<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
(INFORMATION PURSUANT TO RULE 13D-101)
AUDITS & SURVEYS WORLDWIDE, INC.
(NAME OF SUBJECT COMPANY)
UNITED INFORMATION ACQUISITION CORP.
UNITED INFORMATION GROUP, INC.
(BIDDERS)
COMMON STOCK, PAR VALUE $.01
(TITLE OF CLASS OF SECURITIES)
050839109
(CUSIP NUMBER OF CLASS OF SECURITIES)
RICHARD M. BLOCK, ESQ.
UNITED INFORMATION GROUP, INC.
TWO WORLD TRADE CENTER, SUITE 5550
NEW YORK, NY 10048
(212) 306-0850
------------------------
COPY TO:
JAMES E. ABBOTT, ESQ.
CARTER, LEDYARD & MILBURN
2 WALL STREET
NEW YORK, NY 10005
(212) 732-3200
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
JANUARY 19, 1999
(DATE OF EVENT WHICH REQUIRES FILING OF STATEMENT ON SCHEDULE 13D)
CALCULATION OF FILING FEE
Transaction valuation: $43,169,693
Amount of filing fee: $8,634
- ------------------------
* For purposes of calculating amount of fee only. This amount assumes the
purchase of 13,935,355 shares of Common Stock, par value $.01 per share, of
Audits & Surveys Worldwide, Inc. at a price of $3.24 per share. Such number
of shares represents all outstanding shares as of January 19, 1999, plus the
number of shares issuable upon the exercise of all outstanding options or
other rights to acquire shares, and the valuation amount is reduced by the
exercise price of such rights.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11 (a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
Exhibit Index is located on Page 8
</TABLE>
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<PAGE>
14D-1 AND 13D
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1. Names of Reporting Persons: United Information Acquisition Corp.
S.S. or I.R.S. Identification No. of Above Person: Not applicable
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2. Check the Appropriate Box if a Member of Group (See Instructions)
(a) / /
(b) / /
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3. SEC Use Only
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4. Sources of Funds (See Instructions)
WC
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5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f)
/ /
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6. Citizenship or Place of Organization
DELAWARE
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7. Aggregate Amount Beneficially Owned by Each Reporting Person*
6,389,618*
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8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares
(See Instructions)
/ /
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9. Percent of Class Represented by Amount in Row (7)
48.7%
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10. Type of Reporting Person (See Instructions)
CO
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Page 2 of 8 Pages
<PAGE>
14D-1 AND 13D
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(1) Name of Reporting Persons: United Information Group, Inc.
S.S. I.R.S. Identification No. of Above Person: 36-2948619
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(2) Check the Appropriate Box if a Member of a Group (See Instructions):
(a) / /
(b) / /
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(3) SEC Use Only
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(4) Sources of Funds (See Instructions)
WC
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(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f)
/ /
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(6) Citizenship or Place of Organization:
Delaware
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(7) Aggregate Amount Beneficially Owned by Each Reporting Person*
6,389,618*
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(8) Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares (See
Instructions)
/ /
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(9) Percent of Class Represented by Amount in Row (7)
48.7%
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(10) Type of Reporting Person (See instructions)
CO,HC
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* This Statement on Schedule 14D-1 relates to the offer by United Information
Acquisition Corp., a Delaware corporation ("Purchaser") and wholly-owned
subsidiary of United Information Group, Inc., a Delaware corporation
("Parent"), to purchase all outstanding shares of common stock, par value
$.01 per share (the "Shares"), of Audits & Surveys Worldwide, Inc. (the
"Company"), 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 related Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively (the "Offer").
(Page 3 of 8 Pages)
<PAGE>
On January 19, 1999, Purchaser, the Company and United News & Media Group
Limited entered into an Agreement and Plan of Merger (the "Merger
Agreement") pursuant to which, subject to certain terms and conditions,
Purchaser agreed to commence the Offer to Purchase, and following
consummation thereof, to merge with and into the Company. In connection with
the Merger Agreement, Purchaser and certain stockholders of the Company
beneficially owning in the aggregate 6,389,618 Shares (representing
approximately 48.7% of the issued and outstanding Shares and approximately
45.9% of the Shares on a fully diluted basis) entered into an Inducement
Agreement dated as of January 19, 1999 (the "Inducement Agreement"),
pursuant to which, among other things, each such stockholder has agreed (i)
to grant 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 (as defined in the
Merger Agreement) 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 proposal for any business
combination between the Company and any other person or entity other than
Purchaser during the period specified therein, (ii) to grant an option to
purchase such Shares at a price of $3.24 per Share, under certain
circumstances, and (iii) to tender the Shares held by such stockholder
pursuant to the Offer. Copies of the Merger Agreement and the Inducement
Agreement have been filed as Exhibit (c)(1) and Exhibit (c)(2), respectively
to this Schedule 14D-1 and 13D, and are incorporated herein by reference.
