of Analyze's Common Stock.
Very truly yours,
ALLEN & COMPANY INCORPORATED
By: /s/ Robert C. Miller
---------------------------
<PAGE>
Exhibit 99(a)(2)
[LETTERHEAD OF AUDITS & SURVEYS WORLDWIDE]
For Immediate Release
AUDITS & SURVEYS WORLDWIDE AGREES TO MERGE
NEW YORK, JANUARY 19, 1999 -- Audits & Surveys Worldwide, Inc. (ASE:ASW)
announced today that it had agreed to merge with United Information Group (UIG)
for $3.24 per share, representing a total consideration of $42.5 million. UIG is
a wholly-owned subsidiary of United News & Media Plc, an international media and
information company headquartered in London, England with revenues in excess of
$3.5 billion.
Under the terms of the agreement, a subsidiary of United Information Group will
acquire Audits & Surveys Worldwide through a tender offer to commence no later
than January 26, 1999. Dr. Solomon Dutka, founder, Chairman of the Board and
Chief Executive Officer of Audits & Surveys Worldwide, and Carl Ravitch,
Executive Vice President of Audits & Surveys Worldwide, have entered into an
agreement with United Information Group to sell their Audits & Surveys Worldwide
shares to United Information Acquisition Corp. at the price of $3.24 per share.
Dr. Dutka and Mr. Ravitch hold approximately 49% of the common stock of Audits &
Surveys Worldwide. The transaction is not conditioned on financing. The tender
offer is scheduled to close in February and is subject to required regulatory
reviews. As soon as practicable following the completion of the tender offer and
after any required approvals by shareholders, United Information Group will
cause United Information Acquisition Corp. to merge into Audits & Surveys
Worldwide and all remaining common shares will be converted into the right to
receive $3.24 per share.
Audits & Surveys Worldwide was founded in 1953 by its current Chairman, and CEO,
Dr. Sol Dutka. It has grown to be one of the largest market research companies
in the United States, providing corporate clients with solutions to complex
domestic and international marketing, strategy and policy problems. Its
consumer, retail and business to business services are offered in over 80
countries. Audits & Surveys Worldwide's client list is largely composed of
household names such as Coca-Cola, IBM, Visa and Volvo.
UIG, through its UK subsidiary NOP, is one of the world's leading providers of
custom research and one of the largest market research and information companies
in the UK. In the US, Mediamark Research Inc. (MRI) is the leading syndicated
magazine readership agency, offering its rich database to media owners,
advertising agencies and advertisers through traditional and electronic
publishing. Market Measures, Inc. serves the healthcare industry with a range of
research and information products. The group also includes Bruskin/Goldring
Research, MIL Motoring Research, and companies serving a variety of markets in
North America and Europe.
<PAGE>
[Graphic Omitted]
- Page 2 -
The acquisition will make United Information Group one of the world's top 5
custom research organizations with about $240 million dollars of revenues. It
also doubles UIG's volume in the US. The United States is the world's largest
market for market research services, and, with annual growth rates of about 10
per cent, one of the fastest growing. The move will greatly enhance NOP's
ability to sell US market research to its established blue-chip clients while
allowing Audits & Surveys Worldwide to increase substantially the international
products and services offered to its own US customers. The acquisition will also
produce significant integration benefits from sharing new technologies which
both have pioneered, restructuring and by eliminating the costs associated with
a publicly traded company.
Dr. Sol Dutka will continue as Chairman of the Audits & Surveys Worldwide Board
of Directors. Lou Bender, President and COO of MRI, will become President and
CEO of Audits & Surveys Worldwide in addition to his present role. H. Arthur
Bellows, Jr., current President of Audits & Surveys Worldwide, will serve as a
consultant to Audits & Surveys Worldwide upon completion of the transaction.
Dr. Sol Dutka, Chairman and CEO of Audits & Surveys Worldwide, said:
"The combination of Audits & Surveys Worldwide and United Information Group will
bring together two highly respected market research companies, each with an
impressive list of blue-chip clients who can now be serviced even more
effectively on a global basis."
Jim Rose, CEO of United Information Group, said:
"This move will significantly increase United Information Group's presence in
the US market and enhance Audits & Surveys Worldwide's capabilities of providing
international services to its existing national and multinational clients. We
are also delighted to benefit from the knowledge and experience of one of the
long-time leaders of the research industry, Sol Dutka, and other managers who
have helped build Audits & Surveys' business."
Charles Gregson, Executive Director of United News & Media, said:
"This acquisition is an important step towards United News & Media's goal of
creating a leading world-wide market information group."
Audits & Surveys Worldwide is a full-service marketing research firm offering
commercial, industrial, technological, financial, legal, institutional,
governmental and academic clients a wide variety of syndicated and custom
services designed to provide solutions to complex marketing, strategy and policy
problems. Services are offered in more than 80 countries.
<PAGE>
[LOGO]
[LOGO]
January 29, 1999
Dear Stockholder:
Your Board of Directors is pleased to inform you that on January 19, 1999
Audits & Surveys Worldwide, Inc. ("ASW") entered into an Agreement and Plan of
Merger (the "Merger Agreement") among ASW, United News & Media Group Limited,
and United Information Acquisition Corp. ("Purchaser"), providing for the merger
of Purchaser and ASW. As required by the Merger Agreement, Purchaser has
commenced today a tender offer (the "Offer") to purchase all outstanding shares
of ASW Common Stock at a price of $3.24 per share in cash. Following the
completion of the Offer, upon the terms and subject to the conditions of the
Merger Agreement, Purchaser will merge with ASW (the "Merger") and each of the
ASW shares (other than shares owned by ASW, certain affiliates of ASW or
Purchaser or by objecting stockholders) will be converted into the right to
receive in cash the highest price per share paid pursuant to the Offer. As a
result of the Merger, the surviving corporation will be wholly-owned by United
Information Group, Inc., the sole stockholder of Purchaser.
Your Board of Directors has determined that the Offer and the Merger are
fair to and in the best interests of the stockholders of ASW and recommends that
stockholders accept the Offer and tender all of their ASW shares pursuant to the
Offer.
In arriving at its decision, your Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9,
which has been filed with the Securities and Exchange Commission. Among other
things, your Board considered the opinion of its financial advisor, Allen &
Company Incorporated, dated January 14, 1999, that, as of such date, the
consideration to be received pursuant to the Offer and the related Merger is
fair, from a financial point of view, to the stockholders of ASW. The attached
Schedule 14D-9 describes the Board's decision and contains other important
information relating to that decision. We urge you to read it carefully.
Carl Ravitch and I have agreed with the Purchaser to tender the shares we
own (about 48.7% of all outstanding shares) pursuant to the Offer.
Accompanying this letter, in addition to the Schedule 14D-9, are the Offer
to Purchase and related materials, including a Letter of Transmittal for use in
tendering shares. These documents set forth the terms and conditions of the
Offer and provide instructions as to how you can tender your shares. I urge you
to read the enclosed materials carefully and consider all the factors set forth
therein before making your decision with respect to the Offer.
I personally, along with the entire Board of Directors, management and
employees of ASW, thank you most sincerely for your loyal support throughout the
years.
Sincerely yours,
[LOGO]
Solomon Dutka, Ph.D.
Chairman of the Board
[LOGO]
<PAGE>
Exhibit 99.(c)(1)
AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 19, 1999
AMONG
UNITED NEWS & MEDIA GROUP LIMITED
UNITED INFORMATION ACQUISITION CORP.
AND
AUDITS & SURVEYS WORLDWIDE, INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I THE TENDER OFFER.......................................................................................2
Section 1.1 The Offer..............................................................................2
Section 1.2 Company Action.........................................................................3
Section 1.3 Directors..............................................................................4
ARTICLE II PRINCIPAL TERMS OF MERGER.............................................................................5
Section 2.1 Surviving Corporation..................................................................5
Section 2.2 Certificate of Merger. ...............................................................5
Section 2.3 Effective Time.........................................................................5
Section 2.4 Certificate of Incorporation...........................................................6
Section 2.5 By-Laws................................................................................6
Section 2.6 Officers and Directors.................................................................6
Section 2.7 Approval of Audits Stockholders........................................................6
ARTICLE III STATUS AND CONVERSION OF SECURITIES..................................................................6
Section 3.1 Status and Conversion of Audits Shares.................................................6
Section 3.2 Audits Stock Options...................................................................7
Section 3.3 Acquisition to Make Cash Available.....................................................7
Section 3.4 Status and Conversion of Acquisition Shares............................................8
Section 3.5 Closing of Transfer Books of Audits....................................................9
Section 3.6 Transfer Taxes.........................................................................9
ARTICLE IV CERTAIN EFFECTS OF MERGER.............................................................................9
Section 4.1 Effect of Merger.......................................................................9
Section 4.2 Further Assurances.....................................................................9
ARTICLE V REPRESENTATIONS AND WARRANTIES........................................................................10
Section 5.1 Representations and Warranties by Audits. ...........................................10
(a) Organization of Audits................................................................10
(b) Authority of Audits...................................................................11
(c) Capitalization........................................................................11
(d) Consents, etc.........................................................................12
(e) Reports and Financial Statements......................................................12
(f) Absence of Certain Changes or Events..................................................13
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(g) Tax Matters...........................................................................14
(h) Title to Properties; Absence of Liens and Encumbrances, etc...........................15
(i) Contracts, etc........................................................................16
(j) Litigation............................................................................16
(k) Patents, Copyrights, Trademarks, etc..................................................16
(l) Employee Benefit Plans................................................................17
(m) Financial Advisors....................................................................19
(n) No Failure to Disclose................................................................19
(o) Insider Interests.....................................................................20
(p) Environmental Laws....................................................................20
(q) Director Action.......................................................................20
Section 5.2 Representations and Warranties by Acquisition and Group Ltd...........................20
(a) Organization of Acquisition and Group Ltd.............................................20
(b) Authority of Acquisition and Group Ltd................................................20
(c) Consents, etc.........................................................................21
(d) Finder's Fee..........................................................................21
(e) Proxy Statement.......................................................................21
ARTICLE VI COVENANTS AND AGREEMENTS.............................................................................22
Section 6.1 Covenants and Agreements of Audits....................................................22
(a) Submission to Stockholders............................................................22
(b) Conduct of Business...................................................................22
(c) Stock Options.........................................................................24
(d) No Other Negotiations.................................................................24
(e) Financial Statements..................................................................25
(f) Takeover Statutes.....................................................................25
Section 6.2 Other Covenants and Agreements........................................................25
(a) Cooperation of Acquisition and Audits.................................................25
(b) Efforts to Consummate Transactions....................................................25
(c) Inducement Agreement..................................................................26
(d) Other Agreements......................................................................26
(e) Covenant of Group Ltd.................................................................26
(f) Antitrust Filings.....................................................................26
(g) Insurance and Indemnification.........................................................26
ARTICLE VII MERGER CONDITIONS.................................................................27
Section 7.1 Mutual Conditions.....................................................................27
(a) Stockholder Approval..................................................................27
(b) Absence of Restraint..................................................................27
(c) Cutoff Date...........................................................................27
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(d) Regulatory Approvals..................................................................27
Section 7.2 Conditions to Obligations of Acquisition..............................................27
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(a) Compliance with Representations, Warranties, Covenants
and Agreements........................................................................27
(b) Dissenting Stockholders...............................................................28
(c) No Material Adverse Change............................................................28
Section 7.3 Conditions to Obligations of Audits...................................................28
(a) Compliance with Representations, Warranties, Covenants
and Agreements........................................................................28
(b) Adequacy of Funds.....................................................................28
ARTICLE VIII TERMINATION........................................................................................29
Section 8.1 Termination...........................................................................29
Section 8.2 Effect of Termination.................................................................29
ARTICLE IX MISCELLANEOUS.......................................................................................30
Section 9.1 Extension of Time; Waivers............................................................30
(a) By Acquisition........................................................................30
(b) By Audits.............................................................................30
Section 9.2 Costs and Expenses....................................................................30
Section 9.3 Amendments............................................................................30
Section 9.4 Assignability.........................................................................31
Section 9.5 Notices...............................................................................31
Section 9.6 Entire Agreement; Law Governing.......................................................32
Section 9.7 Publicity and Disclosures.............................................................32
Section 9.8 Headings..............................................................................32
Section 9.9 Survival..............................................................................33
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
Agreement
Page and Section
Exhibit Description Reference
- ------- ----------- ----------------
<S> <C> <C>
A Inducement Agreement 1 Preamble
B Certificate of Incorporation 6 [ss.2.4]
of Surviving Corporation
C By-Laws of Surviving Corporation 6 [ss.2.5]
D Form of Employment Agreement 26 [ss.6.2(d)]
Amendments
E Joint Press Release 32 [ss.9.7]
</TABLE>
<TABLE>
<CAPTION>
Disclosure Agreement
Schedule Page and Section
Part Description Reference
- ---------- ----------- ----------------
<S> <C> <C>
Part A Qualifications to do Business; 10 [ss.5.1(a)]
Subsidiaries
Part B Violation of Agreements, Etc. 11 [ss.5.1(b)]
Part C Capitalization 11 [ss.5.1(c)]
Part E Undisclosed Liabilities 13 [ss.5.1(e)]
Part F Certain Changes or Events 13 [ss.5.1(f)]
Part G Tax Matters 14 [ss.5.1(g)]
Part H Title Exceptions 16 [ss.5.1(h)]
Part I Contracts 16 [ss.5.1(i)]
Part J Pending and Threatened Litigation 16 [ss.5.1(j)]
Part K Patents, Copyrights,
Trademarks, Etc. 16 [ss.5.1(k)]
Part L Employee Benefit Plans 17 [ss.5.1(l)]
Part O Insider Interests 20 [ss.5.1(o)]
</TABLE>
vii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (herein "this Agreement") dated
as of January 19, 1999 among UNITED NEWS & MEDIA GROUP LIMITED, an English
limited company ("Group Ltd."), UNITED INFORMATION ACQUISITION CORP., a Delaware
corporation ("Acquisition") and AUDITS & SURVEYS WORLDWIDE, INC., a Delaware
corporation ("Audits").
W I T N E S S E T H :
WHEREAS, the parties hereto desire that United Information
Group, Inc., the sole shareholder of Acquisition ("Group Inc."), acquire Audits,
upon the terms and conditions set forth herein and in accordance with the
General Corporation Law of the State of Delaware (the "DGCL");
WHEREAS, in furtherance thereof, it is proposed that
Acquisition will make a cash tender offer (the "Offer") to acquire all
outstanding shares of Common Stock, par value $.01 per share, of Audits
(referred to collectively as the "Audits Shares" and individually as an "Audits
Share"), for $3.24 per Audits Share, or such higher price as may be paid if the
Offer is amended, net to the seller in cash (the "Per Share Amount");
WHEREAS, also in furtherance thereof, it is proposed that,
following the consummation of the Offer, Acquisition will merge with and into
Audits (the "Merger") and that the Audits Shares not tendered and accepted
pursuant to the Offer will thereupon be converted into the right to receive cash
in the amount set forth in Section 3.1 hereof (Acquisition and Audits sometimes
being hereinafter referred to as the "Constituent Corporations" and Audits,
following the effectiveness of the Merger, as the "Surviving Corporation");
WHEREAS, the respective Boards of Directors of Group Ltd.,
Acquisition and Audits have approved this Agreement, the Offer and the Merger;
and
WHEREAS, in order to induce Group Ltd. and Acquisition to
enter into this Agreement, Dr. Solomon Dutka and Carl Ravitch (collectively, the
"Inducement Stockholders") have entered into an Inducement Agreement (the
"Inducement Agreement") with Acquisition, the form of which is attached hereto
as EXHIBIT A pursuant to which, among other things, such stockholders have
granted to Acquisition an option to purchase the Audits Shares beneficially
owned by such stockholders (the "Inducement Shares") for the Per Share Amount,
agreed to tender the Inducement Shares to Acquisition in accordance with the
Offer, and granted Acquisition an irrevocable proxy to vote the Inducement
Shares in favor of the Merger, all on the terms and conditions set forth
therein;
<PAGE>
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants, agreements and conditions contained
herein, and in order to set forth the terms and conditions of the Offer and the
Merger and the mode of carrying the same into effect, the parties hereto agree
as follows:
ARTICLE I
THE TENDER OFFER
SECTION 1.1 THE OFFER. (A) Provided that this Agreement shall
not have been terminated in accordance with Section 8.1 hereof and none of the
events set forth in Annex I hereto shall have occurred and be existing,
Acquisition shall commence (within the meaning of Rule 13d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) the Offer as
promptly as practicable, but in no event later than five business days following
the public announcement of the execution of this Agreement, and shall use all
reasonable efforts to consummate the Offer. The obligation of Acquisition to
accept for payment any Audits Shares tendered shall be subject to the
satisfaction of only those conditions set forth in Annex I. Acquisition
expressly reserves the right to waive any such condition or to increase the Per
Share Amount or, subject to Section 1.1(b), to make other changes in the terms
and conditions of the Offer. The Per Share Amount shall be net to the seller in
cash, subject to reduction only for any applicable Federal back-up withholding
or stock transfer taxes payable by the seller. Audits agrees that no Audits
Shares held by Audits will be tendered pursuant to the Offer.
(B) Without the prior written consent of Audits, Acquisition
shall not (i) decrease the Per Share Amount or change the form of consideration
payable in the Offer, (ii) decrease the number of Audits Shares sought, (iii)
amend or waive satisfaction of the Minimum Condition (as defined in Annex I) or
(iv) impose additional conditions to the Offer or amend any other term of the
Offer in any manner adverse to the holders of Audits Shares; provided, however,
that Acquisition may extend the expiration date (x) in its sole discretion from
time to time, if on the initial scheduled expiration date of the Offer which
shall be twenty (20) business days after the date the Offer is commenced, all
conditions to the Offer shall not have been satisfied or waived; 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 initial expiration date of the Offer (as it may be
extended), the Audits Shares tendered and not withdrawn pursuant to the Offer
equal less than 90% of the outstanding Audits Shares and Acquisition 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 or interpretation of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer. Acquisition shall, on the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, accept for payment and purchase, as soon
as permitted under the terms of the Offer, all Audits Shares validly tendered
and not withdrawn prior to the expiration of the Offer as such expiration may be
extended in accordance with this Section 1.1(b).
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<PAGE>
(C) The Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") having only the conditions set forth in Annex I
hereto. As soon as practicable on the date the Offer is commenced, Acquisition
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (together
with all amendments and supplements thereto, the "Schedule 14D-1") with respect
to the Offer that will comply in all material respects with the provisions of,
and satisfy in all material respects the requirements of, such Schedule 14D-1
and all applicable Federal securities laws, and will contain (including as an
exhibit) or incorporate by reference the Offer to Purchase and forms of the
related letter of transmittal and summary advertisement (which documents,
together with any supplements or amendments thereto, and any other SEC schedule
or form which is filed in connection with the Offer and related transactions,
are referred to collectively herein as the "Offer Documents"). Each of
Acquisition and Audits agrees promptly to correct any information provided by it
for use in the Schedule 14D-1 or the Offer Documents if and to the extent that
such information shall have become false or misleading in any material respect
and to supplement the information provided by it specifically for use in the
Schedule 14D-1 or the Offer Documents to include any information that shall
become necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and Acquisition
further agrees to take all steps necessary to cause the Schedule 14D-1, as so
corrected or supplemented, to be filed with the SEC and the Offer Documents, as
so corrected or supplemented, to be disseminated to holders of Audits Shares, in
each case as and to the extent required by applicable Federal securities laws.
Audits and its counsel shall be given a reasonable opportunity to review and
comment on any Offer Documents before they are filed with the SEC.
SECTION 1.2 COMPANY ACTION. (A) Audits hereby approves of and
consents to the Offer and represents and warrants that its Board of Directors,
at a meeting duly called and held on January 19, 1999, at which a majority of
the Directors were present, duly approved and adopted this Agreement and the
transactions contemplated hereby, including the Offer and the Merger,
recommended that the stockholders of Audits accept the Offer, tender their
Audits Shares pursuant to the Offer and approve this Agreement and the
transactions contemplated hereby, including the Merger, and determined that this
Agreement and the transactions contemplated hereby, including the Offer and the
Merger, are fair to and in the best interests of the stockholders of Audits.