This Statement on Schedule 14D-1 also constitutes a Statement on Schedule
13D with respect to the acquisition by Purchaser of beneficial ownership of
the Shares subject to the Inducement Agreement. The item numbers and
responses thereto below are in accordance with the requirements of Schedule
14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Audits & Surveys Worldwide, Inc., a
Delaware corporation (the "Company"), which has its principal executive offices
at 650 Avenue of the Americas, New York, New York 10011.
(b) This Statement on Schedule 14D-1 relates to the offer by Purchaser to
purchase all outstanding Shares of the Company, at $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 and related Letter of Transmittal, copies of which are
attached hereto as Exhibits (a)(1) and (a)(2), respectively. Based upon
information provided by the Company there were 13,116,136 Shares outstanding as
of January 19, 1999. The information set forth in the introduction of the Offer
to Purchase is incorporated herein by reference.
(c) The information set forth in "Section 6. Price Range of the Shares" of
the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d), (g) This statement is being filed by Parent and Purchaser. The
information concerning the name, state or other place of organization, its
principal business and the address of its principal office with respect to each
of Parent and Purchaser are set forth in the Introduction and "Section 8.
Certain Information Concerning Purchaser and Parent" of the Offer to Purchase is
incorporated herein by reference.
(e)-(f) During the last five years, neither the Purchaser nor Parent nor, to
the best knowledge of the Purchaser and Parent, any of the persons listed on
Schedule I to the Offer to Purchase, has (i) been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
(Page 4 of 8 Pages)
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ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth in "Section 10. Background of the Offer;
Contacts with the Company; Merger Agreement; Inducement Agreement; Employment
Amendments;" of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in "Section 9. Financing of the Offer and the
Merger" of the Offer to Purchase is incorporated herein by reference.
(b)-(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in "Section 10. Background of the Offer;
Contacts with the Company; Merger Agreement; Inducement Agreement; Employment
Amendments" and "Section 11. Purpose of the Offer; Plans for the Surviving
Corporation after the Offer and the Merger" of the Offer to Purchase is
incorporated herein by reference.
(f)-(g) The information set forth in "Section 6. Price Range of the Shares"
and "Section 13. Effect of the Offer on Market for Shares; American Stock
Exchange Listing; Registration under the Exchange Act" of the Offer to Purchase
is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction, "Section 8. Certain
Information Concerning Purchaser and Parent" and "Section 10. Background of the
Offer; Contacts with the Company; Merger Agreement; Inducement Agreement;
Employment Amendments" of the Offer to Purchase is incorporated herein by
reference.
(b) The information set forth in the Introduction, "Section 8. Certain
Information Concerning Purchaser and Parent" and "Section 10. Background of the
Offer; Contacts with the Company; Merger Agreement; Inducement Agreement;
Employment Amendments" of the Offer to Purchase is incorporated herein by
reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, "Section 8. Certain
Information Concerning Purchaser and Parent," and "Section 10. Background of the
Offer; Contacts with the Company; Merger Agreement; Inducement Agreement;
Employment Amendments" of the Offer to Purchase is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth and in "Section 16. Fees and Expenses" of the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in "Section 8. Certain Information Concerning
Purchaser and Parent" of the Offer to Purchase is incorporated herein by
reference.
(Page 5 of 8 Pages)
<PAGE>
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in the Introduction, "Section 10. Background
of the Offer; Contacts with the Company; Merger Agreement; Inducement Agreement;
Employment Amendments" of the Offer to Purchase is incorporated herein by
reference.
(b) and (c) The information set forth in "Section 15. Certain Legal Matters
and Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in "Section 13. Effect of the Offer on Market
for Shares; American Stock Exchange Listing; Registration under the Exchange
Act" of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively, is incorporated herein by reference in its entirety.
ITEM 11. MATERIAL FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated January 26, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees
(a)(5) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees to their Clients
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9
(a)(7) Press release dated January 20, 1999
(a)(8) Summary advertisement dated January 26, 1999
(b) None.
(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.
(c)(2) Inducement Agreement dated as of January 19, 1999 among United
Information Acquisition Corp., Solomon Dutka and Carl Ravitch.
(d) None.
(e) Not applicable.
(f) Not applicable.
(Page 6 of 8 Pages)
<PAGE>
SIGNATURE
After due and 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.
January 26, 1999
<TABLE>
<S> <C> <C>
UNITED INFORMATION GROUP, INC.
By: /s/ RICHARD BLOCK
-----------------------------------------
Name: Richard Block
Title: Vice President
UNITED INFORMATION ACQUISITION CORP.
By: /s/ RICHARD BLOCK
-----------------------------------------
Name: Richard Block
Title: President
</TABLE>
(Page 7 of 8 Pages)
<PAGE>
<TABLE>
<CAPTION>
PAGE NO. IN
EXHIBIT SEQUENTIALLY
NO. TITLE NUMBERED SCHEDULE
- ----------- ------------------------------------------------------------------------------------- ---------------------
<C> <S> <C>
(a)(1) Offer to Purchase, dated January 26, 1999
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees
(a)(5) Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees to
their Clients
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9
(a)(7) Press release, dated January 20, 1999
(a)(8) Summary advertisement dated January 26, 1999
(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.
(c)(2) Inducement Agreement, dated as of January 19, 1999 among United Information
Acquisition Corp., Solomon Dutka and Carl Ravitch
</TABLE>
(Page 8 of 8 Pages)
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AUDITS & SURVEYS WORLDWIDE, INC.
AT
$3.24 PER SHARE, NET
BY
UNITED INFORMATION ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
UNITED INFORMATION GROUP, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, FEBRUARY 23, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK OF AUDITS & SURVEYS
WORLDWIDE, INC. (THE "COMPANY") ON A FULLY DILUTED BASIS AND (II) THE EXPIRATION
OR TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS WHICH ARE CONTAINED IN THIS OFFER TO PURCHASE. SEE
SECTION 14.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT EACH
OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
IMPORTANT
Any stockholder desiring to tender all or any portion of such
stockholder's shares of common stock, par value $.01 per share (the "Shares"),
of the Company, should either (1) complete and sign the Letter of Transmittal,
or a facsimile copy thereof, in accordance with the instructions in the Letter
of Transmittal and mail or deliver it together with the certificate(s)
evidencing tendered Shares (the "Share Certificates"), and any other required
documents, to the Depositary named on the back cover of this Offer to Purchase
or tender such Shares pursuant to the procedure for book-entry transfer set
forth in Section 3, or (2) request such stockholder's broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for such
stockholder. Any stockholder whose Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if such
stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose Share Certificates
are not immediately available, or who cannot comply with the procedures for
book-entry transfer described in this Offer to Purchase on a timely basis, may
tender such Shares by following the procedure for guaranteed delivery set forth
in Section 3.
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from the
Information Agent or from brokers, dealers, commercial banks or trust companies.
--------------------------
January 26, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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INTRODUCTION............................................................................................. 1
SECTION 1. Terms of Offer; Expiration Date....................................................... 3
SECTION 2. Acceptance for Payment and Payment for Shares......................................... 4
SECTION 3. Procedure for Accepting the Offer and Tendering Shares................................ 5
SECTION 4. Withdrawal Rights..................................................................... 8
SECTION 5. Certain Federal Income Tax Consequences............................................... 9
SECTION 6. Price Range of the Shares............................................................. 10
SECTION 7. Certain Information Concerning the Company............................................ 10
SECTION 8. Certain Information Concerning Purchaser and Parent................................... 12
SECTION 9. Financing of the Offer and the Merger................................................. 14
SECTION 10. Background of the Offer; Contacts with the Company; Merger Agreement; Inducement
Agreement; Employment Amendments...................................................... 14
SECTION 11. Purpose of the Offer; Plans for the Surviving Corporation after the Offer and the
Merger................................................................................ 24
SECTION 12. Dividends and Distributions........................................................... 26
SECTION 13. Effect of the Offer on Market for Shares; American Stock Exchange Listing;
Registration under the Exchange Act................................................... 26
SECTION 14. Certain Conditions of the Offer....................................................... 26
SECTION 15. Certain Legal Matters and Regulatory Approvals........................................ 28
SECTION 16. Fees and Expenses..................................................................... 31
SECTION 17. Miscellaneous......................................................................... 31
SCHEDULE I. Directors and Executive Officers of Parent, Purchaser and United...................... 32
</TABLE>
i
<PAGE>
TO THE HOLDERS OF COMMON STOCK OF
AUDITS & SURVEYS WORLDWIDE, INC.