(B) Audits shall file with the SEC, as promptly as practicable
after the filing by Acquisition of the Schedule 14D-1 with respect to the Offer,
a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, the "Schedule 14D-9") that will
comply in all material respects with the provisions of all applicable Federal
securities laws. Audits shall mail such Schedule 14D-9 to the stockholders of
Audits along with the Offer Documents promptly after the commencement of the
Offer. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors described in Section 1.2(a) hereof.
Audits agrees promptly to correct the Schedule 14D-9 if and to the extent that
it shall become false or misleading in any material respect (and Acquisition,
with respect to written information supplied by it specifically for use
in the Schedule 14D-9, shall promptly notify Audits of any required corrections
of such information and
3
<PAGE>
cooperate with Audits with respect to correcting such information) and to
supplement the information contained in the Schedule 14D-9 to include any
information that shall become necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
Audits shall take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to Audits's stockholders to
the extent required by applicable Federal securities laws. Acquisition and its
counsel shall be given a reasonable opportunity to review and comment on the
Schedule 14D-9 before it is filed with the SEC.
(C) In connection with the Offer, Audits shall promptly upon
execution of this Agreement furnish Acquisition with mailing labels containing
the names and addresses of all record holders of Audits Shares and security
position listings of Audits Shares held in stock depositories, each as of a
recent date, and shall promptly furnish Acquisition with such additional
information, including updated lists of stockholders, mailing labels and
security position listings, and such other information and assistance as
Acquisition or its agents may reasonably request for the purpose of
communicating the Offer to the record and beneficial holders of Audits Shares.
SECTION 1.3 DIRECTORS. (A) Promptly upon the purchase by
Acquisition of all of the Inducement Shares pursuant to the Inducement Agreement
or Audits Shares pursuant to the Offer, and from time to time thereafter as
Audits Shares are acquired by Acquisition, Acquisition shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors as will give Acquisition, 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 appointed or
elected pursuant to this sentence and including current directors serving as
officers of Audits) multiplied by the percentage obtained by dividing (i) the
aggregate number of Audits Shares beneficially owned by Acquisition or any
affiliate of Acquisition (including for purposes of this Section 1.3 such Audits
Shares as are accepted for payment pursuant to the Offer, but excluding Audits
Shares held by Audits) by (ii) the number of Audits Shares outstanding
(excluding Audits Shares held by Audits). At such times, if requested by
Acquisition, Audits will also cause each committee of the Board of Directors to
include persons designated by Acquisition constituting the same percentage of
each such committee as Acquisition's designees are of the Board of Directors.
Audits shall, upon request by Acquisition, promptly increase the size of the
Board of Directors or exercise its best efforts to secure the resignations of
such number of directors as is necessary to enable Acquisition designees to be
elected to the Board of Directors in accordance with the terms of this Section
1.3 and shall cause Acquisition's designees to be so elected; provided, however,
that, in the event that Acquisition's designees are appointed or elected to the
Board of Directors, until the Effective Time (as defined in Section 2.3 hereof)
the Board of Directors shall have at least one director who is a director on the
date hereof and who is neither an officer of Audits nor a designee, stockholder,
affiliate or associate (within the meaning of the Federal securities laws) of
Acquisition (one of more of such directors, the "Independent Directors");
provided, further, that if no Independent Directors remain, the other directors
shall designate one person to fill one of the vacancies who shall not be either
an officer of Audits or a designee, shareholder, affiliate or associate
4
<PAGE>
of Acquisition, and such person shall be deemed to be an Independent Director
for purposes of this Agreement.
(B) Subject to applicable law, Audits 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
1.3 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 Acquisition has not theretofore designated
directors) such information with respect to Audits 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 1.3. Group Ltd. will supply Audits 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 Audits,
(ii) exercise or waive any of Audits's rights or remedies hereunder, (iii)
extend the time for performance of Acquisition's obligations hereunder or (iv)
take any other action by Audits in connection with this Agreement required to be
taken by the Board of Directors.
ARTICLE II
PRINCIPAL TERMS OF MERGER
SECTION 2.1 SURVIVING CORPORATION. At the Effective Time (as
defined in Section 2.3 hereof), Acquisition shall be merged with and into Audits
upon the terms and conditions hereinafter set forth as permitted by and in
accordance with the DGCL. At the Effective Time, the identity and separate
existence of Acquisition shall cease, and Audits shall succeed to all rights,
privileges, powers, franchises, properties, assets, debts, liabilities and
obligations of Acquisition in accordance with Section 259 of the DGCL.
SECTION 2.2 CERTIFICATE OF MERGER. Subject to the provisions
of Article VII hereof, the Surviving Corporation shall execute a certificate of
merger (the "Certificate of Merger") and cause such Certificate to be filed with
the Delaware Secretary of State (the "Secretary") and recorded in accordance
with the applicable provisions of Sections 251 and 103 of the DGCL on or as
promptly as practical after the Effective Time.
SECTION 2.3 EFFECTIVE TIME. The Merger shall become effective
at the date and time when the Certificate of Merger is filed by the Secretary in
accordance with the applicable provisions of the DGCL (or at such later time
specified as the effective time in the Certificate of Merger), which Certificate
shall be submitted for filing as soon as practicable after all of the conditions
set forth in Article VII 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."
5
<PAGE>
SECTION 2.4 CERTIFICATE OF INCORPORATION. The certificate of
incorporation of the Surviving Corporation from and after the Effective Time
(the "Surviving Certificate of Incorporation") shall be as set forth in EXHIBIT
B to this Agreement, until thereafter further amended as provided by law and by
Section 6.2(g) hereof.
SECTION 2.5 BY-LAWS. The by-laws of the Surviving Corporation
from and after the Effective Time (the "Surviving By-Laws") shall be as set
forth in EXHIBIT C to this Agreement, until thereafter further amended as
therein provided and by Section 6.2(g) hereof.
SECTION 2.6 OFFICERS AND DIRECTORS. At the Effective Time,
those of the current directors of Audits as are designated in writing by Group
Inc. prior to the Effective Time shall resign, and the directors and officers of
the Surviving Corporation shall be as designated by Group Inc. prior to the
Effective Time; and such officers and directors shall hold office until the next
annual meeting of the stockholders or of the Board of Directors of the Surviving
Corporation and until their successors have been duly elected and qualified.
SECTION 2.7 APPROVAL OF AUDITS STOCKHOLDERS. Following
consummation of the Offer, Acquisition shall, as soon as reasonably possible,
cause Audits to take all action necessary in accordance with the DGCL, Audits's
Certificate of Incorporation and By-Laws and the Exchange Act, to hold a meeting
of its stockholders to consider and vote upon the adoption of this Agreement and
the authorization of the Merger, and at such meeting Acquisition shall vote all
Analyze Shares over which it has voting control in favor thereof. In no event
shall such meeting be held earlier than 20 business days following the date on
which a proxy statement (the "Proxy Statement") is sent to the stockholders of
Audits.
ARTICLE III
STATUS AND CONVERSION OF SECURITIES
SECTION 3.1 STATUS AND CONVERSION OF AUDITS SHARES. At the
Effective Time, by virtue of the Merger and without any action on the part of
the holders thereof:
(A) Any Audits Shares held by Audits as treasury shares or
held by any Audits subsidiary shall be canceled and retired.
(B) Each then outstanding Audits Share remaining (other than
Audits Shares to be canceled in accordance with Section 3.1(a) hereof and other
than Audits Shares held by stockholders of Audits who properly exercise
dissenters' rights available under the DGCL ("Dissenting Shares")) shall be
converted into the right to receive the Per Share Amount in cash, without
interest.
6
<PAGE>
(C) If, between the date of this Agreement and the Effective
Time, the outstanding Audits Shares shall have been changed into a different
number of shares or a different class by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment or
other similar transaction with respect to Audits Shares, or a stock dividend
thereon shall be declared with a record date within said period, the Per Share
Amount shall be correspondingly adjusted. Audits covenants and agrees not to
take any action referred to in the preceding sentence.
(D) Each Dissenting Share as to which a written objection to
the Merger is filed in accordance with Section 262 of the DGCL at or prior to
the approval by Audits's stockholders of the Merger taken at the meeting of such
stockholders referred to in Section 2.7 hereof and not withdrawn at or prior to
the time of such approval and which is not voted in favor of the Merger shall
not be converted into a right to receive cash hereunder unless and until the
holder shall have effectively withdrawn or lost his right to payment for his
Audits Shares under such Section 262, at which time his Audits Shares shall be
converted into a right to receive cash in accordance with Section 3.1(b).
SECTION 3.2 AUDITS STOCK OPTIONS. With respect to all
outstanding options (referred to collectively as the "Options" and individually
as an "Option") to purchase Audits Shares, a complete list of which is included
in Part C of the Disclosure Schedule, each holder of an Option which is
surrendered by the holder for cancellation shall be entitled to receive from
Audits, immediately prior to the Effective Time, for each Audits Share
purchasable under the vested portion (but not the unvested portion) of an Option
issued under Audits's 1997 Stock Option Plan and for each Audits Share
purchasable under both the vested and unvested portions of an Option issued
under Audits's 1994 Stock Option Plan, an amount in cash in full cancellation of
such Option equal to the excess, if any, of the Per Share Amount over the per
share exercise price of such Option (or such greater amount as Acquisition shall
agree in writing), as such amount may be reduced by any required withholding in
accordance with applicable tax laws. Audits's Board of Directors will adopt a
resolution terminating Audits's 1994 and 1997 Stock Option Plans (collectively
the "Option Plans") effective as of the Effective Date. Audits agrees to use its
best efforts to obtain prior to the expiration date of the Offer written
agreements of all optionholders legally binding such optionholders to
cancellation of all Options consistent with the foregoing.
SECTION 3.3 ACQUISITION TO MAKE CASH AVAILABLE. At or prior to
the Effective Time, Acquisition shall make available to United States Trust
Company of New York, or such other entity as Acquisition shall designate to act
as paying agent (the "Paying Agent"), such funds (the "Payment Fund") as are
required for the conversion of Audits Shares into the right to receive cash
pursuant to Section 3.1 hereof. The Payment Fund may be invested from time to
time by the Paying Agent, as directed by the Surviving Corporation, in (i)
obligations of or guaranteed by the United States of America or any State, (ii)
commercial paper rated A-1 or A-2, and/or (iii) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company that has capital, surplus and undivided profits of at
least $50,000,000, and any net
7
<PAGE>
earnings with respect thereto shall be paid to the Surviving Corporation as and
when requested by the Surviving Corporation.
Promptly after the Effective Time, the Paying Agent shall mail
to each record holder of Audits Shares a form of letter of transmittal and
instructions for use in surrendering certificates representing such shares and
receiving payment therefor.
Each holder of Audits Shares to be converted into the right to
receive cash pursuant to this Article III shall be entitled to receive, upon
surrender to the Paying Agent of one or more certificates for such Audits Shares
for cancellation, a bank check made payable to such holder for the amount of
cash, without interest, into which the Audits Shares previously represented by
such certificates are convertible in the Merger. If a check is to be sent to a
person other than the person in whose name the certificates for the Audits
Shares surrendered for conversion are registered, it shall be a condition of
payment that the certificates so surrendered shall be properly endorsed and the
signatures thereon properly guaranteed and otherwise in proper form for transfer
and that the person requesting such payment shall pay to the Surviving
Corporation any transfer or other taxes required by reason of the delivery of
such check to a person other than the registered holder of the certificates
surrendered, or shall establish to the satisfaction of the Surviving Corporation
that such taxes have been paid or are not applicable. Until so presented and
surrendered in exchange, from and after the Effective Time each certificate
representing Audits Shares held by Audits stockholders (other than Dissenting
Shares) shall be deemed for all purposes to evidence only the right to receive
the cash to which such Audits Shares are entitled in accordance with Section 3.1
hereof.
Any portion of the Payment Fund not paid to holders of Audits
Shares pursuant to this Agreement within twelve months after the Effective Time
shall be paid over by the Paying Agent to the Surviving Corporation together
with a list of holders of Audits Shares who have not yet surrendered
certificates for Audits Shares to the Paying Agent and such holders of Audits
Shares shall thereafter look only to the Surviving Corporation for payment, but
shall have no greater rights against the Surviving Corporation than may be
accorded to general creditors under applicable law. Notwithstanding the
foregoing, neither the Paying Agent, the Surviving Corporation nor any party
hereto shall be liable to a holder of Audits Shares for any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
SECTION 3.4 STATUS AND CONVERSION OF ACQUISITION SHARES. At
the Effective Time, each share of Common Stock, $.01 par value, of Acquisition
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger, automatically and without any action on the part of the holder
thereof, be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock, $.01 par value, of the Surviving
Corporation.
SECTION 3.5 CLOSING OF TRANSFER BOOKS OF AUDITS. At the
Effective Time, the stock transfer books of Audits shall be closed and no
transfer of Audits Shares shall be made thereafter. In the event that
certificates representing Audits Shares are presented for transfer to the
8
<PAGE>
Surviving Corporation or Group Inc. after the Effective Time, they shall be
canceled and exchanged for the amount of cash consideration into which the
Audits Shares previously represented by such certificates are convertible in
accordance with the provisions of Section 3.3 hereof.
SECTION 3.6 TRANSFER TAXES. Acquisition and Audits shall
cooperate in the preparation, execution and filing of all returns, applications
or other documents regarding any real property transfer, stamp, recording,
documentary or other taxes and any other fees and similar taxes which become
payable in connection with the Merger (collectively, "Transfer Taxes"). From and
after the Effective Time, Group Ltd. shall pay or cause to be paid, without
deduction or withholding from any amounts payable to the holders of Audits
Shares, all Transfer Taxes.
ARTICLE IV
CERTAIN EFFECTS OF MERGER
SECTION 4.1 EFFECT OF MERGER. At and after the Effective Time,
the separate existence of Acquisition shall cease, the Audits Shares shall cease
to exist (except as evidence of the right of the holder thereof to receive cash
therefor in accordance with the terms hereof), subject to the rights of holders
of Dissenting Shares referred to in Section 3.1(b) hereof, and all rights,
privileges, powers and franchises, and all property, tangible and intangible, of
Acquisition and of Audits shall transfer to, vest in and devolve on the
Surviving Corporation without further act or deed. Confirmatory deeds,
assignments, or similar instruments to evidence such transfer may be executed
and delivered at any time in the name of Acquisition or Audits by Acquisition's
last acting officers or by the appropriate officers of the Surviving
Corporation. The Surviving Corporation shall be liable for all of the debts and
obligations of Acquisition and Audits. Any existing claim, action or proceeding
pending by or against Acquisition or Audits may be prosecuted to judgment as if
the Merger had not taken place or, on motion of the Surviving Cor poration, the
Surviving Corporation may be substituted as a party, and any judgment against
Acquisition or Audits shall constitute a lien on the property of the Surviving
Corporation. The Merger shall not impair the rights of creditors or any liens on
the property of either of the Constituent Corporations.
SECTION 4.2 FURTHER ASSURANCES. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
further deeds, assignments or assurances in law or any other acts are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, the title to any property or right of the Constituent
Corporations acquired or to be acquired by reason of, or as a result of, the
Merger, or (b) otherwise to carry out the purposes of this Agreement, the
Constituent Corporations agree that the Surviving Corporation and its proper
officers and directors shall and will execute and deliver all such property,
deeds, assignments and assurances in law and do all acts necessary, desirable or
proper to vest, perfect or confirm title to such property or right in the
Surviving Corporation and otherwise to carry out the purposes of this Agreement,
and that the proper officers and directors of the Constituent Corporations and
the proper officers and directors of the Surviving Corporation are fully
authorized in the name of the Constituent Corporations or otherwise to take any
and all such action.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES BY AUDITS. Audits
represents and warrants to, and agrees with, Acquisition and Group Ltd., subject
to the exceptions set forth in the disclosure schedule (the "Disclosure
Schedule") attached hereto, as follows:
(A) ORGANIZATION OF AUDITS. Audits is duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware with full corporate power and authority to own its properties and to
conduct its business as now conducted. Audits is duly qualified to do business
as a foreign corporation in good standing in all jurisdictions where the nature
of its assets or business requires such qualification, except for failures to be
so qualified or in good standing which would not in the aggregate have a
Material Adverse Effect, and such jurisdictions are listed in Part A of the
Disclosure Schedule. Audits owns a majority of the outstanding capital stock or
other equity ownership interests (being the percentage ownership interest
indicated in Part A of the Disclosure Schedule) in the entities listed in Part A
of the Disclosure Schedule (collectively the "Subsidiaries"). Except as set
forth in Part A of the Disclosure Schedule, Audits does not own, directly or
indirectly, shares of capital stock or other equity ownership interests in any
corporation, partnership, limited liability company, joint venture or other
entity, other than the Subsidiaries. The Subsidiaries are each duly organized
and validly existing and are in good standing under the laws of their respective
jurisdictions of incorporation, with full corporate power and authority to own
their properties and to conduct their businesses as now conducted. Each of the
Subsidiaries is duly qualified to do business and is in good standing in all
jurisdictions where the nature of its assets or business requires such
qualification, except for failures to be so qualified or in good standing which
would not in the aggregate have a Material Adverse Effect, and such
jurisdictions are listed in Part A of the Disclosure Schedule. The Certificate
of Incorporation and the By-Laws (or other similar organization documents) of
Audits and of each of the Subsidiaries, heretofore delivered by Audits to
Acquisition, are complete and correct as of the date hereof, and will be
complete and correct as of the Effective Time, and contain all amendments
thereto. When used in this Agreement, "Material Adverse Effect" means, with
respect to Audits or the Subsidiaries, any effect that is materially adverse to
the business, operations, properties, assets, liabilities, results of operations
or condition (whether financial or otherwise) of Audits and the Subsidiaries,
taken as a whole.
(B) AUTHORITY OF AUDITS. Audits has the corporate power to
enter into this Agreement and, subject to the approval of the Merger by its
stockholders, to carry out the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the Offer, the Merger and
the other transactions contemplated hereby have been duly approved and
authorized by the Board of Directors of Audits and the Board of Directors of
Audits has recommended that holders of Audits Shares adopt this Agreement,
tender their Audits Shares pursuant to the Offer and approve the Merger. Except
for the adoption of this Agreement and approval of the Merger by its
shareholders, no other corporate acts or proceedings on the part of
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Audits are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. Subject to the approval of the Merger by its
shareholders, this Agreement constitutes the valid and legally binding
obligation of Audits enforceable against Audits in accordance with its terms
except as enforcement may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally. Except as set
forth in Part B of the Disclosure Schedule, the execution and delivery of this
Agreement by Audits does not, and the consummation of the transactions
contemplated hereby will not, violate or constitute a default or give rise to
any third party rights or third party consent requirements under (i) any
provision of the Certificate of Incorporation or By-Laws of Audits, (ii) any
provision of (or under which there would arise a right of termination,
cancellation, modification or acceleration of any obligation, or any right to
payment or compensation, or any right of a third party to purchase any asset or
interest of Audits or any of the Subsidiaries, or the loss of any other material
benefit by Audits or any of the Subsidiaries) any mortgage, note, lien, lease,
agreement, indenture, loan or credit agreement, contract, joint venture
agreement, stockholders agreement, operating agreement, license, permit, order,
concession, instrument, arbitration award, judgment or decree to which Audits or
any of the Subsidiaries is a party or by which Audits or any of the Subsidiaries
is bound or to which any material property of Audits or any of the Subsidiaries
is subject or (iii) any laws of the United States or any state or jurisdiction
in which Audits or any of the Subsidiaries conducts business, except in the case
of (ii) or (iii) for violations, breaches or defaults which would not in the
aggregate have a Material Adverse Effect.
(C) CAPITALIZATION. The authorized capital stock of Audits
consists of 1,000,000 shares of Preferred Stock, $1.00 par value, and 30,000,000
shares of Common Stock. As of the date hereof, 13,116,136 shares of Common Stock
of Audits are validly issued and outstanding, fully paid and nonassessable, and
no Audits Shares were held in the treasury of Audits. No shares of Audits
Preferred Stock are issued or outstanding. As of the date hereof, 819,219 Audits
Shares were reserved under the Option Plan for issuance pursuant to Options
heretofore granted thereunder which are outstanding on the date hereof. Part C
of the Disclosure Schedule sets forth the name of each optionee, the number of
Options held by such optionee, the vesting schedule for such Options and the
exercise price for such Options under the Option Plan. As of the date hereof,
Audits has no warrants, calls, convertible securities or other rights,
agreements or commitments to issue, sell or transfer any shares of its capital
stock or any securities or obligations convertible into or exchangeable for, or
giving any person any right to subscribe for or acquire from Audits any shares
of capital stock of Audits and no securities or obligations evidencing any such
rights are outstanding, except pursuant to the outstanding Options described
above.