INTRODUCTION
United Information Acquisition Corp., a Delaware corporation (the
"Purchaser") and wholly-owned subsidiary of United Information Group, Inc., a
Delaware corporation ("Parent"), hereby offers to purchase all outstanding
shares of common stock, par value $.01 per share (the shares subject to the
Offer being hereinafter called the "Shares"), of Audits & Surveys Worldwide,
Inc., a Delaware corporation (the "Company"), 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
this Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer. Purchaser will pay all charges and expenses of United
States Trust Company of New York (the "Depositary") and D.F. King & Co., Inc.
(the "Information Agent") incurred in connection with the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") UNANIMOUSLY HAS
DETERMINED THAT EACH OF THE OFFER AND THE MERGER (AS DEFINED BELOW) IS FAIR TO,
AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, AND RECOMMENDS
THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE OUTSTANDING SHARES OF THE COMPANY ON A FULLY DILUTED BASIS (THE
"MINIMUM CONDITION"), AND (II) THE EXPIRATION OR TERMINATION OF ALL APPLICABLE
WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976,
AS AMENDED (THE "HSR ACT"). THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND
CONDITIONS WHICH ARE CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTION 14.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of January 19, 1999 (the "Merger Agreement") by and among Purchaser, the Company
and United News & Media Group Limited. The Merger Agreement provides, among
other things, for the making of the Offer by Purchaser and further provides
that, following the purchase of Shares pursuant to the Offer and promptly after
the satisfaction or waiver of certain other conditions and in accordance with
the relevant provisions of the General Corporation Law of the State of Delaware
(the "DGCL"), Purchaser will be merged with and into the Company and the
separate corporate existence of Purchaser will cease (the "Merger"). (The
Company, as the entity which will survive the Merger, is sometimes referred to
herein as the "Surviving Corporation.") The Surviving Corporation will be a
wholly-owned subsidiary of Parent. At the time of the Merger (the "Effective
Time"), each Share issued and outstanding immediately prior to the Effective
Time (other than Shares owned by Purchaser, Parent or any affiliate of Parent or
owned by the Company or any direct or indirect wholly-owned subsidiary of the
Company or held by stockholders who shall have demanded and perfected appraisal
rights, if any, under the DGCL) will be canceled and converted automatically
into the right to receive $3.24 in cash, or any higher price that may be paid
per share in the Offer, without interest (the "Merger Consideration"). See
Section 10 for a more detailed description of the Merger Agreement.
Purchaser has entered into an agreement with certain stockholders of the
Company (the "Inducement Agreement"), pursuant to which, among other things,
each such stockholder has (i) granted 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
1
<PAGE>
contemplated by the Merger Agreement and the Inducement Agreement and any other
actions required in furtherance thereof, and against certain transactions with
competing third-party bidders and any action in furtherance thereof, (ii)
granted Purchaser an irrevocable option to purchase such stockholder's Shares at
a price of $3.24 per Share, under certain circumstances (see Section 10) and
(iii) agreed to tender such stockholder's Shares in the Offer.
The Merger Agreement provides that, promptly upon the acceptance for payment
of, and payment for, all of the Shares subject to the Inducement Agreement or
any Shares pursuant to the Offer, Purchaser shall from time to time be entitled
to designate such number of Directors (rounded up to the next whole number) on
the Board as will give Purchaser that percentage of the total number of
Directors on the Board equal to the percentage of the then outstanding Shares
owned by Purchaser, subject to compliance with Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), provided that such
percentage of the total Directors shall not be less than a majority of the
Board. In the Merger Agreement, the Company has agreed to take all actions
necessary to cause Purchaser's designees to be elected as members of the Board,
including increasing the size of the Board or securing the resignations of
incumbent directors or both. See Section 10.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger Agreement
by the requisite vote of the stockholders of the Company. See Section 11. Under
the Company's Certificate of Incorporation and the DGCL, the affirmative vote of
the holders of a majority of the outstanding Shares is required to approve and
adopt the Merger Agreement and the Merger. Consequently, if Purchaser acquires
(pursuant to the Offer or otherwise) at least a majority of the outstanding
Shares, Purchaser will have sufficient voting power to approve and adopt the
Merger Agreement and the Merger without the vote of any other stockholder.
The DGCL generally permits a merger of a subsidiary with a parent
corporation which owns at least 90% of the outstanding shares of each class of
the stock of the subsidiary, without a vote of the stockholders of the
subsidiary and Purchaser reserves the right, subject to certain conditions
described below, to extend the Offer for up to 10 business days if less than 90%
of the outstanding Shares have been tendered. However, the Certificate of
Incorporation of the Company includes a provision, Article Eleventh, which
effectively will require a meeting of the Company's shareholders to approve the
Merger whether or not Purchaser acquires 90% of the outstanding Shares.
The Company has advised Purchaser that as of January 19, 1999, 13,116,136
Shares were issued and outstanding. The Company has advised Purchaser that as of
January 19, 1999, the Company had duly reserved a total of 819,219 Shares for
future issuance pursuant to outstanding employee stock options granted pursuant
to the Company's 1994 Stock Option Plan and 1997 Stock Option Plan
(collectively, the "Company Stock Option Plans"), of which 665,887 entitled the
holders thereof to payment under the terms of the Merger Agreement. See Section
10 for a description of the treatment of options under the Company Stock Option
Plans.
The Company has been advised by each of its directors and officers that they
intend to tender all Shares beneficially owned by them pursuant to the Offer.
Such persons hold in the aggregate approximately 58.0% of the issued and
outstanding Shares and approximately 57.1% of the Shares on a fully diluted
basis, including in each case Shares held by family members and other
affiliates, as set forth in the Information Statement attached as Annex I to the
Schedule 14D-9 of the Company of even date herewith.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ IN ITS ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
2
<PAGE>
SECTION 1. TERMS OF OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment and will pay for all Shares duly
tendered on or prior to the Expiration Date (as hereinafter defined) and not
properly withdrawn in accordance with the provisions set forth in Section 4. The
term "Expiration Date" shall mean 12:00 Midnight, New York City time, on
February 23, 1999, unless and until Purchaser, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by Purchaser, shall expire.
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement), at any time or from time
to time, to extend for any reason the period of time during which the Offer is
open, including the occurrence of any of the conditions set forth in Section 14,
by giving oral or written notice of such extension to the Depositary and by
providing notice thereof, if applicable, as required by rules promulgated by the
Securities and Exchange Commission (the "SEC"). During any such extension, all
Shares previously tendered and not properly withdrawn will remain subject to the
Offer, subject to the right of a tendering stockholder to withdraw such
stockholder's Shares. See Section 4.
Purchaser expressly reserves the right, at any time and from time to time,
if any of the conditions to the Offer are not satisfied, to (i) terminate the
Offer, (ii) postpone acceptance of, and payment for, any Shares or (iii) waive
any condition or otherwise amend the Offer in any respect, by giving notice
thereof to the Depositary (and such other persons as required by the SEC),
subject in each case to the applicable rules and regulations of the SEC and the
terms and conditions of the Merger Agreement. The Merger Agreement states that,
without the prior written consent of the Company, Purchaser shall not (i)
decrease the price per Share payable in the Offer or change the form of
consideration payable in the Offer, (ii) decrease the number of Shares sought,
(iii) amend or waive satisfaction of the Minimum Condition or (iv) impose
additional conditions to the Offer or amend any other term of the Offer in any
manner adverse to the holders of Shares; except that Purchaser may, without the
consent of the Company, extend the Offer (a) beyond its scheduled expiration
date if, at such scheduled expiration date, any of the conditions to Purchaser's
obligation to accept for payment, and to pay for, the Shares, shall not be
satisfied or waived, (b) for any period required by any rule, regulation or
interpretation of the SEC or the staff thereof applicable to the Offer, or (c)
for an aggregate period of not more than 10 business days beyond the latest
applicable date that would otherwise be permitted under clause (a) or (b) of
this sentence, if the number of Shares validly tendered and not withdrawn
pursuant to the Offer is less than 90 percent of the outstanding Shares and as
of such date Purchaser expressly waives any condition (other than the Minimum
Condition) that subsequently may not be satisfied during such extension of the
Offer.