(D) CONSENTS, ETC. Except for the filing for record of the
Certificate of Merger with the Secretary, the required filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") and filings
with the SEC, no consent, authorization, order or approval of, or filing or
recording with, any governmental commission, board or other regulatory body is
required for or in connection with the execution and delivery of this Agreement
by Audits and the consummation by Audits of the Merger and the transactions
contemplated hereby.
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(E) REPORTS AND FINANCIAL STATEMENTS. Audits has previously
furnished Acquisition with true and complete copies of its (i) Annual Reports on
Form 10-K for the fiscal years ended December 31, 1995, December 31, 1996 and
December 31, 1997, as filed with the SEC, (ii) Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1998, June 30, 1998 and September 30, 1998, as
filed with the SEC, (iii) proxy statements related to all meetings of its
stockholders (whether annual or special) since December 31, 1995 and (iv) all
other reports or registration statements filed by Audits with the SEC since
December 31, 1995, except for preliminary material (in the case of clauses (iii)
and (iv) above), which are all the documents that Audits was required to file
with the SEC since that date (the documents in clauses (i) through (iv) being
referred to herein collectively as the "Audits SEC Reports"). As of their
respective dates, the Audits SEC Reports complied as to form in all material
respects with the requirements of the Securities Act of 1933, as amended (the
"Securities Act") or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Audits SEC Reports. As of
their respective dates, the Audits SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial statements of
Audits included in the Audits SEC Reports comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. Audits has previously furnished
Acquisition with a true and complete copy of the audited consolidated balance
sheet of Audits as of December 31, 1997 and the related audited statements of
consolidated income and of consolidated cash flows for the fiscal year then
ended, including the notes thereto, all reported on by Deloitte & Touche LLP,
independent certified public accountants, and the unaudited consolidated balance
sheet of Audits as of September 30, 1998 and the related unaudited statements of
consolidated income and retained earnings and of consolidated cash flows for the
nine months then ended (collectively the "Audits Financial Statements"). The
financial statements included in the Audits SEC Reports and the Audits Financial
Statements: (i) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis, except as may be indicated
therein or in the notes thereto and subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments and any other
adjustments described therein and the fact that certain information and notes
have been condensed or omitted in accordance with the Exchange Act and the rules
promulgated thereunder; (ii) present fairly, in all material respects, the
financial position of Audits and its Subsidiaries as at the dates thereof and
the results of their operations and cash flows for the periods then ended; and
(iii) are in all material respects in accordance with the books of account and
records of Audits and its Subsidiaries. Of the revenues included in the December
31, 1997 Financial Statements, not more than $12,800,000 represents amounts paid
by Audits clients (either without markup or with retention by Audits only of a
handling fee) to other unaffiliated parties designated by such clients. Neither
Audits nor any of its Subsidiaries has incurred any liability, whether absolute,
accrued, contingent or otherwise (including liabilities for taxes) subsequent to
September 30, 1998 other than (i) liabilities incurred in the ordinary course of
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business since September 30, 1998 and (ii) those liabilities described in Part E
of the Disclosure Schedule.
(F) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in the Audits SEC Reports or in Part F or elsewhere of the Disclosure Schedule,
since September 30, 1998 Audits and its Subsidiaries have operated their
respective businesses in the ordinary course of business consistent with past
practice and there has not been any material adverse change in the financial
condition, properties, business, prospects or results of operations of Audits
and the Subsidiaries, taken as a whole, and since September 30, 1998 there has
not been (i) any change in the authorized, issued or outstanding capital stock
or material change in the funded debt of Audits and the Subsidiaries on a
consolidated basis, other than changes in the outstanding capital stock due to
exercise of options under the Option Plan and other than changes due to payments
in accordance with the terms of such debt; (ii) any declaration, setting aside
or payment of any dividend on, or distribution in respect of, any shares of the
capital stock of Audits or the acquisition for value by Audits or any of the
Subsidiaries of any shares of capital stock of Audits; (iii) any grant by Audits
of any warrant, option or right to acquire any Audits Shares or other securities
whatsoever; (iv) any transaction, commitment, dispute or other event or
condition (financial or otherwise) of any character (whether or not in the
ordinary course of business) which, alone or in the aggregate, has had, or would
have, a Material Adverse Effect; (v) any damage, destruction or loss, not
covered by insurance, which has had, or would have, a Material Adverse Effect;
(vi) any material change in Audits's accounting principles, practices or methods
(other than as required by changes in generally accepted accounting principles
and practices); (vii) any repurchase or redemption by Audits or any of its
Subsidiaries of its stock; (viii) any granting by Audits or any of its
Subsidiaries to any director, officer or employee of Audits or any of its
Subsidiaries of (A) any increase in compensation (other than in the case of
employees in the ordinary course of business consistent with past practice), (B)
any increase in severance or termination pay, or (C) acceleration of
compensation or benefits (except as contemplated by this Agreement); (ix) any
entry by Audits into any employment, severance, bonus or termination agreement
with any director or officer of Audits; (x) any entry by Audits or any of the
Subsidiaries into any joint venture or other material investment in or
acquisition of any business, assets or business entity; (xi) any material
reduction of Audits's customer order backlog or any material order cancellations
by customers of Audits; (xii) the making of any material capital expenditures;
or (xiii) any agreement (whether or not in writing), arrangement or
understanding to do any of the foregoing. Neither Audits nor the Subsidiaries is
currently in default on any installment or installments on indebtedness for
borrowed money, or on any rental on any long-term lease, which default has had,
or would have, a Material Adverse Effect.
(G) TAX MATTERS. Except as set forth in Part G of the
Disclosure Schedule:
(A) The amounts shown as tax liabilities on the consolidated
balance sheet of Audits as of December 31, 1997 included in the Audits Financial
Statements will be sufficient for the payment of all federal, state, county,
local and foreign Taxes (as hereinafter defined) of Audits and the Subsidiaries,
whether or not disputed, which were properly accruable in accordance with
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generally accepted accounting principles consistently applied at that date.
There are no agreements by Audits or any of the Subsidiaries for the extension
of the time for the assessment of any Taxes;
(B) Neither the Internal Revenue Service (the "IRS") nor any
other taxing authority is now asserting, or to the knowledge of Audits
threatening to assert, against Audits or any of the Subsidiaries any claim for
additional Taxes, nor to Audits's knowledge is the IRS or any other taxing
authority auditing any tax return filed by Audits or either of the Subsidiaries;
(C) Each of Audits and the Subsidiaries has timely filed (and
until the Effective Time will timely file) all returns, declarations, reports,
estimates, information returns and statements ("Returns") required to be filed
or sent by or with respect to them in respect of any Taxes;
(D) As of the time of filing, such Returns were (and, as to
Returns not filed as of the date hereof, but filed prior to the Effective Time,
will be) true, complete and correct in all material respects;
(E) There is not currently in effect any waiver of any statute
of limitations in respect of Taxes or any agreement to extend the time with
respect to a Tax assessment or deficiency, to which Audits or any Subsidiary is
a party.
(F) Audits and the Subsidiaries have timely paid or provided
(and until the Effective Time will timely pay or in good faith contest) all
Taxes that are due and payable;
(G) None of Audits and the Subsidiaries is a party to any Tax
allocation or sharing agreement, nor was a member of an affiliated group filing
a consolidated federal income Tax return (other than the group of which Audits
is the parent) for any year for which the statute of limitations has not expired
or has any liability for Taxes of any person under Treas. Reg. ss. 1.1502-6;
(H) Audits and the Subsidiaries have complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes and have timely withheld from employee wages and paid
over to the proper governmental authorities all amounts required to be so
withheld and paid over under all applicable laws;
(I) None of Audits or the Subsidiaries has filed a consent
pursuant to Section 34l(f) of the Internal Revenue Code of 1986 (the "Code") or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by Audits or any of the Subsidiaries;
(J) No property used by Audits or the Subsidiaries is property
that Audits or any such Subsidiary is or will be required to treat as being
owned by another person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954 as it existed prior to the
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enactment of the Tax Reform Act of 1986 or is "tax-exempt use property" within
the meaning of Section 168(h) of the Code;
(K) None of Audits or the Subsidiaries is required to include
in income any adjustment pursuant to Section 481(a) of the Code by reason of a
voluntary change in accounting method initiated by Audits, or to Audits's
knowledge for any other reason, nor does Audits have any knowledge that the
Internal Revenue Service has proposed any such adjustment or change in
accounting method;
(L) Part G of the Disclosure Schedule accurately sets forth
the amount of any net operating loss, net capital loss, unused investment or
other credit, unused foreign tax, or excess charitable contribution allocable to
Audits or any of the Subsidiaries. Except as disclosed in Part G of the
Disclosure Schedule, there has not been an "ownership change," within the
meaning of Section 382(g) of the Code, of Audits or any of the Subsidiaries, or
any relevant predecessor thereof. With respect to any "ownership change" so
disclosed, Part G of the Disclosure Schedule accurately states the "value" of
such corporation as of the "change date," all determined as required under
Section 382 of the Code; and
(M) Audits is not a party to any agreement that would require
it to make any payment that would constitute an "excess parachute payment" for
purposes of Sections 280G and 4999 of the Code.
For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, property or other taxes, customs duties, fees,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any tax
authority (domestic or foreign) upon Audits or any of the Subsidiaries.
(H) TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES,
ETC. Except for leased properties, Audits and the Subsidiaries have good and
marketable title to all of their tangible properties and assets, real, personal
and mixed, used in their businesses, including without limitation those referred
to in the balance sheet as of December 31, 1997 included in the Audits Financial
Statements (other than properties or assets disposed of in the ordinary course
of business since the date of such balance sheet), free and clear of all liens,
charges, pledges, security interests or other encumbrances, except as reflected
in the Audits Financial Statements or in Part H of the Disclosure Schedule and
other than liens and other imperfections of title and encumbrances which liens,
imperfections and encumbrances would not have a Material Adverse Effect.
(I) CONTRACTS, ETC. Audits has furnished to Acquisition and
its counsel a complete and accurate list, together with true and complete
copies, of:
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(I) all contracts of Audits or any of the
Subsidiaries, leases, mortgages, indentures, promissory notes, deeds,
loan or credit agreements, joint venture agreements, stockholder
agreements, operating agreements, subcontracts, or similar instruments
involving amounts in excess of $100,000 or more; and
(II) all pension, profit-sharing or employee benefit
plans, employment contracts, contracts with unions and other agreements
relating to employees of Audits or any of the Subsidiaries.
Part I of the Disclosure Schedule contains a true and complete
list of all of the above described contracts and leases. Except as set forth in
Part I of the Disclosure Schedule, none of Audits or the Subsidiaries is in
default, and no event has occurred which (whether with or without notice, lapse
of time or the happening or occurrence of any other event) would constitute a
default by Audits or a Subsidiary under any of the above described contracts and
leases, and all such contracts and leases are valid and legally binding on
Audits or the Subsidiaries, as the case may be.
(J) LITIGATION. Except as set forth in Part J of the
Disclosure Schedule, there is no claim, action, suit or proceeding in or before
any court or administrative or regulatory agency pending, or to the knowledge of
Audits contemplated or threatened, against Audits or any of the Subsidiaries or
any of their properties, nor is there any judgment, decree, injunction, rule or
order of any court, regulatory body or arbitrator outstanding against Audits or
any of its Subsidiaries which would have a Material Adverse Effect. For purposes
of this Agreement, the phrases "Audits's knowledge" and "knowledge of Audits"
and other phrases of like import shall mean the actual knowledge of any
executive officer or director of Audits.
(K) PATENTS, COPYRIGHTS, TRADEMARKS, ETC. Except as set forth
on Part K of the Disclosure Schedule, Audits and the Subsidiaries have good and
marketable title to all patents, patent applications, copyrights, trademarks and
trade names, brand names, customer lists, proprietary and other technical
information, technology, inventions, discoveries, improvements, processes,
know-how, formulae, drawings, specifications, production data, trade secrets and
computer software and programs, and licenses thereof, which are necessary for
the operation of their businesses as presently conducted and as proposed to be
conducted. Except as set forth in Part K of the Schedule, there are no claims or
proceedings pending or, to the knowledge of Audits, threatened against Audits or
any of the Subsidiaries asserting that Audits or any of the Subsidiaries is
infringing any intellectual property rights of any other person.
(L) EMPLOYEE BENEFIT PLANS. (I) Set forth in Part L of the
Disclosure Schedule is an accurate and complete list of each "employee benefit
plan", as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and each other bonus, incentive, retirement,
profit sharing, pension, stock bonus, thrift, stock ownership, stock
appreciation right, stock purchase, stock option, deferred compensation,
cafeteria, hospitalization, medical, dental, vision, sickness or accident,
business travel accident, life insurance, survivor or death benefit,
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disability, salary continuation, severance pay, tuition reimbursement, dependent
care assistance, legal assistance, fringe benefit (cash and non-cash), vacation
pay or similar employee benefit plan, arrangement, program or policy, which
covers any employee, officer or director (or any beneficiary thereof), whether
active or retired, of Audits or any of the Subsidiaries, and which is sponsored,
maintained or administered by Audits or any of the Subsidiaries or to which
Audits or any of the Subsidiaries makes contributions (any such plan,
arrangement, program or policy is hereinafter referred to as a "Plan").
(II) Audits has furnished or made available to Acquisition,
for each Plan, a complete and accurate copy of (A) the plan document currently
in effect, and any amendments thereto, (B) any trust agreement, insurance
contract or other agreement or arrangement for the funding of benefits under
such Plan, (C) a copy of the most recent summary plan description ("SPD"), and
all summaries of material modifications to such SPD, (D) if the Plan is intended
to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), the most recent determination letter issued by the Internal
Revenue Service (the "IRS") for such Plan, and the request filed with the IRS
for such determination, (E) the most recent annual report (Form 5500) for such
Plan, if such form is required by law to be filed for the Plan and (E) the most
recently issued financial statement and actuarial report, if any.
(III) Each Plan which is intended to be qualified under
Section 401(a) of the Code (A) has received a determination letter from the IRS
which indicates that the Plan is so qualified, and (B) has been timely amended
to reflect any provisions which the IRS required to be included in such Plan as
a condition to issuing such determination letter. Audits is not aware of any
fact or event which could reasonably be expected to cause any such Plan to fail
to so qualify.
(IV) Each Plan is, and at all times since its inception has
been, in material compliance in all material respects with all the provisions of
ERISA and the Code applicable to such Plan, and with all other laws, rules and
regulations applicable to such Plan. Audits, the Subsidiaries and each fiduciary
of each of the Plans is in compliance with the terms of each Plan, and with the
require ments and duties of any and all laws, statutes, orders, decrees, rules
and regulations, including but not limited to ERISA and the Code, applicable to
each Plan. No non-exempt prohibited transaction within the meaning of the
applicable provisions of ERISA and the Code has occurred with respect to any
Plan. No event, transaction or failure to act has occurred, and to the best of
Audits's knowledge there does not now exist any condition or set of
circumstances, with respect to any Plan that has resulted in, or could result
in, any material liability including but not limited to additional
contributions, fines, penalties or loss of any tax deduction, or in the
imposition of any lien, for or on Audits or any of the Subsidiaries (or for or
on any successor to Audits or any of the Subsidiaries) under the Code, ERISA or
any other applicable legal requirement or under any indemnity agreement to which
Audits or any of the Subsidiaries is a party, excluding liability for routine
benefit claims and funding obligations payable in the ordinary course.
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(V) All contributions to the Plans (including both employee
and employer contributions) which are required to have been made, whether by
virtue of the terms of the particular plan or by operation of law, have been
made by the due date thereof (including all applicable extensions) and all
contributions to the Plans which are not yet due but which relate to periods
which began prior to the date hereof have either been paid or have been
appropriately reflected by Audits as an accrued liability on its books and
records. No Plan which is subject to the requirements of ERISA or the Code has
incurred any "accumulated funding deficiency" within the meaning of Section 302
of ERISA or Section 412 of the Code (whether or not waived), as applicable to
such plan. The actuarial present value of accrued benefits (both vested and
unvested) of each Plan which is a defined benefit plan does not exceed the value
of the assets of such Plan based upon actuarial assumptions which are reasonable
in light of the experience of such Plan.
(VI) There is no pending, or, to the best of the knowledge of
Audits, threatened, legal action, proceedings or investigations against Audits,
the Subsidiaries or any Plan, other than routine contributions and claims for
benefits, which could result in material liability being imposed upon any of the
Plans, or upon Audits or any of the Subsidiaries with respect to any of the
Plans, and there is no basis for any such legal action or proceeding.
(VII) Except as set forth on Part L of the Disclosure
Schedule, no governmental agency, including the IRS, the Department of Labor or
the Pension Benefit Guaranty Corporation (the "PBGC"), has initiated an
examination or audit or, to the best of Audits's knowledge, an investigation of
a Plan which has not been completed. With respect to each Plan which is subject
to Title IV of ERISA, (A) no "reportable event" has occurred with respect to
which a notice must be filed with the PBGC, (B) no proceedings by the PBGC to
terminate such Plan pursuant to Title IV of ERISA have been instituted or
threatened, and (C) neither Audits nor any of the Subsidiaries (x) has incurred
any liability to the PBGC, or has had a penalty or lien imposed on it in favor
of the PBGC, in connection with such Plan under any provision of Title IV of
ERISA, including but not limited to Section 4062, 4068, 4069 or 4071 of ERISA or
(y) has any knowledge as to the existence of any state of facts, or as to the
occurrence of any event or transaction, pertaining to or involving such Plan
that might reasonably be anticipated to result in any liability, or the
imposition of a penalty or lien, of or on Audits or any of the Subsidiaries to
the PBGC under any provision of Title IV of ERISA.
(VIII) Except as set forth in Part L of the Disclosure
Schedule, there are no agreements between Audits or any of the Subsidiaries and
any labor union, and Audits and the Subsidiaries are not, and have never been, a
participating employer in any "multiemployer plan", as such term is defined in
Section 3(37) of ERISA, or in any "multiple employer plan" described in Section
413(c) of the Code. To the extent that Audits or any of the Subsidiaries is or
has been a par ticipating employer in any multiemployer plan (as so defined),
none of Audits or any of the Subsidiaries is now, or would upon withdrawal
therefrom become, liable for any withdrawal liability to or in respect of such
multiemployer plan, and neither Audits or any of the Subsidiaries has
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participated in any multiemployer plan which is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA, or which is terminated under Section
4041A or 4042 of ERISA.
(IX) Except as set forth in Part L of the Disclosure Schedule,
the execution and delivery of this Agreement and Plan of Merger and the
consummation of the transactions contemplated hereby will not result in any
material payment (whether of severance pay or otherwise) becoming due from any
of the Plans, or from Audits or any of the Subsidiaries with respect to any of
the Plans, to any individual, or result in the vesting, acceleration or payment
or increases in the amount of any benefit payable under any of the Plans to any
individual.
(X) Except as set forth on Part L of the Disclosure Schedule,
any hospital, medical, dental, vision, sickness or accident, survivor or death
benefit, disability or similar benefit coverage under any Plan is provided
solely through insurance policies. Except as disclosed in Schedule L, (A) no
Plan provides for hospital, medical, death, survivor or any other welfare
benefit for retired or former employees, officers or directors, except as
required by the Consolidated Omnibus Budget Reconciliation Act of 1985 as
amended, and (B) no Plan is an unfunded plan of deferred compensation.
(XI) Neither Audits nor any of the Subsidiaries is under any
obligation (express or implied) to modify any Plan or to establish any
additional employee benefit plan.
(M) FINANCIAL ADVISORS. Audits has received the opinion of
Allen & Company to the effect that, as of the date hereof, the cash
consideration payable to the holders of Audits Shares in the Offer and the
Merger is fair from a financial point of view. No brokers or finders other than
Allen & Company were employed by Audits or any of the Subsidiaries in connection
with any of the transactions contemplated by this Agreement.