If Purchaser extends the Offer, or, subject to the provision of Rule
14e-1(c) under Exchange Act, if Purchaser (whether before or after its
acceptance for payment of Shares) is delayed in its payment for Shares or is
unable to pay for the Shares pursuant to the Offer for any reason, then, without
prejudice to Purchaser's rights under the Offer, the Depositary may
nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares
may not be withdrawn except to the extent tendering stockholders are entitled to
withdrawal rights. See Section 4.
Any extension, delay in payment, amendment or termination of the Offer will
be followed as promptly as practicable by a public announcement in accordance
with the public announcement requirements of Rule 14e-1(d) under the Exchange
Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to inform
stockholders of such change) and without limiting the manner in which Purchaser
may choose to make any public announcement, Purchaser shall have no obligation
to
3
<PAGE>
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
Purchaser will extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
SECTION 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the purchase of and payment for Shares validly tendered on or prior
to the Expiration Date and not properly withdrawn as permitted by Section 4 will
be made as promptly as reasonably practicable after the latest to occur of (i)
the Expiration Date, (ii) the expiration or termination of any applicable
waiting period under the HSR Act and (iii) the satisfaction or waiver of the
conditions to the Offer set forth in Section 14. Any determination concerning
the satisfaction of the terms and conditions of the Offer shall be within the
sole discretion of Purchaser and such determination shall be final and binding
on all tendering stockholders. In addition, Purchaser reserves the right, in its
sole discretion, subject to applicable rules promulgated by the SEC, (A) to
accelerate the acceptance for payment of, and the payment for, Shares consistent
with any applicable withdrawal rights and (B) to delay acceptance for payment
of, or payment for, Shares pending receipt of any regulatory approvals specified
in Section 15 or in order to comply, in whole or in part, with any other
applicable law.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
Share Certificates or timely confirmation (a "Book-Entry Confirmation") of a
book-entry transfer of such Shares into the Depositary's account at the
Depository Trust Company (the "Book-Entry Transfer Facility"), pursuant to the
procedures set forth in Section 3, (ii) a properly completed and duly executed
Form of Acceptance and Letter of Transmittal (or a facsimile thereof), with any
required signature guarantees or an Agent's Message (as defined in Section 3) in
connection with a book-entry transfer, and (iii) any other documents required by
the Letter of Transmittal.
United News & Media public limited company ("United"), as the ultimate
parent entity of Purchaser, expects to file by January 29, 1999 with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division") a Premerger Notification and Report Form
under the HSR Act with respect to the Offer. Accordingly, it is anticipated that
the waiting period with respect to the Offer under the HSR Act will expire at
11:59 P.M., New York City time, by not later than February 13, 1999. Prior to
such time the FTC or the Antitrust Division may extend such waiting period by
requesting additional information or material from Parent. If such request is
made, the waiting period will expire at 11:59 P.M., New York City time, on the
tenth calendar day after substantial compliance by Purchaser with such a
request. Thereafter, the waiting period may only be extended by court order. Any
waiting period under the HSR Act may be terminated in individual cases by the
FTC and the Antitrust Division prior to its expiration. See Section 15.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment and purchased Shares validly tendered and not properly withdrawn if and
when Purchaser gives oral or written notice to the Depositary of its acceptance
of payment for such Shares pursuant to the Offer. In all cases, upon the terms
and subject to the conditions of the Offer, payment for Shares so accepted for
payment will be made
4
<PAGE>
by the deposit of the purchase price thereafter with the Depositary, which will
act as agent for the tendering stockholders for the purpose of receiving payment
from Purchaser and transmitting payment to validly tendering stockholders whose
Shares have been accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON
THE PURCHASE PRICE FOR SHARES TENDERED PURSUANT TO THE OFFER BE PAID BY
PURCHASER REGARDLESS OF ANY EXTENSION OR DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer or if Share Certificates are submitted evidencing
more Shares than are tendered, Share Certificates for such unpurchased or
untendered Shares will be returned (or, in the case of Shares tendered by book-
entry transfer within the Book-Entry Transfer Facility, such Shares will be
credited to an account maintained within the Book-Entry Transfer Facility),
without expense to the tendering stockholder, as promptly as practicable
following the expiration or termination of the Offer. Return of such Share
Certificates will be made to and at the risk of the tendering stockholder. Upon
the deposit of funds with the Depositary for the purpose of making payments to
tendering stockholders, Purchaser's obligation to make such payments shall be
satisfied and tendering stockholders must thereafter look solely to the
Depositary for payment of amounts owed to them by reason of the acceptance for
payment of Shares pursuant to the Offer.