(N) NO FAILURE TO DISCLOSE. Audits has not failed to disclose
to Acquisition any agreement, arrangement, event or occurrence, or threatened or
anticipated event or occurrence known to Audits, which would or might reasonably
be deemed to have a Material Adverse Effect. All information furnished to
Acquisition pursuant to or in connection with this Agreement is correct and
complete in all material respects as of the date hereof. No representation or
warranty of Audits and no information furnished by or on behalf of Audits to
Acquisition or its affiliates or agents pursuant to or in connection with this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
(O) INSIDER INTERESTS. No officer or director or stockholder
of Audits or any of the Subsidiaries has any agreement with Audits or any of the
Subsidiaries or any interest in any property, real, personal or mixed, tangible
or intangible (including, without limitation, patents, patent applications,
trademarks, trade names or other intellectual property), used in or pertaining
to the business of Audits or the Subsidiaries except as set forth in Part O of
the Disclosure Schedule.
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(P) ENVIRONMENTAL LAWS. Audits has furnished Group Ltd. with
all material information known to it with respect to environmental matters
affecting Audits, its Subsidiaries and the properties presently owned, leased or
operated by them, and neither Audits and its Subsidiaries nor such properties
are subject to liabilities that would have a Material Adverse Effect for
environmental matters.
(Q) DIRECTOR ACTION. The Board of Directors of Audits (at a
meeting duly called and held) has by the unanimous vote of all directors present
(i) determined that the Offer and the Merger are advisable and fair to and in
the best interests of Audits and its stockholders; (ii) approved the Merger in
accordance with the provisions of Section 251 of the DGCL; (iii) recommended the
approval of this Agreement, the tender of all Audits Shares pursuant to the
Offer, and the approval of the Merger by the holders of Audits Shares and
directed that the Merger be submitted for consideration by the stockholders of
Audits as contemplated by Section 6.1(a); and (iv) approved the Inducement
Agreement in accordance with Section 203 of the DGCL.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES BY ACQUISITION AND
GROUP LTD. Each of Acquisition and Group Ltd. jointly and severally represents
and warrants to, and agrees with, Audits as follows:
(A) ORGANIZATION OF ACQUISITION AND GROUP LTD. Acquisition is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and Group Ltd. is a limited company duly
organized, validly existing and in good standing under the laws of England and
Wales.
(B) AUTHORITY OF ACQUISITION AND GROUP LTD. Acquisition and
Group Ltd. have the corporate power to enter into this Agreement and to carry
out the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the Offer, the Merger and the transactions
contemplated hereby have been duly authorized by the Board of Directors and
Group Inc., as the sole stockholder of Acquisition, and by the Board of
Directors of Group Ltd.; and (i) no other corporate acts or proceedings on
the part of Acquisition or Group Ltd. are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby, and
(ii) this Agreement constitutes the valid and legally binding obligation of
Acquisition and Group Ltd. enforceable against Acquisition and Group Ltd. in
accordance with its terms except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'
rights generally. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not, violate or
constitute a default under any provision of the Certificate of Incorporation
or By-Laws (or similar organizational documents) of Acquisition or Group Ltd.
or any provision of (or under which there would arise a right of termination,
cancellation, modification or acceleration of any obligation, or any right to
payment or compensation, or the loss of a benefit) any mortgage, note, lien,
lease, agreement, indenture, loan or credit agreement, contract, license,
permit, order, concession, instrument,
864036-4
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arbitration award, judgment or decree to which Acquisition or Group Ltd. or any
of their affiliates is a party or by which they are bound or to which any of
their property is subject, or any laws of the United States or any country,
state or jurisdiction in which Acquisition or Group Ltd. or any of their
affiliates conducts business.
(C) CONSENTS, ETC. Except for the filing of the Certificate of
Merger with the Secretary, the filings required under the HSR Act and the
Mergers and Take-Overs (Control) Acts 1978 to 1996 of Ireland and filings with
the SEC, no consent, authorization, order or approval of, or filing or
registration with, any governmental commission, board or other regulatory body
is required for or in connection with the execution and delivery of this
Agreement by Acquisition and Group Ltd. and the consummation by Acquisition and
Group Ltd. of the Merger and the transactions contemplated hereby.
(D) FINDER'S FEE. No brokers or finders were employed by
Acquisition or Group Ltd. in connection with any of the transactions
contemplated by this Agreement.
(E) PROXY STATEMENT. All information concerning Acquisition
and Group Ltd. and their affiliates furnished or to be furnished by Acquisition
for inclusion in the Proxy Statement is and will be true and correct in all
material respects; the information concerning Acquisition and Group Ltd. and
their affiliates contained in the Proxy Statement furnished by Acquisition (i)
will include all statements of material facts which are required to be stated
therein, and (ii) will not include any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. The Schedule 14D-1 will comply in
all material respects with the Exchange Act and the rules and regulations
thereunder. Neither the Schedule 14D-1 or the Offer Documents nor any of the
information relating to Audits or its affiliates provided by or on behalf of
Audits specifically for inclusion in the Schedule 14D-9 will, at the respective
times the Schedule 14D-9, the Schedule 14D-1 and the Offer Documents or any
amendments or supplements thereto are filed with the SEC and are first
published, sent or given to stockholders of Audits, 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 made therein, in light of
the circumstances under which they were made, not misleading. No representation
is made by Audits with respect to written information supplied by Audits
specifically for inclusion in the Schedule 14D-1.
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ARTICLE VI
COVENANTS AND AGREEMENTS
SECTION 6.1 COVENANTS AND AGREEMENTS OF AUDITS. Audits
covenants and agrees with Acquisition and Group Ltd. as follows:
(A) SUBMISSION TO STOCKHOLDERS. Audits will, as soon as
practicable following the consummation of the Offer, use its best efforts to
obtain the approval of its stockholders of this Agreement and their consent to
the Merger, and the Board of Directors of Audits will recommend to such
stockholders their approval and consent thereof.
(B) CONDUCT OF BUSINESS. Without the prior written consent of
Acquisition, between the date of this Agreement and the Effective Time:
(I) Audits will not, and will not cause or permit any
of the Subsidiaries to, engage in any activities or transactions which
will be outside the ordinary course of their respective businesses
consistent with past practices, except as shall be provided for or
specifically contemplated by this Agreement, and Audits and the
Subsidiaries will consult with Acquisition (which will be entitled to
have two of its designated representatives present on a full-time basis
at Audits's principal executive offices until the closing or
termination of this Agreement to observe the conduct of Audits's
business and be available for such consultations) prior to making any
material business decisions of the types contemplated by this Section
6.1;
(II) Audits will not subdivide or reclassify the
Audits Shares, issue any shares of its capital stock, except upon the
exercise of outstanding options under the Option Plan, or amend its
Certificate of Incorporation or By-Laws;
(III) Audits will not declare or pay any dividend or
other distribution in respect of its shares of capital stock or acquire
for value, or permit any Subsidiary to acquire for value, any shares of
capital stock of Audits;
(IV) Audits will afford to the officers, attorneys,
accountants and other authorized representatives of Acquisition
reasonable access to its and the Subsidiaries' offices, properties,
books, tax returns and minute books and other corporate records during
normal business hours. If for any reason the Merger is not consummated,
Acquisition will cause confidential information obtained in connection
with such investigation to be treated as confidential in accordance
with the terms of the confidentiality agreement referred to in Section
9.7 hereof;
(V) Audits will not, and will not cause or permit the
Subsidiaries to, take any action to institute any new severance or
termination pay practices with respect to any
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directors, officers, or employees of Audits or any of the Subsidiaries
or to increase the benefits payable under its severance or termination
pay practices in effect on the date hereof;
(VI) Audits will not, and will not cause or permit
the Subsidiaries to, adopt or amend, in any material respect, except as
may be required by applicable law or regulation, any collective
bargaining, bonus, profit sharing, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund, plan
or arrangement for the benefit or welfare of any directors, officers or
employees of Audits or any of the Subsidiaries or make any increase in
the salaries, compensation or pay scales of any such directors,
officers or employees without Acquisition's prior written consent;
(VII) Audits and the Subsidiaries will use their
reasonable best efforts to maintain their relationships with their
material suppliers and customers, and if and as requested by
Acquisition, (i) Audits and the Subsidiaries shall make reasonable
arrange ments for representatives of Acquisition to meet with suppliers
and customers of Audits and the Subsidiaries, and (ii) Audits and the
Subsidiaries shall schedule, and the manage ment of Audits and the
Subsidiaries shall participate in, meetings of representatives of
Acquisition with employees of Audits and the Subsidiaries;
(VIII) Audits will, and will cause the Subsidiaries
to, maintain all of their material properties (taken as a whole) in
customary repair, order and condition, reasonable wear and tear
excepted, and will maintain, and will cause the Subsidiaries to
maintain, insurance upon all of its and their properties and with
respect to the conduct of its and their businesses in such amounts and
of such kinds comparable to that in effect on the date of this
Agreement;
(IX) Audits and the Subsidiaries will maintain their
books, accounts and records in the usual, regular and ordinary manner,
on a basis substantially consistent with prior years;
(X) Audits and the Subsidiaries will duly comply with
all laws applicable to each of them and to the conduct of their
respective businesses, consistent with their past practice;
(XI) without the prior written consent of
Acquisition, no change shall be made in the banking and safe deposit
arrangements of Audits or the Subsidiaries existing on the date hereof
and no powers of attorney shall be granted by Audits or any of the
Subsidiaries;
(XII) except as contemplated by this Agreement,
Audits will not, and will not permit any of the Subsidiaries to,
acquire or agree to acquire by merging or consolidating
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with, purchasing substantially all of the assets of or otherwise, any
business or any corporation, partnership, association, or other
business organization or division thereof or enter into any joint
venture, partnership, limited liability company operating agreement or
other similar business arrangement;
(XIII) without Acquisition's prior written consent,
Audits will not, and will not permit the Subsidiaries to, enter into
any contract or commitment containing obligations in excess of $100,000
or take any action which would have a material adverse effect on the
cash flows of Audits; and
(XIV) Audits will promptly advise Acquisition in
writing of any change in the financial condition, business or
operations of Audits and the Subsidiaries, taken as a whole, and of any
breach of its representations or warranties contained herein which
could have a Material Adverse Effect and will promptly advise
Acquisition in writing of all material order cancellations.
(C) STOCK OPTIONS. From the date hereof through the
consummation of the Offer, Audits will not issue any stock options under the
Option Plans or any other options, warrants, convertible securities or other
capital stock, and (except as contemplated by Section 3.2 hereof) will not
accelerate the vesting or otherwise modify the terms of any option outstanding
under the Option Plans.
(D) NO OTHER NEGOTIATIONS. (i) Audits agrees (A) that neither
it nor any of its Subsidiaries shall, and each of them shall direct and use
their best efforts to cause their officers, directors, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by the Inducement Stockholders, Audits or any of Audits's
Subsidiaries) not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to its stockholders) with
respect to a merger, acquisition, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of Audits and its Subsidiaries, taken as a whole (any such
proposal or offer being hereinafter referred to as an "Alternative Proposal"),
or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Alternative Proposal, or release any third party from any obligations under any
existing standstill agreement or arrangement, or enter into any agreement with
respect to an Alternative Proposal; (B) that it will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing; and (C) that
it will notify Group Ltd. with reasonable promptness if any such inquiries or
proposals are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, Audits
or any of its Subsidiaries and disclose to Group Ltd. the material substance
thereof; provided, however, that to the extent required by the fiduciary
obligations of the Board of Directors of Audits, as determined in good faith by
a majority of the members thereof (after receipt
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of advice from outside legal counsel to the Board of Directors), Audits may, in
response to unsolicited requests therefor, participate in discussions or
negotiations with, or furnish information (pursuant to a confidentiality
agreement) to, any person who indicates a willingness to make a Superior
Proposal. For purposes of this Agreement,"Superior Proposal" means a bona fide
written proposal made by a third party to acquire Audits pursuant to a tender or
exchange offer, a merger, a share exchange, a sale of all or substantially all
its assets or otherwise on terms which a majority of the members of the Board of
Directors of Audits determines in good faith (taking into account the advice of
independent financial advisors) to be more favorable to Audits and its
stockholders than the Merger (and any revised proposal made by Group Ltd. or
Acquisition) and for which financing, to the extent required, is then fully
committed or reasonably determined to be available by the Board of Directors of
Audits.
(ii) The Board of Directors of Audits shall neither (A) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Group Ltd. or
Acquisition, the approval or recommendation by the Board of Directors of Audits
of this Agreement or the Merger or (B) approve or recommend, or propose to
approve or recommend, any Alternative Proposal; provided, however, that the
Board of Directors of Audits, to the extent required by its fiduciary
obligations, as determined in good faith by a majority of the members thereof
(after receipt of advice from outside legal counsel to the Board of Directors),
may approve or recommend a Superior Proposal (and, in connection therewith,
withdraw or modify its approval or recommendation of this Agreement or the
Merger).
(E) FINANCIAL STATEMENTS. Audits will deliver to Acquisition
all regularly prepared unaudited financial statements of Audits or of any the
Subsidiaries prepared after the date hereof in the format historically used
internally, as soon as available.
(F) TAKEOVER STATUTES. If any Takeover Statute is or may
become applicable to the transactions contemplated hereby or by the Inducement
Agreement, the Audits Board of Directors will grant such approvals and take such
actions as are necessary so that the transactions contemplated hereby and
thereby may be consummated as promptly as practicable on the terms contemplated
hereby and thereby and otherwise act to eliminate the effects of any Takeover
Statute on any of such transactions.
SECTION 6.2 OTHER COVENANTS AND AGREEMENTS.
(A) COOPERATION OF ACQUISITION AND AUDITS. Acquisition and
Audits will fully cooperate with each other in the preparation of the Proxy
Statement.
(B) EFFORTS TO CONSUMMATE TRANSACTIONS. Acquisition, Group
Ltd. and Audits will each use their best efforts to consummate the Offer and the
Merger and to cause to be satisfied each of the conditions contained in Section
7.1 and each of the conditions contained in Section 7.2 and Annex I (to be
satisfied by Audits) and Section 7.3 (to be satisfied by Acquisition).
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(C) INDUCEMENT AGREEMENT. Immediately prior to the execution
and delivery of this Agreement, the Inducement Stockholders executed and
delivered the Inducement Agreement. Audits hereby represents and warrants that
the Inducement Agreement has been authorized by the Board of Directors of Audits
in the manner required by Section 203 of the DGCL.
(D) OTHER AGREEMENTS. Prior to consummation of the Offer,
Messrs. Solomon Dutka, H. Arthur Bellows, Jr., Joel S. Klein, Alan J. Ritter and
Carl Ravitch (collectively, the "Management Stockholders") will execute and
deliver Amendments to their Employment Agreements in the form of EXHIBIT D
hereto (the "Employment Amendments").
(E) COVENANT OF GROUP LTD.. Group Ltd. hereby covenants and
agrees with Audits that Group Ltd. shall cause Acquisition to perform and comply
with all of its covenants and agreements contained in this Agreement. After the
date of the consummation of the Offer, Group Ltd. and Acquisition shall use all
reasonable efforts to cause Audits to perform any of its obligations to be
performed under this Agreement from such date until the Effective Time.
(F) ANTITRUST FILINGS. Audits and Group Ltd. shall use their
best efforts to file as soon as practicable (i) notifications under the HSR Act,
(ii) the Mergers and Take-Overs (Control) Acts 1978 to 1996 of Ireland and (iii)
any other applicable law or regulation in connection with the Merger and the
transactions contemplated hereby, and to respond as promptly as practicable to
any inquiries received from the Federal Trade Commission (the "FTC"), the
Antitrust Division of the Department of Justice (the "DOJ") and the Minister for
Enterprise, Trade and Employment of Ireland and any other applicable
governmental bodies for additional information or documentation.
(G) INSURANCE AND INDEMNIFICATION. As of the Effective Time
and for six years thereafter (or such later time as to which the statute of
limitations shall have been extended by action of the Surviving Corporation),
Group Ltd. shall, and shall cause the Surviving Corporation to, indemnify,
defend and hold harmless the present and former officers, directors, employees
and agents of Audits and its Subsidiaries (each an "Indemnified Party") against
all losses, claims, damages or liabilities arising out of actions or omissions
occurring on or prior to the Effective Time (including, without limitation the
transactions contemplated by this Agreement) to the full extent permitted or
required under Delaware law and by Article Twelfth of the Surviving Certificate
of Incorporation and Article VII of the Surviving By-laws (which Article Twelfth
and Article VII shall not be amended to adversely affect such indemnity for the
six year period), 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 Delaware law and the Surviving Certificate of
Incorporation and the Surviving By-laws shall be made by independent counsel
mutually selected by the Indemnified Party and the Surviving Corporation. At the
Effective Time Group Ltd. shall cause the Surviving Corporation to purchase a
non-cancellable extension of the existing directors' and officers' liability
insurance of Audits covering parties who are currently covered by such policy
for a period of five
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years after the Effective Time in respect of acts or omissions occurring prior
to the Effective Time on terms with respect to coverage and amount no less
favorable than those of such policy in effect on the date hereof.
ARTICLE VII
MERGER CONDITIONS
SECTION 7.1 MUTUAL CONDITIONS. Neither Acquisition nor Audits
shall be obligated to complete or cause to be completed the Merger unless at the
Effective Time:
(A) STOCKHOLDER APPROVAL. Approval of this Agreement and
consent to the Merger by the stockholders of Audits as may be required by law
and by any applicable provisions of its Certificate of Incorporation or By-Laws
shall have been obtained.
(B) ABSENCE OF RESTRAINT. No order to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the Merger shall have
been entered by any court or administrative body and shall then remain
effective.
(C) CUTOFF DATE. The Merger shall in any event have been
completed not later than April 30, 1999.
(D) REGULATORY APPROVALS. All applicable regulatory approvals
necessary to consummation of the Merger (including, without limitation,
expiration or early termination of the waiting period under the HSR Act) shall
have been obtained.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF ACQUISITION.
Consummation of the Merger is subject to the fulfillment to the reasonable
satisfaction of Acquisition of each of the following conditions:
(A) COMPLIANCE WITH REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. All of the representations and warranties of Audits contained in
this Agreement shall be true and correct in all material respects at and as of
the Effective Time with the same force and effect as if they had been made at
and as of such date (except for changes contemplated or permitted by this
Agreement or otherwise approved in writing by Acquisition and Group Ltd.);
Audits shall have complied with and performed in all material respects all of
the covenants and agreements contained in this Agreement to be performed by it
at or prior to the Effective Time; and on the date of the Effective Time,
Acquisition shall have received from Audits a certificate dated that day, signed
by the Chairman and by the Chief Financial Officer of Audits, certifying the
foregoing. Until the Closing, Audits agrees to give Acquisition prompt written
notice of any matter or matters which come to Audits's attention which would
constitute a breach of the condition contained in this Section 7.2(a), together
with reasonably complete details of such matter or matters. Notwithstanding the
foregoing, no breach of any representation or warranty by Audits and no act or
omission to act of
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Audits, in each case which occurs after the consummation of the Offer shall
excuse Acquisition and Group Ltd. from their obligations under this Agreement.
(B) DISSENTING STOCKHOLDERS. The holders of not more than 10%
in the aggregate of the outstanding Audits Shares shall have filed with Audits
notices of election to dissent pursuant to Section 262 of the DGCL. If such
holders of more than 10% of the outstanding Audits shares have filed such
notices, Acquisition shall have the right to (i) waive this condition and close,
(ii) terminate this Agreement, or (iii) adjourn the Closing to any date not
later than the cutoff date referred to in Section 7.1(c) hereof to determine
whether such per centage is reduced to 10% or less by holders who abandon or
lose their right to appraisal pursuant to the procedures of said Section 262. At
such time as such percentage is thus reduced to 10% or less, this condition
shall be deemed satisfied.
(C) NO MATERIAL ADVERSE CHANGE. Except as otherwise set forth
herein or in the Disclosure Schedules, since September 30, 1998, no event shall
have occurred, and no condition shall exist, which has a Material Adverse
Effect.