If Purchaser is delayed in its acceptance for payment of, or payment for
tendered Shares, or is unable to accept for payment or pay for such Shares
pursuant to the Offer for any reason, then, without prejudice to Purchaser's
rights under the Offer (but subject to Purchaser's obligations under Rule
14e-1(c) under the Exchange Act to pay for or return the tendered Shares
promptly after the termination or withdrawal of the Offer), the Depositary may,
nevertheless, retain tendered Shares on behalf of Purchaser, and such Shares may
not be withdrawn except to the extent tendering stockholders are entitled to
exercise, and duly exercise, withdrawal rights in accordance with the provisions
set forth in Section 4.
If, prior to the Expiration Date, Purchaser varies the terms of the Offer by
increasing the consideration to be paid for Shares, Purchaser will pay such
increased consideration for all Shares purchased pursuant to the Offer, whether
or not such Shares have been tendered or purchased prior to such variation in
the terms of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its subsidiaries or to other affiliates of
Parent the right to purchase all or any portion of the Shares tendered pursuant
to the Offer, but any such transfer or assignment will not relieve Purchaser of
its obligations under the Offer and will in no way prejudice the rights of
tendering stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
SECTION 3. PROCEDURE FOR ACCEPTING THE OFFER AND TENDERING SHARES.
VALID TENDER OF SHARES. For a stockholder validly to tender Shares pursuant
to the Offer, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees (or an Agent's
Message in connection with a book-entry transfer of Shares) and any other
required documents, must be transmitted to and received by the Depositary at its
address set forth on the back cover of this Offer to Purchase and either (i)
Share Certificates for tendered Shares must be received by the Depositary at
such address or such Shares must be tendered pursuant to the procedures for
book-entry transfer set forth below (and a confirmation of receipt of such
tender received by the Depositary), in each case, prior to the Expiration Date,
or (ii) the tendering stockholder must comply with the guaranteed delivery
procedure described below.
BOOK-ENTRY TRANSFERS. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility may make
book-entry delivery of the Shares by causing the Book-Entry Transfer Facility to
transfer such Shares into
5
<PAGE>
the Depositary's account in accordance with the Book-Entry Transfer Facility's
procedure for such transfer. However, although delivery of Shares may be
effected through book-entry transfer at the Book-Entry Transfer Facility, the
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and any other required documents, must,
in any case, be received by the Depositary at its address set forth on the back
cover of this Offer to Purchase on or prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedure
described below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH ITS BOOK-ENTRY PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of the
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received the
Letter of Transmittal and agrees to be bound by the terms of the Letter of
Transmittal and that Purchaser may enforce such agreement against such
participant.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. No signature guarantee on the Letter of Transmittal
is required if (a) the Letter of Transmittal is signed by the registered holder
of Shares (which term, for purposes of this Section, includes any participant in
the Book-Entry Transfer Facility system whose name appears on a security
position listing as the owner of the Shares) tendered therewith and such
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on such Letter
of Transmittal or (b) such Shares are tendered for the account of a bank,
broker, dealer, credit union, savings association or other entity that is a
member in good standing of the Securities Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Signature Guarantee Program or the Stock
Exchange Medallion Program (each, an "Eligible Institution"). In all other
cases, all signatures on the Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
the Share Certificates are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made to, or Share
Certificates not validly tendered or not accepted for payment are to be issued
or returned to, a person other than the registered holder of the Share
Certificates, the tendered Share Certificates must be endorsed in blank or
accompanied by appropriate stock powers, signed exactly as the name of the
registered holder appears on the Share Certificates with the signature on such
Share Certificates or stock powers guaranteed by an Eligible Institution. See
Instructions 1 and 5 to the Letter of Transmittal.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date, or the procedures for book-entry transfer
cannot be completed on a timely basis, such Shares may nevertheless be tendered,
provided that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
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<PAGE>
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is received
by the Depositary as provided below on or prior to the Expiration Date; and
(iii) the Share Certificates, in proper form for transfer (or Book-Entry
Confirmation with respect to such Shares), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other documents required by the Letter of Transmittal, are received by
the Depositary within three American Stock Exchange ("Amex") trading days
after the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by telegram, facsimile transmission or mail, to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery provided by Purchaser.