SECTION 7.3 CONDITIONS TO OBLIGATIONS OF AUDITS. Consummation
of the Merger is subject to the fulfillment to the reasonable satisfaction of
Audits of each of the following conditions:
(A) COMPLIANCE WITH REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. All of the representations and warranties of Acquisition and Group
Ltd. contained in this Agreement shall be true and correct at and as of the
Effective Time with the same force and effect as if they had been made at and as
of such date (except for changes contemplated or permitted by this Agreement or
otherwise approved in writing by Audits); Acquisition and Group Ltd. shall have
performed all of the covenants and agreements contained in this Agreement to be
performed by them at or prior to the Effective Time; and on date of the
Effective Time, Audits shall have received from Acquisition and Group Ltd. a
certificate dated that day, signed by the President of Acquisition and by a
Director of Group Ltd., certifying the foregoing.
(B) ADEQUACY OF FUNDS. Simultaneously with the consummation of
the transactions contemplated hereby, Acquisition shall have caused to be
deposited with the Paying Agent funds in an amount sufficient to permit
consummation of the Merger in accordance with the terms hereof and Audits shall
have received evidence reasonably satisfactory to it and its counsel that such
funds have been received by the Paying Agent.
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ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated and
canceled, and the Offer, the Merger and the other transactions contemplated
hereby may be abandoned, notwithstanding shareholder authorization, at any time
prior to the Effective Time (a) by mutual consent of Acquisition and Audits, (b)
by any party not in material breach hereof, in the event that any of the
conditions specified in Section 7.1 shall not have been satisfied within the
time contemplated by this Agreement, (c) by Acquisition if not in material
breach hereof, if any of the conditions specified in Section 7.2 shall not have
been satisfied within the time contemplated by this Agreement, (d) by Audits, if
not in material breach hereof, if any of the conditions specified in Section 7.3
shall not have been satisfied within the time contemplated by this Agreement,
(e) by Acquisition if the Offer shall have expired or been terminated without
any Audits Shares being purchased thereunder by Acquisition and its affiliates
as a result of the occurrence of any of the events set forth in Annex I, and (f)
by Acquisition if the Board of Directors of Audits shall have modified in any
material respect or withdrawn its approval of this Agreement or the Merger as
permitted by Section 6.1(d)(ii).
Any party intending to terminate this Agreement pursuant to
clause (b), (c) or (d) hereof shall give notice of intention to terminate to the
other parties, specifying the breach of condition giving rise thereto, which
termination shall become effective (i) upon receipt thereof if the condition
shall then be impossible of performance, or (ii) on the tenth day after receipt
thereof if the breach is susceptible of cure and the condition is not satisfied
within such period.
If Acquisition intends to terminate this Agreement pursuant to
clause (e) or (f) hereof, Acquisition shall give notice of such intention to
terminate to Audits, specifying the event giving rise thereto, which termination
shall become effective upon receipt thereof.
SECTION 8.2 EFFECT OF TERMINATION. (A) If this Agreement is
terminated pursuant to Section 8.1, this Agreement, except as to the second
sentence of Section 6.1(b)(iv), shall no longer be of any force or effect and
there shall be no liability on the part of any party or its respective
directors, officers or shareholders; provided, however, that in the event that
Acquisition shall have terminated this Agreement pursuant to Section 8.1(f) or
pursuant to Section 8.1(e) in circumstances where the failure of any condition
set forth in Annex I resulted from a willful and intentional breach by Audits of
any provision of this Agreement, then Audits shall, concurrently with such
termination, pay Acquisition a fee of $1,250,000, which amount shall be payable
by wire transfer of same day funds, and shall promptly reimburse Acquisition for
all substantiated out-of-pocket costs and expenses incurred by Acquisition and
its affiliates in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, costs and expenses of
accountants and attorneys, up to an aggregate amount of $500,000. Audits
acknowledges that the agreements contained in this Section 8.2 are an integral
part of the transactions contemplated in this Agreement, and that, without these
agreements, Group Ltd. and Acquisition would not enter into this Agreement;
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accordingly, if Audits fails to promptly pay the amount due pursuant to this
Section 8.2, and, in order to obtain such payment, Group Ltd. or Acquisition
commences a suit which results in a judgment against Audits for the fee and
expenses set forth in this Section 8.2, Audits shall pay Group Ltd. its costs
and expenses (including attorneys' fees and disbursements) in connection with
such suit.
(B) In the event of a termination pursuant to Section 8.1(b),
(c) or (d), nothing herein shall prejudice the ability of the non-breaching
party from seeking and recovering damages from any other party for any breach of
this Agreement, including, without limitation, attorneys' fees and disbursements
and the right to pursue any remedy at law or in equity.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 EXTENSION OF TIME; WAIVERS. At any time prior to
the Effective Time:
(A) BY ACQUISITION. Acquisition and Group Ltd. may (i) extend
the time for the performance of any of the obligations or other acts of Audits,
(ii) waive any inaccuracies in the representations and warranties of Audits
contained herein or in any document delivered pur suant hereto by Audits and
(iii) waive compliance with any of the agreements or conditions contained herein
to be performed by Audits, except those which are required by applicable law,
rules or regulations to be performed. Any agreement on the part of Acquisition
and Group Ltd. to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of Acquisition and Group Ltd..
(B) BY AUDITS. Audits may (i) extend the time for the
performance of any of the obligations or other acts of Acquisition and Group
Ltd., (ii) waive any inaccuracies in the representations and warranties of
Acquisition and Group Ltd. contained herein or in any document delivered
pursuant hereto by Acquisition and Group Ltd. and (iii) waive compliance with
any of the agreements or conditions contained herein to be performed by
Acquisition and Group Ltd., except those which are required by applicable law,
rules or regulations to be performed. Any agreement on the part of Audits to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of Audits.
SECTION 9.2 COSTS AND EXPENSES. Except as otherwise provided
in this Agreement, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby will be paid by the party
incurring such expenses.
SECTION 9.3 AMENDMENTS. This Agreement may be amended with the
approval of Acquisition and Audits at any time before or after approval thereof
by the stockholders of Audits, but after any such stockholder approval, no
amendment shall be made which reduces the amount or changes the form of the
consideration distributable to the stockholders of Audits without the further
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approval of the Independent Directors and the stockholders of Audits. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
SECTION 9.4 ASSIGNABILITY. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns, provided that this Agreement may not be assigned by any
party without the prior written consent of the other parties. Without limiting
the generality of the foregoing, prior to the sixth anniversary of the Effective
Time, the Surviving Corporation shall not, and Group Ltd. will not permit the
Surviving Corporation to, merge, consolidate or combine with, or transfer
substantially all of its assets to, any other person unless such person
expressly assumes the insurance and indemnification obligations set forth in
Section 6.2(g) hereof, in Article Twelfth of the Surviving Certificate of
Incorporation and in Article VII of the Surviving By-Laws.
SECTION 9.5 NOTICES. Any notice to a party hereto pursuant to
this Agreement shall be in writing, shall be deemed given when received, and
shall be delivered personally or sent by certified or registered mail or by
telecopier addressed as follows:
To Acquisition or Group Ltd.:
United Information Group Limited
Ludgate House
245 Blackfriars Road
London SE1 9UY
England
Attention: Mr. Jim Rose
Telecopier No.: 011-44-171-579-4485
with a copy to:
United Information Group, Inc.
2 World Trade Center, Suite 5550
New York, New York 10048
Attention: Anne W. Gurnsey, Esq.
Telecopier No.:212-306-0882
and a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, New York 10005
Attention: James E. Abbott, Esq.
Telecopier No.: 212-732-3232
31
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To Audits:
Audits & Surveys Worldwide, Inc.
The Audits & Surveys Building
650 Avenue of the Americas
New York, New York 10011
Attention: Mr. Sol Dutka
Telecopier No.: 212-243-5748
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Michael J. Shef, Esq.
Telecopier No.: 212-704-6288
SECTION 9.6 ENTIRE AGREEMENT; LAW GOVERNING. This Agreement
together with all other agreements contemplated hereby (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
except for the confidentiality agreement dated as of June 5, 1998 between Audits
and United Information Group Limited (formerly called NOP Information Group
Limited), as amended by a letter agreement dated October 10, 1998, which
confidentiality agreement shall continue in full force and effect until the
Closing, (b) may be executed in several counterparts, each of which will be
deemed an original and all of which shall constitute one and the same
instrument, and (c) except as otherwise stated in any other agreement, shall be
governed in all respects, including validity, interpretation and effect, by the
internal substantive laws of the State of New York without regard to the
conflict of law principles thereof.
SECTION 9.7 PUBLICITY AND DISCLOSURES. Promptly after the
execution and delivery of this Agreement the parties shall issue a joint press
release in the form of EXHIBIT E hereto. No other press releases or public
disclosures of the transactions contemplated by this Agreement, either oral or
written, shall be made without the prior written consent of all the parties
hereto, provided, however, that no such consent shall be unreasonably withheld
or delayed and provided further that no such consent shall be required if (a) in
the opinion of counsel for the party proposing to make such press release or
public disclosure, such press release and/or public disclosure is required by
applicable law, rules or regulations or by stock exchange requirement, and (b)
time does not permit the obtaining of approval by the other parties.
SECTION 9.8 HEADINGS. The headings and captions of the
sections and subsections of this Agreement are included for convenience of
reference only and shall have no effect on the construction or meaning of this
Agreement.
SECTION 9.9 SURVIVAL. The representations and warranties
contained in Article V hereof shall not survive the Closing.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
UNITED INFORMATION ACQUISITION CORP.
By: /s/ Richard M. Block
---------------------------------
UNITED NEWS & MEDIA GROUP LIMITED
By: /s/ Charles Stern
---------------------------------
AUDITS & SURVEYS WORLDWIDE, INC.
By: /s/ H. Arthur Bellows, Jr.
---------------------------------
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ANNEX I
Notwithstanding any other provision of this Agreement, Acquisition
shall not be required to accept for payment or pay for any Audits Shares
tendered, and may terminate or amend the Offer (subject to the provisions of
this Agreement) and may postpone the acceptance of, and payment for, subject to
Rule 14e-1(c) of the Exchange Act, any Audits Shares tendered, (A) unless the
following conditions shall have been satisfied: (i) there shall be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Audits Shares which represents on a fully diluted basis (including for purposes
of such calculation all Audits Shares issuable upon exercise of all vested stock
options and warrants and conversion of convertible securities or other rights to
purchase or acquire shares) at least 51% of the number of Audits Shares then
outstanding (the "Minimum Condition") and (ii) any applicable waiting period
under the HSR Act shall have expired or been terminated prior to the expiration
of the Offer and any required approval of the competition authority of the
Republic of Ireland shall have been obtained or (B) if at any time after the
date of this Agreement and before the time of payment for any such Audits Shares
(whether or not any Audits Shares have theretofore been accepted for payment or
paid for pursuant to the Offer) any of the following conditions exists:
(a) there shall be in effect an injunction or other order,
decree, judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of
competent jurisdiction or a statute, rule, regulation, executive order
or other action or proceeding shall have been promulgated, enacted,
taken, initiated or instituted by a government or a governmental
authority or a governmental, regulatory or administrative agency or
commission of competent jurisdiction which in any such case (i) seeks
to restrain or prohibit the making or consummation of the Offer or the
consummation of the Merger, (ii) seeks to prohibit or restrict the
ownership or operation by Acquisition (or any of its affiliates or
subsidiaries) of any material portion of Audits's business or assets,
or seeks to compel Acquisition (or any of its affiliates or
subsidiaries) to dispose of or hold separate any material portion of
Audits's business or assets, (iii) seeks to impose material limitations
on the ability of Acquisition effectively to acquire or to hold or to
exercise full rights of ownership of the Audits Shares, including,
without limitation, the right to vote the Audits Shares purchased by
Acquisition on all matters properly presented to the stockholders of
Audits, or (iv) seeks to impose any material limitations on the ability
of Acquisition or any of its affiliates or subsidiaries effectively to
control in any material respect the business and operations of Audits;
or
(b) this Agreement shall have been terminated by Audits,
Acquisition or Group Ltd. in accordance with its terms; or
(c) there shall have occurred and be continuing (i) any
general suspension of, or limitation on prices for, trading in
securities on any national securities exchange or the over-the-counter
market, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) any limitation
(whether or not mandatory) by any government or Governmental Authority
of the United States on the extension of credit by banks or other
lending institutions, or (iv) in the case of any of the
34
<PAGE>
foregoing existing at the time of the execution of this Agreement, a
material acceleration or worsening thereof; or
(d) (i) the Board of Directors or any committee thereof shall
have withdrawn, materially modified or changed in a manner adverse to
Group Ltd. or Acquisition the approval or recommendation of the Offer,
the Merger or the Agreement, or approved or recommended any Acquisition
Transaction or any other acquisition of Audits Shares other than the
Offer or the Merger, or (ii) the Board of Directors or any committee
thereof shall have resolved to do any of the foregoing; or
(e) the representations and warranties of Audits shall not be
true and correct as of the date of this Agreement or as of the
expiration of the Offer except for (i) changes specifically
contemplated by this Agreement and (ii) those representations and
warranties that address matters only as of a particular date (which
shall remain true and correct as of such date) and in each case except
in where failure to be so true and correct would not (in the aggregate
for all representations and warranties of Audits) have a Material
Adverse Effect (other than representations and warranties that are
already so qualified or that are qualified as to the prevention or
delay of the consummation of any of the Transactions or as to the
performance by Audits of its obligations under this Agreement, which in
each such case shall be true and correct as written); or
(f) Audits shall have failed to perform any obligation or to
comply with any agreement or covenant of Audits to be performed or
complied with by it under this Agreement unless all such failures
together in their entirety, would not, individually or in the
aggregate, have a Material Adverse Effect; or
(g) Audits shall not have delivered to Group Ltd. binding
agreements signed by the holders of Options representing all of the
Audits Shares issuable upon exercise of all of the outstanding Options
(whether or not exercisable) which are vested or unvested under
Audits's 1994 Stock Option Plan or vested under Audits's 1997 Stock
Option Plan, agreeing to the cancellation of the Options of such
holders on the terms described in Section 3.2 of this Agreement (it
being understood that Audits additionally shall use reasonable efforts
to obtain acknowledgments from the holders of unvested Options under
Audits's 1997 Stock Option Plan that such Options shall become null as
of the Effective Time by the terms of such Plan);
(h) the Employment Amendments shall not have been executed and
delivered by the parties thereto;
(i) there shall since September 30, 1998 have occurred any
event that, individually or when considered together with any other
matter, has had or is reasonably likely in the future to have a
Material Adverse Effect (other than as set forth in the Audits SEC
Reports filed with the SEC prior to the date hereof or in Part F or
elsewhere of the Disclosure Schedule); or
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<PAGE>
(j) Acquisition and Audits shall have agreed that Acquisition
shall amend the Offer to terminate the Offer or postpone the payment
for Audits Shares pursuant thereto.
The foregoing conditions are for the sole benefit of Acquisition and
may be asserted by Acquisition regardless of the circumstances giving
rise to any such condition or may be waived by Acquisition in whole or
in part at any time and from time to time in its sole discretion,
subject in each case to the terms of the Merger Agreement. The failure
by Acquisition at any time to execute any of the foregoing rights shall
not be deemed a waiver of any such right with respect to particular
facts and other circumstances shall not be deemed a waiver with respect
to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time
to time.
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Exhibit 99.(c)(2)
EXHIBIT A
INDUCEMENT AGREEMENT
This Inducement Agreement (the "Agreement"), dated as of January 19,
1999, by and among United Information Acquisition Corp., a Delaware corporation
("Acquisition"), and the stockholders listed on the signature page hereof (each
such stockholder being referred to herein as a "Stockholder" and, collectively
with each other Stockholder, the "Stockholders").
W I T N E S S E T H
WHEREAS, each Stockholder is the sole record and beneficial owner of,
and has the sole right to vote with respect to, the number of shares of common
stock, par value $.01 per share ("Shares") of Audits & Surveys Worldwide, Inc.,
a Delaware corporation ("Audits") set forth opposite the name of such
Stockholder on Schedule A hereto;
WHEREAS, in reliance upon the execution and delivery of this Agreement,
United News & Media Group Limited, an English limited company and affiliate of
Acquisition ("Group Ltd."), and Acquisition will enter into an Agreement and
Plan of Merger dated as of the date hereof (the "Merger Agreement"), with Audits
pursuant to which, among other things, Acquisition will commence a tender offer
(as modified from time to time as permitted by the Merger Agreement, the
"Offer") for all of the outstanding Shares at a price of $3.24 per share, and
Acquisition will be merged with and into Audits (the "Merger"), on the terms and
subject to the conditions contained in the Merger Agreement; and
WHEREAS, in order to induce Acquisition and Group Ltd. to enter into
the Merger Agreement and to incur the obligations set forth therein, the
Stockholders are entering into this Agreement pursuant to which each Stockholder
is (i) agreeing to tender such Stockholder's Option Shares in accordance with
the terms of the Offer, (ii) granting an irrevocable proxy to Acquisition to
vote in favor of the Merger and to make certain agreements with respect to such
Stockholders' Shares, and (iii) granting an option to Acquisition to purchase
such Stockholder's Option Shares, all upon the terms and conditions set forth
herein.
NOW THEREFORE, for and in consideration of the foregoing and the mutual
promises contained herein, and upon and subject to the terms and conditions set
forth below, the parties hereto agree as follows:
SECTION 1. GRANT OF IRREVOCABLE PROXY. Each Stockholder hereby
irrevocably appoints and constitutes Acquisition or any designee of Acquisition,
with full power of substitution, the lawful agent, attorney and proxy of the
Stockholder (each an "Irrevocable Proxy") during the term of this Agreement to
vote in its sole discretion the number of Shares specified in Schedule A hereto
(such Shares, together with any Shares which such Shareholder acquires after the
date hereof, being
<PAGE>
the "Option Shares") in the following manner for the following purposes: (i) to
call one or more meetings of the stockholders of Audits in accordance with the
By-Laws of Audits and applicable law for the purpose of considering the
transactions contemplated by the Merger Agreement such that the stockholders
shall have the full opportunity to approve the Merger Agreement and any and all
amendments, modifications and waivers thereof and the transactions contemplated
thereby; (ii) in favor of the Merger Agreement or any of the transactions
contemplated by the Merger Agreement at any stockholders' meetings of Audits
held to consider the Merger Agreement (whether annual or special and whether or
not an adjourned meeting); (iii) against any other proposal for any
recapitalization, merger, sale of assets or other business combination between
Audits and any other person or entity other than Acquisition or the taking of
any action which would result in any of the conditions to Acquisition's
obligations under the Merger Agreement not being fulfilled; and (iv) as
otherwise necessary or appropriate to enable Acquisition to consummate the
transactions contemplated by the Merger Agreement and, in connection with such
purposes, to otherwise act with respect to the Shares which the Stockholder is
entitled to vote. THIS IRREVOCABLE PROXY HAS BEEN GIVEN IN CONSIDERATION OF THE
UNDERTAKINGS OF ACQUISITION AND Group Ltd. IN THE MERGER AGREEMENT AND SHALL BE
IRREVOCABLE AND COUPLED WITH AN INTEREST UNTIL THE IRREVOCABLE PROXY TERMINATION
DATE AS DEFINED IN SECTION 2 HEREOF. This Agreement shall revoke all other
proxies granted by the Stockholders with respect to their Option Shares.
SECTION 2. IRREVOCABLE PROXY TERMINATION DATE. This Irrevocable Proxy
shall expire on the earlier to occur of the closing of the Offer or the
termination of the Merger Agreement pursuant to its terms (in either case, the
"Merger Termination Date").
SECTION 3. GRANT OF OPTION. Subject to the conditions herein set forth,
each Stockholder hereby grants to Acquisition an irrevocable option (the
"Option") to purchase such Stockholder's Option Shares at $3.24 per share
(subject to adjustment as provided in Section 5 below), expiring on the earlier
to occur of the closing of the Offer or the termination of the Merger Agreement
pursuant to its terms (the "Expiration Date").
SECTION 4. EXERCISE AND CLOSING OF OPTION. Acquisition may exercise the
Option by delivery of written notice of exercise to each Stockholder, binding
Acquisition to purchase such Stockholders' Option Shares on terms set forth
herein, signed by an officer of Acquisition, to such Stockholder at the
executive offices of Audits in New York, New York, prior to the Expiration Date.
The closing of the purchase and sale of the Option Shares shall occur at the
offices of Carter, Ledyard & Milburn in New York, New York, at 10 a.m. on the
second business day following the delivery of the notice of exercise of the
Option. At such Closing, each Stockholder shall deliver certificates
representing such Stockholder's Option Shares endorsed for transfer to
Acquisition, subject to any applicable restrictions as to transferability under
the Securities Act of 1933, against delivery to such Stockholder of a certified
check or wire transfer of the purchase price therefor, payable in funds good on
the date of such delivery. Notwithstanding anything to the contrary contained in
this Agreement, Acquisition may exercise the Option only in the event of a
Superior
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<PAGE>
Proposal (as said term is defined in the Merger Agreement) or of a willful and
intentional breach of the Merger Agreement by Audits.
In the event that Acquisition exercises the Option and the closing of
the purchase and sale of the Option Shares occurs pursuant to this Section 4,
Acquisition and Group Ltd. agree (a) not to terminate the Offer and (b) to
consummate the purchase of all Shares tendered (and not withdrawn) pursuant to
the Offer whether or not all of the conditions contained in Annex 1 to the
Merger Agreement have been satisfied.
SECTION 5. ADJUSTMENT TO PURCHASE PRICE. In the event Acquisition (or
any affiliate of Acquisition) shall at any time prior to the Expiration Date of
the Option (whether or not the Option shall have been exercised prior thereto)
purchase or offer to purchase any Shares at a price or prices higher than $3.24
per share, then (i) if any Option has not been exercised prior to such purchase
or purchases or offer or offers, the price at which such Options may thereafter
be exercised shall automatically be increased to the highest such price, or,
(ii) if any Option has been exercised prior to any such purchase or purchases,
Acquisition shall pay to each Stockholder with respect to which the Option was
exercised, promptly after the Expiration Date, an additional sum equal to the
difference between the price at which it exercised the Option and the price it
would have been required to pay to exercise the Option if it had exercised the
Option immediately prior to the Expiration Date.
SECTION 6. AGREEMENT TO TENDER. Each Stockholder hereby agrees that, if
Acquisition commences the Offer, such Stockholder will tender, or cause to be
tendered, such Stockholder's Option Shares to Acquisition as soon as practicable
(and in any event within five business days) after the commencement of the Offer
in accordance with the terms and conditions of the Offer. Each Stockholder
further agrees that he will not withdraw such tendered Option Shares unless the
Offer is terminated by Acquisition.
SECTION 7. COVENANTS OF THE STOCKHOLDERS. Each Stockholder covenants
and agrees for the benefit of Acquisition that, until the Merger Termination
Date, he/she will not:
(a) sell, transfer, pledge, hypothecate, encumber, assign,
tender or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, pledge,
hypothecation, encumbrance, assignment, tender or other disposition of, any of
his Shares or any interest therein;
(b) other than as expressly contemplated by this Agreement,
grant any powers of attorney or proxies or consents in respect of any of such
Stockholder's Option Shares, deposit any of such Shares into a voting trust,
enter into a voting agreement with respect to any of such Shares or otherwise
restrict or take any action adversely affecting the ability of such Stockholder
freely to exercise all voting rights with respect thereto; or
(c) directly or indirectly through his or her agents and
representatives, initiate, solicit or encourage, any inquiries or the making or
implementation of any alternative proposal (an
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<PAGE>
"Alternative Proposal") to acquire the Shares or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Alternative Proposal, or otherwise
facilitate any effort or attempt to make or implementation Alternative Proposal;
and such Stockholder shall (i) immediately cease and cause to be terminated any
existing activities, including discussions or negotiations with any parties,
conducted heretofore with respect to any of the foregoing and will take the
necessary steps to inform his or her agents and representatives of the
obligations undertaken in this Section 7(c), and (ii) notify Acquisition
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, him or her. Notwithstanding anything
to the contrary contained in Section 7, each Stockholder may take any action
permitted by the provisions of Section 6.1(d) of the Merger Agreement without
being in breach of this Section 7.
In addition, each Stockholder agrees to (i) deliver one or
more certificates evidencing all of such Stockholder's Option Shares (together
with any replacement certificates or certificates reflecting additional Shares
hereafter acquired by such Stockholder, but less such certificates, representing
in the aggregate not more than 18,000 Option Shares as of the date hereof, as
the Stockholders are not able to locate after diligent search thereof, the
"Share Certificates") to American Stock Transfer and Trust Company, transfer
agent for the Shares, for placement of an appropriate legend reflecting this
Agreement and (ii) keep the Share Certificates at all times prior to the
Expiration Date in the safekeeping of the Depositary of the Offer; provided that
the Depositary has delivered to the Stockholder an agreement in form acceptable
to the Stockholder and Acquisition to notify the Stockholder and Acquisition
five business days prior to the date such Share Certificates are to be removed
from Depositary's safekeeping.
SECTION 8. COVENANTS OF ACQUISITION. Acquisition covenants and agrees
for the benefit of the Stockholders that (a) immediately upon execution of this
Agreement, Acquisition shall enter into the Merger Agreement, and (b) until the
Merger Termination Date, it shall use all reasonable efforts to take, or cause
to be taken, all action, and do, or cause to be done, all things necessary or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement and the Merger Agreement, consistent with the
terms and conditions of each such agreement; provided, however, that nothing in
this Section 8 or any other provision of this Agreement is intended, nor shall
it be construed, to limit or in any way restrict Acquisition's right or ability
to exercise any of its rights under the Merger Agreement.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
Stockholder represents and warrants to Acquisition that:
(a) the execution, delivery and performance by such
Stockholder of this Agreement will not conflict with, require a consent, waiver
or approval under, or result in a breach or default under, any of the terms of
any contract, commitment or other obligation (written or oral) to which such
Stockholder is bound;
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<PAGE>
(b) such Stockholder has full right, power and authority to
enter into and execute this Agreement and to perform his obligations hereunder;
(c) this Agreement has been duly executed and delivered by
such Stockholder and constitutes a legal, valid and binding obligation of such
Stockholder enforceable against him in accordance with its terms;
(d) such Stockholder is the sole record and beneficial owner
of, and has the sole right to vote with respect to, the number of Shares set
forth opposite such Stockholder's name on Schedule A hereto, and such Shares
represent all Shares of or with respect to which such Stockholder is the sole
owner or has the right to vote at the date hereof;
(e) except for the Shares listed on Schedule A hereto, such
Stockholder does not have any right to acquire, nor is he or she the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended) of, any other shares of any class of capital stock of
Audits or any securities convertible into or exchangeable or exercisable for any
shares of any class of capital stock of Audits (other than shares subject to
options or other rights granted by Audits as set forth on Schedule B hereto);
(f) such Stockholder's Option Shares are duly authorized,
validly issued, fully paid and non-assessable, and such Stockholder owns its
Shares free and clear of all liens, claims, pledges, charges, proxies,
restrictions, encumbrances, proxies and voting agreements of any nature
whatsoever (each, an "Encumbrance") other than as provided by this Agreement,
and good and valid title to its Shares, free and clear of any Encumbrance, will
pass to Acquisition upon closing of the Offer or exercise of the Option granted
pursuant to Section 3 hereof; and
(g) The Board of Directors of Audits has approved the granting
of the Option to Acquisition.
The representations and warranties contained herein shall be made as of
the date hereof and as of the Closing.
SECTION 10. REPRESENTATIONS AND WARRANTIES OF ACQUISITION. Acquisition
represents and warrants to the Stockholders that:
(a) It has all requisite corporate power and authority to
enter into and perform all of its obligations under this Agreement;
(b) The execution, delivery and performance of this Agreement
by it and all transactions contemplated hereby have been duly authorized by all
necessary corporate action on its part, and this Agreement constitutes the
legal, valid and binding contract of Acquisition enforceable against it in
accordance with its terms; and
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<PAGE>
(c) Acquisition will not acquire the Option Shares with a view
to the distribution thereof as that term is used in the Securities Act of 1933.
The representations and warranties contained herein shall be made as of
the date hereof and as of the Closing.
SECTION 11. ADJUSTMENTS; ADDITIONAL SHARES. In the event of any stock
dividend, stock split, merger (other than the Merger), recapitalization,
reclassification, combination, exchange of shares or the like of the capital
stock of Audits on, of or affecting the Option Shares, then the terms of this
Agreement shall apply to the shares of capital stock or other instruments or
documents that such Stockholder owns or has the right to vote, in respect of the
Option Shares of such Stockholder, immediately following the effectiveness of
the such event as though they were Option Shares hereunder.
SECTION 12. SPECIFIC PERFORMANCE. The parties hereto agree that the
Shares are unique and that money damages are an inadequate remedy for breach of
this Agreement because of the difficulty of ascertaining the amount of damage
that will be suffered by Acquisition in the event that this Agreement is
breached. Therefore, each of the Stockholders agrees that in addition to and not
in lieu of any other remedies available in Acquisition at law or in equity,
Acquisition may obtain specific performance of this Agreement.
SECTION 13. ASSIGNMENT. Acquisition's rights and obligations under this
Agreement may not be assigned without the consent of each affected Stockholder,
except that Acquisition may assign the same to any direct or indirect
wholly-owned subsidiary of United News & Media PLC upon delivery of written
notice of such assignment to such affected Stockholder(s). No such assignment
shall release Acquisition from its obligations under this Agreement.
SECTION 14. AMENDMENTS. No amendment or waiver of any provision of this
Agreement or consent to departure therefrom shall not be effective unless in
writing and signed by Acquisition and all affected Stockholders, in the case of
an amendment, or by the party which is the beneficiary of any such provision, in
the case of a waiver or a consent to depart therefrom.
SECTION 15. NOTICES. Any notices or other communications hereunder
shall be in writing and shall be deemed to have bee duly given (and shall be
deemed to have been duly received if so given) if personally delivered or sent
by telecopier or by registered or certified mail, postage paid, addressed to the
respective parties as follows:
If to Acquisition:
United Information Group Limited
Ludgate House
245 Blackfriars Road
London SE1 9UY
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<PAGE>
England
Attention: Mr. Jim Rose
Telecopier No.: 011-44-171-579-4485
with a copy to:
United Information Group, Inc.
2 World Trade Center, Suite 5550
New York, New York 10048
Attention: Anne W. Gurnsey, Esq.
Telecopier No.:212-306-0882
and a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, New York 10005
Attention: James E. Abbott, Esq.
Telecopier No.: 212-732-3232
If to a Stockholder:
To the address listed on the signature page hereof
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, NY 10036
Attention: Michael J. Shef, Esq.
Fax: 212-704-6288
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
SECTION 16. MISCELLANEOUS. All references herein to time shall mean New
York, New York time. All amounts payable hereunder are in United States Dollars.
SECTION 17. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal substantive laws of the State of New
York, without regard to the conflict of laws principles thereof.
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<PAGE>
SECTION 18. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
personal representatives, executors, heirs and permitted assigns.
SECTION 19. HEADINGS. The Section headings herein are for convenience
of reference only and shall not affect the construction hereof.
SECTION 20. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same Agreement.
IN WITNESS WHEREOF, Acquisition and each of the Stockholders have duly
executed this Agreement as of the date and year first above written.
UNITED INFORMATION ACQUISITION CORP.
By: /s/ Richard M. Block
---------------------------------
Name: Richard M. Block
Title: President
/s/ Solomon Dutka
------------------------------------
Solomon Dutka
Address: 2600 Netherland Avenue
Riverdale, New York 10463
/s/ Carl Ravitch
------------------------------------
Carl Ravitch
Address: 2602 Woodsview Drive
Bensalem, Pennsylvania 19020
-8-
<PAGE>
SCHEDULE A
STOCKHOLDER SHARES
<TABLE>
<CAPTION>
NAME OF STOCKHOLDER NUMBER OF OPTION
SHARES
<S> <C>
Solomon Dutka 4,860,905
Carl Ravitch 1,528,713
</TABLE>
-9-
<PAGE>
SCHEDULE B
SHARES SUBJECT TO OPTIONS OR OTHER RIGHTS
<TABLE>
<CAPTION>
NAME OF STOCKHOLDER NUMBER OF SHARES
<S> <C>
Solomon Dutka 50,000
Carl Ravitch 20,000
</TABLE>
-10-
<PAGE>
Exhibit 99(c)(15)
AMENDMENT NUMBER 2
TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT dated as of the 19th day of January, 1999 by and between
Audits & Surveys Worldwide, Inc., a Delaware corporation (the "Company"), and
Solomon Dutka, an individual residing at [2600 Netherland Avenue, Riverdale, New
York 10463] (the "Employee").
WHEREAS, the Company and the Employee are parties to an Employment
Agreement, dated as of March 24, 1995, as amended March 25, 1997 (collectively
referred to as the "Agreement"); and
WHEREAS, United Information Group Limited, an English limited company,
United Information Acquisition Corp., a Delaware corporation ("United
Acquisition") and the Company have entered into an Agreement and Plan of Merger,
dated as of January 19, 1999, whereby United Acquisition shall, pursuant to a
cash tender offer (the "Offer") by United Acquisition for all of the outstanding
shares of common stock, par value of $.01, of the Company, acquire (the
"Acquisition") the Company upon such terms and conditions as are set forth
therein.
WHEREAS, in connection with and as a result of the Acquisition the Company
and the Employee wish to amend the Agreement as set forth herein.
NOW THEREFORE, in consideration of the Acquisition and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound hereby, the Company and the Employee hereby agree as follows:
Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to those terms in the Agreement.
1. AMENDMENT TO PARAGRAPH 3. Paragraph 3 of the Agreement shall be modified
such that the duties of the Employee, on or after the date of this Amendment and
for the balance of the Employment Term shall be as follows: The Employee shall
serve as a member of the Company's Board of Directors and as the chairman of the
Company subject to the authority and direct supervision of the Board of
Directors of the Company and shall perform such duties for the Company, the
Company's affiliates, subsidiaries, divisions and operating units as may be
assigned to him from time to time by the Board of Directors of the Company and
as are consistent with the usual duties of an employee of his status. The
Employee shall not be required to perform services at a location other than the
current principal office of the Company, or a successor principal office
established by the Company in New York County; provided, however, that the
Employee may be required to travel consistent with his past practice.
<PAGE>
2. AMENDMENT TO PARAGRAPH 7. A new subparagraph 7(c) shall be added to read
as follows: The Employee shall, during the Employment Term, be entitled to the
same or comparable benefits, privileges and perquisites currently enjoyed by the
Employee, including, without limitation, those relating to vacations and days
off, first class travel and his existing office and secretary and during the
Employment Term, the Company shall in no way reduce the benefits or vacation (in
quality, type, quantity, duration or otherwise) provided on the date hereof to
the Employee.
3. AMENDMENT TO PARAGRAPH 12. Paragraph 12(b) shall be modified such that all
references to "the Company" shall be replaced by "the Company, its subsidiaries
or affiliates".
4. EFFECTIVENESS. This Amendment shall become effective upon consummation of
the acquisition by United Acquisition of in excess of 50% of the outstanding
Common Stock of the Company pursuant to the Offer.
5. INTEGRATION. Except as set forth in Sections 1 through 4 above, the terms
and conditions set forth in the Agreement shall remain in full force and effect
and shall be incorporated herein by this reference.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first above written.
AUDITS & SURVEYS WORLDWIDE, INC.
By: /s/ H. Arthur Bellows, Jr.
---------------------------------
Name: H. Arthur Bellows, Jr.
Title: President
/s/ Solomon Dutka
------------------------------------
SOLOMON DUTKA
<PAGE>
Exhibit 99(c)(16)
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of January 19, 1999, between Audits
& Surveys Worldwide, Inc., a Delaware corporation having an address at 650
Avenue of the Americas, New York, New York 10011 (the "Company"), and H. Arthur
Bellows, Jr., an individual residing at 15 Upper Cross Road, Greenwich,
Connecticut 06831 ("Employee").
W I T N E S S E T H :
WHEREAS, Employee has been employed by the Company for more than 30
years; and
WHEREAS, the Company, United News & Media Group Limited ("Group Ltd.")
and United Information Acquisition Corp. ("Acquisition") have entered into that
certain Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"), pursuant to which Acquisition will make a cash tender offer (the
"Offer") to acquire all outstanding shares of common stock, $.01 par value, of
the Company (the "Common Stock"), and, following the consummation of the Offer,
Acquisition will merge with and into the Company, in each case, subject to the
terms and conditions in the Merger Agreement; and
WHEREAS, subject to and upon the purchase by Acquisition of more than
50% of the Common Stock pursuant to the Offer, the Company and Employee desire
to terminate that certain Employment Agreement dated March 24, 1995, as amended,
between the Company and Employee and, simultaneously therewith, the Company,
United and Employee desire to set forth terms pursuant to which Employee will
render services to the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agree
ments contained herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Employment Services. Subject to and upon the terms and
conditions contained in this Agreement, the Company hereby agrees to continue to
employ Employee, and Employee agrees to continue in the employ of the Company,
during the period set forth in Paragraph 2 hereof to render to the Company the
services described in Paragraph 3 hereof.
2. Term. Subject to the terms hereof, Employee's term of employment
under this Agreement shall begin on the date Acquisition (or any of its
affiliates) acquires more than 50% of the Common Stock pursuant to the Offer and
shall continue for a period through and including March 24, 2002, unless
extended as hereinbelow provided or earlier terminated pursuant to the terms and
conditions set forth herein (the "Employment Term"). The Employment Term shall
be extended for successive one (1) year terms unless either party hereto gives
written notice to the other of its desire to terminate this Agreement at least
ninety (90) days prior to the commencement of any such
<PAGE>
extension. The Company and Employee hereby agree that if Acquisition (or any of
its affiliates) does not acquire more than 50% of the Common Stock pursuant to
the Offer, this Agreement shall be null and void ab initio. In such case, the
Company and Employee hereby agree that the Company will continue to employ
Employee and Employee will continue to be employed by the Company pursuant to
the terms of that certain Employment Agreement dated March 24, 1995 between
Employee and the Company, as amended by Agreements dated March 25, 1997 and June
30, 1997 between Employee and the Company.
3. Duties.
(a) The Company hereby retains Employee to perform, and
Employee agrees to render to the Company on the terms herein set forth, such
consultative and advisory services as may from time to time be mutually agreed
upon by Employee and the Board of Directors or officers of the Company. In each
case, such consultative and advisory services shall be limited to matters
involving finances of the Company, prospective mergers and acquisitions
involving the Company, major consultations for Company clients and joint
ventures involving the Company. If agreed to by Employee, such services may
also be rendered to affiliates of the Company. No time period or date of
completion for services to be rendered by Employee shall be effective against
Employee unless mutually agreed to by the Company and Employee.
(b) It is expressly understood and agreed that Employee
shall devote only so much time, and shall consult with and advise the officers
and directors of the Company, only to such extent and at such times as Employee
shall determine are required. Notwithstanding anything in this Agreement to the
contrary (except as otherwise provided in Paragraph 11 hereof), Employee shall
be free to devote the balance of his time and attention to such other
non-competitive business activities and enterprises, as he may see fit.
4. Compensation. As compensation for his services and covenants
hereunder, Employee shall receive a salary ("Salary"), payable in equal
bi-monthly installments, at the rate of $350,000 per annum, and such bonuses as
may be determined from time to time by the Board of Directors of the Company.
5. Location of Services. Employee and the Company hereby agree that
Employee shall, at his own expense, move his office (including any necessary
furniture, equipment and files) from its present location at 650 Avenue of the
Americas, New York, New York 10011 and establish an office anywhere in Fairfield
County, Connecticut (the "Connecticut Office") for the performance of the duties
and services described herein. Such move shall be completed, at the discretion
of Employee, no earlier than February 15, 1999 and no later than March 31, 1999
(the date the move is complete is referred to herein as the "Move Date").
Commencing on the Move Date and continuing for the Employment Term, unless
otherwise mutually agreed to by Employee and the Company, the duties and
services to be performed herein shall be performed at the Connecticut Office.
Commencing on the Move Date and continuing for the Employment Term, the Company
shall provide Employee, in addition to the payments otherwise required under
this Agreement, Three
-2-
<PAGE>
Thousand Dollars ($3,000) per calendar month payable on the first day of each
calendar month (except that the first payment shall be made on the Move Date)
for the purpose of defraying the cost of maintaining the Connecticut Office
(including the cost of secretarial and administrative services).