Notwithstanding any other provision hereof, payment for Shares tendered and
accepted for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of (i) Share Certificates (or a timely
Book-Entry Confirmation with respect thereto), (ii) a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) or, in the case of
Book-Entry Transfer, an Agent's Message and (iii) any other documents required
by the Letter of Transmittal.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser, in its sole discretion, which
determination shall be final and binding. Purchaser reserves the absolute right
to reject any or all tenders of any particular Shares that it determines are not
in proper form or the acceptance for payment of which may, in the opinion of
Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right to
waive any of the conditions of the Offer or to waive any defect or irregularity
in the tender of any Shares with respect to any particular stockholder, whether
or not similar defects or irregularities are waived in the case of other
stockholders. No tender of any Shares will be deemed to have been validly made
until all defects and irregularities have been cured or waived. None of
Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notice of any defects or irregularities in
tenders or incur any liability for failure to give any such notice. Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
OTHER REQUIREMENTS. By executing a Letter of Transmittal as set forth
herein, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Purchaser (and with respect to any and all other Shares or other
securities issued or issuable in respect of such Shares on or after January 19,
1999), effective when, if and to the extent that Purchaser accepts such Shares
for payment pursuant to the Offer. All such proxies shall be considered coupled
with an interest in the tendered Shares. Such appointment is effective when, and
only to the extent that, Purchaser accepts such Shares for payment. Upon such
acceptance for payment, all prior proxies given by such stockholder with respect
to such Shares will, without further action, be revoked, and no subsequent
proxies may be given nor any subsequent written consent executed by such
stockholder with respect to such Shares (and if given or executed, will not be
deemed to be effective). The designees of Purchaser will be empowered, with
respect to such Shares for which the appointment is effective, to exercise all
voting and other rights (whether by written consent or otherwise) of such
stockholder as they, in their sole discretion, may deem proper at any annual or
special meeting of the Company's stockholders or any adjournment of postponement
thereof, by written consent in lieu of any such meeting or otherwise. Purchaser
reserves the right to require that, in order for Shares to be deemed validly
tendered, immediately upon Purchaser's payment for such Shares Purchaser must be
able to exercise full voting rights with respect to such Shares.
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<PAGE>
Purchaser's acceptance for payment of Shares tendered pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING ON PAYMENTS OF CASH
PURSUANT TO THE OFFER, A STOCKHOLDER TENDERING SHARES IN THE OFFER MUST PROVIDE
THE DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER
("TIN") ON A SUBSTITUTE FORM W-9 AND CERTIFY UNDER PENALTIES OF PERJURY THAT
SUCH TIN IS CORRECT AND THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP
WITHHOLDING. All stockholders tendering Shares pursuant to the Offer should
complete and sign the Substitute Form W-9 included as a part of the Letter of
Transmittal to provide the information and certification necessary for
stockholders not subject thereto to avoid backup withholding. Noncorporate
foreign stockholders should complete and sign a Form W-8, Certificate of Foreign
Status, a copy of which may be obtained from the Depositary, in order to avoid
backup withholding. See Instruction 9 to the Letter of Transmittal.
SECTION 4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer are irrevocable except as
otherwise provided in this Section 4. Shares tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date. Shares may also be
withdrawn at any time after March 27, 1999 unless theretofore accepted for
payment as provided herein. If Purchaser extends the Offer or if Purchaser is
delayed in its acceptance for payment of Shares or is unable to accept Shares
for payment pursuant to the Offer for any reason, then, without prejudice to
Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf
of Purchaser, retain tendered Shares, and such Shares may not be withdrawn
except to the extent that tendering stockholders properly withdraw such Shares
as set forth in this Section 4.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address specified on the back cover page of this Offer to Purchase. Any
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and (if Share Certificates
for such Shares have been tendered) the names in which the Share Certificate(s)
representing such Shares are registered, if different from that of the person
tendering such Shares. If Share Certificate(s) have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificate(s), the serial numbers shown on such Share Certificate(s) must be
submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares to be withdrawn have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 3, any notice of withdrawal of such Shares must specify the name and
number of the account at the Book-Entry