6. Business Expenses. Prior to the Move Date, Employee shall be
reimbursed for, and entitled to advances (subject to repayment to the Company if
not actually incurred by Employee) with respect to, only those business expenses
incurred by him (a) which are reasonable and necessary for Employee to perform
his duties under this Agreement in accordance with policies established from
time to time by the Company, and (b) for which Employee has submitted vouchers
and/or receipts. Commencing on the Move Date and continuing for the Employment
Term, in addition to amounts reimbursed under Paragraph 5 hereof, Employee shall
be reimbursed for, and entitled to advances (subject to repayment to the Company
if not actually incurred by Employee) with respect to, only those business
expenses incurred at the request of the Board of Directors or officers of the
Company.
7. Participation in Benefit Plans.
(a) During the Employment Term, the Company shall continue to
provide Employee with the insurance, disability, health and medical benefits and
retirement plans or programs currently provided to Employee, including
medical/health insurance for Employee and his family, provided that Employee
shall be required to comply with the conditions attendant to coverage by such
plans and shall comply with and be entitled to benefits only in accordance with
the terms and conditions of such plans. During the Employment Term, Employee
shall also be entitled to such insurance, disability and health and medical
benefits and be entitled to participate in such retirement plans or programs as
are from time to time generally made available to executive employees of the
Company pursuant to the policies of the Company; provided that Employee shall be
required to comply with the conditions attendant to coverage by such plans and
shall comply with and be entitled to benefits only in accordance with the terms
and conditions of such plans. The Company may withhold from any benefits
payable to Employee all federal, state, local and other taxes and amounts as
shall be permitted or required to be withheld pursuant to any applicable law,
rule or regulation.
(b) Employee shall be entitled to vacation in accordance with
the Company's policy in effect for executive staff, which shall be taken at such
time or times as shall be mutually agreed upon with the Company.
8. Death and Disability.
(a) The Employment Term shall terminate on the date of
Employee's death, in which event Employee's Salary, reimbursable expenses and
benefits owing to Employee through the date of Employee's death shall be paid to
his estate. Employee's estate will not be entitled to any other compensation
upon termination of this Agreement pursuant to this subparagraph 8(a).
-3-
<PAGE>
(b) If, during the Employment Term, in the opinion of a duly
licensed physician selected by the Company, Employee, because of physical or
mental illness or incapacity, shall become substantially unable to perform the
duties and services required of him under this Agreement for a period, of 120
consecutive days or 180 days in the aggregate during any nine-month period, the
Company may, upon at least ten (10) days' prior written notice given at any time
after the expiration of such 120 or 180-day period, as the case may be, to
Employee of its intention to do so, terminate his employment as of such date as
may be set forth in the notice. In case of such termination, Employee shall be
entitled to receive his Salary, reimbursable expenses and benefits owing to
Employee through the date of termination. Employee will not be entitled to any
other compensation upon termination of his employment pursuant to this
subparagraph 8(b).
9. Termination for Cause. The Company may terminate the employment
of Employee for cause, as such term is interpreted by the courts of New York.
Upon such termination, the Company shall be released from any and all further
obligations under this Agreement, except that the Company shall be obligated to
pay Employee his Salary, reimbursable expenses and benefits owing to Employee
through the day on which Employee is terminated. Employee will not be entitled
to any other compensation upon termination of this Agreement pursuant to this
Paragraph 9.
10. Termination Other than for Cause.
(a) The Company may terminate the employment of Employee with or
without cause and Employee may terminate his employment by the Company with or
without "Good Reason" (as defined in subparagraph 10(c) hereof).
(b) In the event the Company terminates the employment of
Employee with or without cause and in the event Employee terminates his
employment with or without Good Reason, the Company shall pay to Employee, in a
single, lump-sum payment, within thirty (30) days after the Company or Employee
has given the other notice of termination, an amount equal to Employee's Salary,
reimbursable expenses and benefits owing to Employee through the date on which
Employee's employment is terminated. In addition, in the event of termination
by the Company without cause or by Employee with Good Reason, Employee shall
receive the following: (i) an amount equal to the product of Employee's annual
Salary then in effect (without regard to any purported or attempted reduction
thereof by the Company) multiplied by the number of years (including any parts
thereof) remaining in the Payment Period (as defined below) payable at the same
times as the Salary would have been paid to Employee during the Payment Period
if Employee's employment was not so terminated and (ii) any benefits which
Employee would have been entitled to receive had his employment continued during
the balance of the Employment Term provided that the provisions of the plans
under which such benefits are offered then permit the same to be offered to
Employee.
(c) For purposes of this Agreement, the term "Payment Period"
shall be the period commencing on the date that Employee's employment is
terminated pursuant to this
-4-
<PAGE>
Paragraph 10 and continuing until the first anniversary of such termination or
the remaining term of this Agreement, whichever is greater. For purposes of
this Agreement, the term "Good Reason" shall mean the assignment to Employee of
duties which are inconsistent with Paragraph 3 of this Agreement or a material
breach by the Company of this Agreement which has not been cured within 10 days
after written notice thereof has been given to the Company by Employee or, if
such breach is not curable within such 10 day period, the Company has failed to
take action to commence the cure thereof within such 10 day period or has failed
thereafter to continue to take such action in an expeditious manner.
(d) Notwithstanding anything in this Agreement to the contrary,
if any of the payments provided for in this Agreement, together with any other
payments which Employee has the right to receive from the Company or any
corporation which is a member of an "affiliated group" (as defined in Section
1504(a) of the Internal Revenue Code of 1986, as amended (the "Code"), without
regard to Section 1504(b) of the Code) of which the Company is a member, would
constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Code),
the payments pursuant to this Agreement shall be reduced to the largest amount
as will result in no portion of such payments being subject to the excise tax
imposed by Section 4999 of the Code. The determination as to whether any
reduction in the payments under this Agreement pursuant to this subparagraph
10(d) is necessary shall be made by the independent public accountants of the
Company at the time and such determination shall be conclusive and binding on
the Company and Employee with respect to their respective treatment of such
payments for tax reporting purposes.
(e) Any amounts payable to Employee under this Paragraph 10
shall be reduced by any compensation received by Employee for services rendered
during the period commencing one year after the effective date of the
termination of his employment and ending on the last day of the Payment Period
by virtue of his being hired on a full-time basis by another employer, without
regard to the actual date on which such compensation is received by Employee.
11. Disclosure of Information and Restrictive Covenant. Employee
acknowledges that, by his employment, he has been and will be in a confidential
relationship with the Company and will have access to confidential information
and trade secrets of the Company, its subsidiaries and affiliates. Confidential
information and trade secrets include, but are not limited to, customer,
supplier and client lists, panels and interviewers, price lists, marketing,
strategies and procedures, operational techniques, business plans and systems,
quality control procedures and systems, special projects and survey and market
research, including projects, research and reports for any entity or client, and
any other records, files, drawings, discoveries, applications, data and
information concerning the business of the Company and its customers and clients
which are not in the public domain. Employee agrees that in consideration of
the execution of this Agreement by the Company:
(a) Employee will not, during the Employment Term or at any time
thereafter, use, or disclose to any third party, trade secrets or confidential
information of the Company, including, but not limited to, confidential
information or trade secrets belonging or relating to the Company, its
subsidiaries, affiliates, customers and clients or proprietary procedures
-5-
<PAGE>
of the Company, its subsidiaries, affiliates, customers and clients.
Proprietary procedures shall include, but shall not be limited to, all
information which is known or intended to be known only by employees of the
Company, its subsidiaries and affiliates or others in a confidential
relationship with the Company or its subsidiaries and affiliates which relates
to business matters.
(b) Employee will not, during the Employment Term and for a
period of one year thereafter, directly or indirectly, under any circumstance
other than at the direction and for the benefit of the Company, engage in or
participate in any business activity, including, but not limited to, acting as a
director, officer, employee, agent, independent contractor, partner, consultant,
licensor or licensee, franchiser or franchisee, proprietor, syndicate member,
shareholder or creditor or with a person having any other relationship with any
other business, company, firm, occupation or business activity, that is,
directly or indirectly, competitive with any business carried on by the Company
or any of its subsidiaries or affiliates during the Employment Term. The
ownership by Employee of 3% or less of the issued and outstanding shares of a
class of securities which is traded on a national securities exchange or in the
over-the-counter market, shall not cause Employee to be deemed a shareholder
under this subparagraph 11(b).
(c) Employee will not, during the Employment Term and for a
period of three (3) years thereafter, on his behalf or on behalf of any other
business enterprise, directly or indirectly, under any circumstance other than
at the direction and for the benefit of the Company, solicit or induce any
creditor, customer, client, supplier, officer, employee or agent of the Company
or any of its subsidiaries or affiliates to sever his or its relationship with
or leave the employ of any of such entities.
(d) Nothing contained in this Paragraph 11 shall be construed as
prohibiting Employee from being engaged by a client or customer of the Company
upon his termination of employment by the Company.
(e) It is expressly agreed by Employee that the nature and scope
of each of the provisions set forth above in this Paragraph 11 are reasonable
and necessary. If, for any reason, any aspect of the above provisions as it
applies to Employee is determined by a court of competent jurisdiction to be
unreasonable or unenforceable, the provisions shall only be modified to the
minimum extent required to make the provisions reasonable and/or enforceable, as
the case may be. Employee acknowledges and agrees that his services are of
unique character and expressly grants to the Company or any subsidiary or
affiliate of the Company or any successor of any of them, the right to enforce
the above provisions through the use of all remedies available at law or in
equity, including, but not limited to, injunctive relief.
(f) This Paragraph 11 and Paragraphs 12, 13 and 14 hereof shall
survive the expiration or termination of this Agreement for any reason.
12. Company Property. (a) Any patents, inventions, discoveries,
applications or processes designed, devised, planned, applied, created,
discovered or invented by Employee in the
-6-
<PAGE>
course of Employee's employment under this Agreement and which pertain to any
aspect of the Company's or its subsidiaries, or affiliates' business shall be
the sole and absolute property of the Company, and Employee shall promptly
report the same to the Company and promptly execute any and all documents
reasonably requested to assure the Company the full and complete ownership
thereof.
(b) All records, files, lists, including computer generated
lists, drawings, documents, equipment and similar items relating to the
Company's business which Employee shall prepare or receive from the Company
shall remain the Company's sole and exclusive property. Upon termination of
this Agreement, Employee shall promptly return to the Company all property of
the Company in his possession. Employee further represents that he will not
copy or cause to be copied, print out or cause to be printed out any software,
documents or other materials originating with or belonging to the Company.
Employee additionally represents that, upon termination of his employment with
the Company, he will not retain in his possession any such software, documents
or other materials.
13. Remedy. It is mutually understood and agreed that Employee's
services are special, unique, unusual, extraordinary and of an intellectual
character giving them a peculiar value, the loss of which cannot be reasonably
or adequately compensated in damages in an action at law. Accordingly, in the
event of any breach of this Agreement by Employee, including, but not limited
to, the breach of the nondisclosure, non-solicitation and non-compete clauses
under Paragraph 11 hereof, the Company shall be entitled to equitable relief by
way of injunction or otherwise in addition to any damages which the Company may
be entitled to recover. In addition, the Company shall be entitled to
reimbursement from Employee, upon request, of any and all reasonable attorneys'
fees and expenses incurred by it in enforcing any term or provision of this
Agreement.
14. Representations and Warranties of Employee. (a) In order to
induce the Company to enter into this Agreement, Employee hereby represents and
warrants to the Company as follows: (i) Employee has the legal capacity and
unrestricted right to execute and deliver this Agreement and to perform all of
his obligations hereunder; (ii) the execution and delivery of this Agreement by
Employee and the performance of his obligations hereunder will not violate or be
in conflict with any fiduciary or other duty, instrument, agreement, document,
arrangement or other understanding to which Employee is a party or by which he
is or may be bound or subject; and (iii) Employee is not a party to any
instrument, agreement, document, arrangement or other understanding with any
person (other than the Company) requiring or restricting the use or disclosure
of any confidential information.
(b) Employee hereby agrees to indemnify and hold harmless the
Company from and against any and all losses, costs, damages and expenses
(including, without limitation, its reasonable attorneys, fees) incurred or
suffered by the Company resulting from any breach by Employee of any of his
representations or warranties set forth in subparagraph 14(a) hereof.
-7-
<PAGE>
15. Waiver of Jury Trial and Consent to New York Jurisdiction and
Venue. In any action, suit or proceeding in any jurisdiction brought against
Employee by the Company, or vice versa, Employee and the Company each waive
trial by jury. Employee hereby consents and agrees that the Supreme Court of
the State of New York for the County of New York and the United States District
Court for the Southern District of New York each shall have personal
jurisdiction and proper venue with respect to any dispute between Employee and
the Company. In any dispute with the Company, Employee will not raise, and
hereby expressly waives, any objection or defense to any such jurisdiction as an
inconvenient forum.
16. Notice. Except as otherwise expressly provided, any notice,
request, demand or other communication permitted or required to be given under
this Agreement shall be in writing, shall be sent by one of the following means
to Employee at his address set forth on the first page of this Agreement and to
the Company at its address set forth on the first page of this Agreement,
Attention: Chief Executive Officer, (or to such other address as shall be
designated hereunder by notice to the other parties and persons receiving
copies, effective upon actual receipt) and shall be deemed conclusively to have
been given: (i) on the first business day following the day timely deposited
with Federal Express (or other equivalent national overnight courier) or United
States Express Mail, with the cost of delivery prepaid or for the account of the
sender; (ii) on the fifth business day following the day duly sent by certified
or registered United States mail, postage prepaid and return receipt requested;
or (iii) when otherwise actually received by the addressee on a business day (or
on the next business day if received after the close of normal business hours or
on any nonbusiness day).
17. Interpretation, Headings. The parties acknowledge and agree that
the terms and provisions of this Agreement have been negotiated, shall be
construed fairly as to all parties hereto, and shall not be construed in favor
of or against any party. The section headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement.
18. Successors and Assign; Assignment; Intended Beneficiaries. Nei
ther this Agreement, nor any of Employee's rights, powers, duties or obligations
hereunder, may be assigned by Employee. This Agreement shall be binding upon
and inure to the benefit of Employee and his heirs and legal representatives and
the Company and its successors. Successors of the Company shall include,
without limitation, any corporation or corporations acquiring, directly or
indirectly, all or substantially all of the capital stock or assets of the
Company, whether by merger, consolidation, purchase, lease or otherwise, and
such successor shall thereafter be deemed "the Company" for the purpose hereof.
19. No Waiver by Action, Cumulative Rights, Etc. Any waiver or
consent from the Company respecting any term or provision of this Agreement or
any other aspect of Employee's conduct or employment shall be effective only in
the specific instance and for the specific purpose for which given and shall not
be deemed, regardless of frequency given, to be a further or continuing waiver
or consent. The failure or delay of the Company at any time or times to require
performance
-8-
<PAGE>
of, or to exercise any of its powers, rights or remedies with respect to any
term or provision of this Agreement or any other aspect of Employee's conduct or
employment in no manner (except as otherwise expressly provided herein) shall
affect the Company's right at a later time to enforce any such term or
provision.
20. Counterparts: New York Governing Law; Amendments, Entire
Agreement. This Agreement may be executed in two counterpart copies, each of
which may be executed by one of the parties hereto, but all of which, when taken
together, shall constitute a single agreement binding upon all of the parties
hereto. This Agreement and all other aspects of Employee's employment shall be
governed by and construed in accordance with the applicable laws pertaining in
the State of New York (other than those that would defer to the substantive laws
of another jurisdiction). Each and every modification and amendment of this
Agreement shall be in writing and signed by the parties hereto, and any waiver
of, or consent to any departure from, any term or provision of this Agreement
shall be in writing and signed by each affected party hereto. Subject to
Paragraph 2 hereof, this Agreement contains the entire agreement of the parties
and supersedes all prior representations, agreements and understandings, oral or
otherwise, between the parties with respect to the matters contained herein,
including but not limited to any and all rights which the Company or Employee
may have under that certain Employment Agreement dated March 24, 1995 between
Employee and the Company, as amended by Agreements dated March 25, 1997 and June
30, 1997 between Employee and the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
AUDITS & SURVEYS WORLDWIDE, INC.
By: /s/ Solomon Dutka
------------------------------------
Name: Solomon Dutka
Title: CEO
/s/ H. Arthur Bellows, Jr.
---------------------------------------
H. Arthur Bellows, Jr.
-9-
<PAGE>
Exhibit 99(c)(17)
AMENDMENT NUMBER 3
TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT dated as of the 19th day of January, 1999 by and between
Audits & Surveys Worldwide, Inc., a Delaware corporation (the "Company"), and
Carl Ravitch, an individual residing at [2602 Woodsview Drive, Bensalem, PA
19020] (the "Employee").
WHEREAS, the Company and the Employee are parties to an Employment
Agreement, dated as of March 24, 1995, as amended March 25, 1997 and June 30,
1997 (collectively referred to as the "Agreement"); and
WHEREAS, United Information Group Limited, an English limited company,
United Information Acquisition Corp., a Delaware corporation ("United
Acquisition") and the Company have entered into an Agreement and Plan of Merger
(the "Merger Agreement"), dated as of January 19, 1999, whereby United
Acquisition shall, pursuant to a cash tender offer (the "Offer") by United
Acquisition for all of the outstanding shares of common stock, par value of
$.01, of the Company, acquire (the "Acquisition") the Company upon such terms
and conditions as are set forth therein.
WHEREAS, in connection with and as a result of the Acquisition the Company
and the Employee wish to amend the Agreement as set forth herein.
NOW THEREFORE, in consideration of the Acquisition and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound hereby, the Company and the Employee hereby agree as follows:
Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to those terms in the Agreement.
1. AMENDMENT TO PARAGRAPH 3. Paragraph 3 of the Agreement shall be modified
such that the duties of the Employee, on or after the date of this Amendment and
for the balance of the Employment Term shall be as follows: The Employee shall
serve as a senior marketing executive of the Company subject to the authority
and direct supervision of the Board of Directors of the Company and the Chief
Executive Officer of the Company and shall perform such duties for the Company,
the Company's affiliates, subsidiaries, divisions and operating units as may be
assigned to him from time to time by the Chief Executive Officer of the Company
and as are consistent with the usual duties of an employee of his status. The
Employee shall not be required to perform services at a location more than
twenty-five (25) miles from his home; provided, however, that the Employee may
be required to travel (including travel to the Company's principal office in New
York County) consistent with his past practice.
<PAGE>
2. AMENDMENT TO PARAGRAPH 7. A new subparagraph 7(c) shall be added to read
as follows: During the Employment Term, the Company shall in no way reduce the
benefits or vacation (in quality, type, quantity, duration or otherwise)
provided on the date hereof to the Employee.
3. AMENDMENT TO PARAGRAPH 11. Paragraph 11(b) shall be modified such that all
references to "the Company" shall be replaced by "the Company, its subsidiaries
or affiliates".
4. WAIVER OF TERMINATION RIGHTS. The Employee hereby waives and agrees not to
exercise in connection with the Acquisition and the other transactions
contemplated by the Merger Agreement any of the Employee's termination rights
under the Letter Agreement, dated October 1, 1997, between the Company and the
Employee.
5. EFFECTIVENESS. This Amendment shall become effective upon consummation of
the acquisition by United Acquisition of in excess of 50% of the outstanding
Common Stock of the Company pursuant to the Offer.
6. INTEGRATION. Except as set forth in Sections 1 through 5 above, the terms
and conditions set forth in the Agreement shall remain in full force and effect
and shall be incorporated herein by this reference.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first above written.
AUDITS & SURVEYS WORLDWIDE, INC.
By: /s/ H. Arthur Bellows, Jr.
---------------------------------
Name: H. Arthur Bellows, Jr.
Title: President
/s/ Carl Ravitch
------------------------------------
CARL RAVITCH
<PAGE>
Exhibit 99(c)(18)
AMENDMENT NUMBER 1
TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT dated as of the 19th day of January, 1999, by and between
Audits & Surveys Worldwide, Inc., a Delaware corporation (the "Company"), and
Joel S. Klein, an individual residing at [13 Maple Way, Armonk, New York
10504-2602] (the "Employee").
WHEREAS, the Company and the Employee are parties to an Employment
Agreement, dated as of October 1, 1997 (the "Agreement") and a Deferred
Compensation Letter Agreement, dated June 28, 1993 (the "Deferred Compensation
Agreement"); and
WHEREAS, United Information Group Limited, an English limited company,
United Information Acquisition Corp., a Delaware corporation ("United
Acquisition") and the Company have entered into an Agreement and Plan of Merger,
dated as of January 19, 1999, whereby United Acquisition shall, pursuant to a
cash tender offer (the "Offer") by Acquisition for all of the outstanding shares
of common stock, par value of $.01, of the Company, acquire (the "Acquisition")
the Company upon such terms and conditions as are set forth therein.
WHEREAS, in connection with and as a result of the Acquisition the Company
and the Employee wish to amend the Agreement and the Deferred Compensation
Agreement, as set forth herein.
NOW THEREFORE, in consideration of the Acquisition and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound hereby, the Company and the Employee hereby agree as follows:
Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to those terms in the Agreement.
1. AMENDMENT TO PARAGRAPH 3 OF THE AGREEMENT. Paragraph 3 of the Agreement
shall be modified such that the duties of the Employee, on or after the date of
this Amendment and for the balance of the Employment Term shall be as follows:
The Employee shall serve as the senior operations executive of the Company
subject to the authority and direct supervision of the Board of Directors of the
Company and the Chief Executive Officer of the Company and shall perform such
duties for the Company, the Company's affiliates, subsidiaries, divisions and
operating units as may be assigned to him from time to time by the Chief
Executive Officer of the Company and as are consistent with the usual duties of
an employee of his status. The Employee shall not be required to perform
services at a location other than the current principal office of the Company;
or a successor principal office established by the Company in New York County;
provided, however, that the Employee may be required to travel consistent with
his past practice.
<PAGE>
2. AMENDMENT TO PARAGRAPH 7 OF THE AGREEMENT. A new subparagraph 7(c) shall
be added to the Agreement to read as follows: During the Employment Term, the
Company shall in no way reduce the benefits or vacation (in quality, type,
quantity, duration or otherwise) provided on the date hereof to the Employee.
3. AMENDMENT TO PARAGRAPH 11 OF THE AGREEMENT. Paragraph 11(b) of the
Agreement shall be modified such that all references to "the Company" shall be
replaced by "the Company, its subsidiaries or affiliates".
4. AMENDMENT TO PARAGRAPH 4 OF THE DEFERRED COMPENSATION AGREEMENT. The
Employee agrees and acknowledges that on and as of the date of this Amendment
the Employee has no rights and shall not, in connection with the Acquisition or
thereafter, attempt to exercise any rights, under the terms of Paragraph 4 of
the Deferred Compensation Agreement, which Paragraph 4 is on and as of the date
of this Amendment invalid and of no force and effect.
5. EFFECTIVENESS. This Amendment shall become effective upon consummation of
the acquisition by United Acquisition of in excess of 50% of the outstanding
Common Stock of the Company pursuant to the Offer.
6. INTEGRATION. Except as set forth in Sections 1 through 5 above, the terms
and conditions set forth in the Agreement and the Deferred Compensation
Agreement shall remain in full force and effect and shall be incorporated herein
by this reference.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first above written.
AUDITS & SURVEYS WORLDWIDE, INC.
By: /s/ H. Arthur Bellows, Jr.
------------------------------------
Name: H. Arthur Bellows, Jr.
Title: President
/s/ Joel S. Klein
---------------------------------------
JOEL S. KLEIN
<PAGE>
Exhibit 99(c)(19)
AMENDMENT NUMBER 2
TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT dated as of the 19th day of January, 1999 by and between
Audits & Surveys Worldwide, Inc., a Delaware corporation (the "Company"), and
Alan J. Ritter, an individual residing at [87 Blueberry Lane, Fairfield,
Connecticut 06432] (the "Employee").
WHEREAS, the Company and the Employee are parties to an Employment
Agreement, dated as of September 13, 1995, as amended June 30, 1997
(collectively referred to as the "Agreement"); and
WHEREAS, United Information Group Limited, an English limited company,
United Information Acquisition Corp., a Delaware corporation ("United
Acquisition") and the Company have entered into an Agreement and Plan of Merger,
dated as of January 19, 1999, whereby United Acquisition shall, pursuant to a
cash tender offer (the "Offer") by United Acquisition for all of the outstanding
shares of common stock, par value of $.01, of the Company, acquire (the
"Acquisition") the Company upon such terms and conditions as are set forth
therein.
WHEREAS, in connection with and as a result of the Acquisition the Company
and the Employee wish to amend the Agreement as set forth herein.
NOW THEREFORE, in consideration of the Acquisition and of the mutual
covenants and agreements herein set forth, and for other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound hereby, the Company and the Employee hereby agree as follows:
Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to those terms in the Agreement.
1. AMENDMENT TO PARAGRAPH 3. Paragraph 3 of the Agreement shall be modified
such that the duties of the Employee, on or after the date of this Amendment and
for the balance of the Employment Term shall be as follows: The Employee shall
serve as a senior financial and accounting executive of the Company subject to
the authority and direct supervision of the Board of Directors of the Company
and the Chief Executive Officer of the Company (or such other officer of the
Company as the Board of Directors shall designate) and shall perform such duties
for the Company, the Company's affiliates, subsidiaries, divisions and operating
units as may be assigned to him from time to time by the Board of Directors of
the Company and the Chief Executive Officer of the Company (or such other
officer of the Company as the Board of Directors shall designate) and as are
consistent with the usual duties of an employee of his status. The Employee
shall not be required to perform services at a location other than the current
principal office of the Company; or a successor principal office established by
the Company in New York County; provided, however, that the Employee may be
required to travel consistent with his past practice.
<PAGE>
2. AMENDMENT TO PARAGRAPH 7. A new subparagraph 7(c) shall be added to read
as follows: During the Employment Term, the Company shall in no way reduce the
benefits or vacation (in quality, type, quantity, duration or otherwise)
provided on the date hereof to the Employee.
3. AMENDMENT TO PARAGRAPH 11. Paragraph 11(b) shall be modified such that all
references to "the Company" shall be replaced by "the Company, its subsidiaries
or affiliates".
4. EFFECTIVENESS. This Amendment shall become effective upon consummation of
the acquisition by United Acquisition of in excess of 50% of the outstanding
Common Stock of the Company pursuant to the Offer.
5. INTEGRATION. Except as set forth in Sections 1 through 4 above, the terms
and conditions set forth in the Agreement shall remain in full force and effect
and shall be incorporated herein by this reference.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first above written.
AUDITS & SURVEYS WORLDWIDE, INC.
By: /s/ H. Arthur Bellows, Jr.
------------------------------
Name: H. Arthur Bellows, Jr.
Title: President
/s/ Alan J. Ritter
---------------------------------
ALAN J. RITTER
<PAGE>
Exhibit 99(c)(20)
[LETTERHEAD OF ALLEN & COMPANY]
April 23, 1997
CONFIDENTIAL
Mr. H. Arthur Bellows, Jr.
President
Audits & Surveys Worldwide, Inc.
The Audits & Surveys Building
650 Avenue of the Americas
New York, NY 10011
Dear Art:
As per our conversation, this letter is to serve as a brief outline of how Allen
& Company Incorporated ("Allen & Company") could work with Audits & Surveys
Worldwide, Inc. (the "Company") to evaluate alternatives to maximize shareholder
value. Based on our understanding of the current business and financial
condition of the Company and its current prospects in the industry, we would
propose the following approach:
Scope of Engagement:
Allen & Company will assist in reviewing and evaluating (i) the Company's
financial condition and historical and projected results, (ii) the Company's
current operations and business prospects, and (iii) the current condition of
the industry, as well as any recent trends, and the Company's competitive
position therein, all with a view toward assisting the Company in evaluating
alternatives to maximize shareholder value. Among the possible alternatives,
Allen & Company will advise the Company with respect to possible joint ventures
and strategic investments, as well as possible business combinations, mergers,
asset dispositions or other transactions which could result in a change in
control of the Company's outstanding voting stock. With the information provided
by the Company, Allen & Company will work with the Company in preparing an
information memorandum or other appropriate materials and will assist in
identifying and soliciting potential suitors. Allen & Company will further
assist in structuring the terms of any joint venture, strategic investment,
merger, stock sale, or other transaction which the Company proposes to pursue.
Allen & Company will also assist the Company in negotiating and documenting any
proposed transaction.
<PAGE>
Mr. H. Arthur Bellows, Jr.
Audits & Surveys Worldwide, Inc.
Page 2
Advisory Fees:
The Company shall pay to Allen & Company, in consideration for commencing the
services described above, an initial fee of $100,000 (the "Initial Fee"). In
addition, upon the consummation of any joint venture transaction or strategic
investment in the Company or any of its businesses or subsidiaries (a
"Financing Transaction") or any Control Transaction (as defined below), in
each case by or with any entity introduced or identified by Allen & Company
(each, hereinafter, a "Transaction"), the Company shall pay to Allen &
Company a success fee calculated as follows, less the amount of the Initial
Fee ("Transaction Fee"):
(a) In the case of any Financing Transaction, a fee equal to 2% of the gross
proceeds to the Company resulting therefrom (including the amount of all
cash and fair market value of all property, rights, securities or other
tangible assets received by the Company or any of its businesses or
subsidiaries in connection with such Transaction); provided that to the
extent any Financing Transaction includes options, warrants or other
rights to invest in the future, the fee applicable to the additional
amounts paid to the Company upon the exercise of such right shall be paid
at the time of exercise; and
(b) In the case of any Control Transaction, a fee equal to (i) 1.25% of the
product of the fully diluted equity value ascribed to the Company
(including the value of all outstanding common stock and common stock
equivalents as well as "in the money" warrants and options) in connection
with such transaction (the "Transaction Equity Value"), up to a value of
$5.00 per share or common share equivalent and (ii) 2.5% of the
Transaction Equity Value exceeding $5.00 per share or common share
equivalent; provided, however, that if a transaction constitutes a
Financing Transaction as well as a Control Transaction, the fee payable by
the Company pursuant to this clause (b) shall be reduced by any amounts
paid pursuant to clause (a) above.
As used herein, the term "Control Transaction" shall mean (a) any merger,
consolidation, reorganization, recapitalization, business combination or other
transaction pursuant to which the Company is acquired by, or combined with,
another entity, and the stockholders of the Company immediately prior to such
transaction do not own at least 50% of the outstanding voting equity of the
acquiring or combined entity immediately after such transaction, (b) any
transaction or series of transactions (whether in the form of tender or exchange
offer, open market or negotiated purchase of outstanding shares, purchase of
newly issued shares, share repurchase or redemption or otherwise, including any
combination of the foregoing) which results in any person or entity, or any
group thereof, owning in excess of 50% of the outstanding Common Stock of the
Company, after giving effect to such transaction or series of transactions, (c)
the sale or other disposition, in a single
<PAGE>
Mr. H. Arthur Bellows, Jr.
Audits & Surveys Worldwide, Inc.
Page 3
transaction or a series of transactions, of all or the major portion of the
assets of the Company or (d) the election or appointment of nominees, designees
or representatives of any person or entity, or any group thereof, to the Board
of Directors of the Company so that such nominees, designees or representatives
represent, in the aggregate, at least a majority of such Board of Directors.
In the event that the Company enters into a transaction with any entity
introduced or identified by Allen & Company, or in which Allen & Company was
otherwise involved, other than a Transaction (as defined above), the Company and
Allen & Company will discuss and mutually determine in advance of such
transaction a reasonable and customary fee or fee scale to be paid to Allen &
Company in connection therewith.
In addition to any fees described above, whether or not any transaction is
consummated, the Company shall reimburse Allen & Company, upon request from time
to time, for all out-of-pocket expenses incurred pursuant our Engagement,
including reasonable fees and disbursements of our counsel, as well as any other
consultants and advisors retained by us with your consent.
Critical Path:
o Assist in reviewing and evaluating the Company's business prospects for
the future and advise the Company with respect to various alternatives
available to maximize shareholder value. Such alternatives are likely to
range from a strategic investment to an outright acquisition of the
Company. Other transactions falling within this range include a "staged"
acquisition consisting of an initial equity purchase with an option to
acquire more stock, either on pre-arranged terms or through open market
purchases.
o Work with the Company in preparing any information memorandum or other
appropriate materials and assist in identifying, prioritizing and
soliciting potential suitors. Initially recommend making contact with only
a limited (approximately 3) number of top candidates and discerning their
interest level before casting net wider.
o Assist the Company in structuring the terms of any joint venture,
strategic investment, merger, stock sale, or other transaction which the
Company proposes to pursue.
o Assist the Company in negotiating and documenting any proposed
transaction.
Regardless of the form of any transaction the Company ultimately proposes to
pursue, we recommend that, after identifying and prioritizing prospects, we
initially make contact with only a limited number of top candidates. This entire
process would likely take a minimum of three months but could take as long as
six months.
<PAGE>
Mr. H. Arthur Bellows, Jr.
Audits & Surveys Worldwide, Inc.
Page 4
The initial term of our engagement shall be for a period of 12 months and may be
extended as the parties shall mutually agree, subject to the establishment of
arrangements for additional compensations. Notwithstanding termination of our
engagement or completion of any assignment, however, Allen & Company shall be
entitled to the payment of a fee for any transaction as described above if such
transaction is consummated, or if any agreement or arrangement respecting such
transaction is made, prior to the first anniversary of the date of termination.
Finally, it is our practice to provide for indemnification for any investment
banking activities in which we are involved. In that regard, you will receive
under separate cover our standard form of indemnity letter.
Strong Industry Contacts and Significant Experience:
With a long history of doing deals and developing senior level relationships in
related industry sectors, Allen & Company has significant experience in the area
of initiating, negotiating and structuring joint venture arrangements and
strategic investments as well as in providing financial advice in the area of
mergers and acquisitions. In addition to my involvement, other members of the
Allen & Company working group will include Donald Keough (Chairman of the
Board), John Simon (Managing Director) and Terrence Morris (Associate).
We welcome the opportunity to discuss any aspects of our proposal with you or
other company representatives. Please feel free to call me at your convenience
at (212) 339-2253.
Very truly yours,
/s/ Robert C. Miller
Robert C. Miller
Vice President and Director
cc: Solomon Dutka, Ph.D., Audits & Surveys Worldwide, Inc.
Donald R. Keough, Allen & Company Incorporated
John Simon, Allen & Company Incorporated
<PAGE>
[LETTERHEAD OF ALLEN & COMPANY]
April 23, 1997
Audits & Surveys Worldwide, Inc.
The Audits & Surveys Bldg.
650 Avenue of the Americas
New York, NY 10011
Attn: Mr. H. Arthur Bellows, Jr.
President
Gentlemen:
In connection with our engagement to advise and assist you with the
matters described in the letter from Robert C. Miller to you dated April 23,
1997, including any related services already performed and any modifications or
future additions to such engagement, you and we are entering into this letter
agreement. You agree that in the event Allen & Company Incorporated or any of
our officers, employees, agents, affiliates or controlling persons, if any (each
of the foregoing, including Allen & Company Incorporated, being an "Indemnified
Person"), become involved in any capacity (whether or not as a party) in any
action, claim, proceeding or investigation (including any security holder action
or claim on any action brought by or in the right of the Company) related to or
arising out of our engagement, including any related services already performed
and any modifications or future additions to such engagement, you will promptly
upon demand advance to such Indemnified Person, or reimburse each such
Indemnified Person for, its legal and other expenses (including the cost of any
investigation and preparation) as and when they are incurred in connection
therewith.
In addition, you will indemnify and hold harmless each Indemnified Person
from and against, and no Indemnified Person shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to you or your
securityholders or creditors for, any losses, claims, damages, liabilities or
expenses (including, without limitation, attorney's fees and expenses) related
to or arising out of our engagement, any services provided thereunder or any
transactions or proposed transactions related thereto, including any related
services already performed any modifications or future additions to such
engagement, whether or not any pending or threatened action, claim, proceeding
or investigation giving rise to such losses, claims, damages, liabilities or
expenses is initiated or brought by you on your behalf and whether or not in
connection with any action, claim, proceeding or investigation in which you or
any Indemnified Person is a party, except to the extent that any such loss,
claim, damage, liability or expense is found by a
<PAGE>
Audits & Surveys Worldwide, Inc.
April 23, 1997
Page 2
court of competent jurisdiction in a judgment that has become final in that it
is no longer subject to appeal or review to have resulted directly and primarily
form such Indemnified Person's bad faith, gross negligence or willful
misconduct.
If any action, claim, proceeding or investigation shall be instituted
against any Indemnified Person in respect of which it is reasonably expected
that indemnity may be sought pursuant to the provisions of this paragraph, such
Indemnified Person shall promptly notify the Company and shall not settle or
compromise any such action or proceeding without the Company's written consent,
which shall not be unreasonably withheld. Failure to so notify the Company shall
not relieve the Company from any liability which the Company may have on account
of this indemnity or otherwise, except to the extent the Company shall have been
materially prejudiced by such failure. The Company shall have the right to
assume the defense of such action or proceeding, including the employment of
counsel and the payment of all expenses. Any Indemnified Person shall have the
right to employ separate counsel in any such action, claim, proceeding or
investigation and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Person unless (i)
the employment thereof has been specially authorized by the Company in writing,
(ii) the Company has failed to assume such defense and to employ counsel or
(iii) in such action, suit or proceeding there is, in the opinion of such
separate counsel, a conflict on any material issue between the position of the
Company and such Indemnified Person.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to this letter is made but it is found in a final
judgment by a court of competent jurisdiction (not subject to further appeal)
that such indemnification may not be enforced in such case, even through the
express provisions hereof provide for indemnification in such case, then you
shall contribute to the loss, claim, damage, liability or expense for which such
indemnification is held unenforceable in such proportion as is appropriate to
reflect the relative benefits received by you and your securityholders on the
one hand and the party entitled to contribution on the other hand in the matters
contemplated by our engagement, as well as the relative fault of you and such
party with respect to such loss, claim, damage, liability or expense and any
other relevant equitable considerations. You agree that, to the extent permitted
by applicable law, in no event shall we or any other Indemnified Person be
required to contributed an aggregate amount for all Indemnified Persons in
excess of the aggregate fees, if any, actually paid to us for such financial
advisory services.
Your reimbursement, indemnity and contribution obligations under this
letter shall be in addition to any liability which you may otherwise have, shall
not be limited by any rights we or any other Indemnified Person may otherwise
have and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of you, us and any other Indemnified
Persons. You agree that, without our prior written consent, which will not be
<PAGE>
Audits & Surveys Worldwide, Inc.
April 23, 1997
Page 3
unreasonably withheld, you will not settle, compromise or consent to the entry
of any judgment in, any pending or threatened claim, action, proceeding or
investigation in respect of which indemnification or contribution could be
sought hereunder (whether or not we or any other Indemnified Persons are an
actual or potential party to such claim, action, proceeding or investigation),
unless such settlement, compromise or consent includes an unconditional release
or each Indemnified Person from all liability arising out of such claim, action,
proceeding or investigation.
No waiver, amendment or other modification of this agreement shall be
effective unless in writing and signed by each party to be bound thereby. This
letter agreement shall be governed by, and construed in accordance with, the law
of the State of New York applicable to contracts executed in and to be performed
in that state. We and you hereby waive all right to trial by jury in any action,
proceeding or counterclaim (whether based upon contract, tort or otherwise)
related to or arising out of our engagement. This agreement shall remain in
effect indefinitely, notwithstanding any termination of our engagement.
Please confirm that the foregoing is in accordance with your understanding
of the terms of our engagement by signing and returning to us the enclosed
duplicate of this letter, which shall thereupon constitute a binding agreement
between us.
Very truly yours,
ALLEN & COMPANY INCORPORATED
By: /s/ William F. Leimkuhler
------------------------------------
Name: William F. Leimkuhler
Title: Vice President & General Counsel
Agreed to and Accepted
as of the date first above written
AUDITS & SURVEYS WORLDWIDE, INC.
By: H. Arthur Bellows, Jr.
------------------------------
Name: H. Arthur Bellows, Jr.
Title: President
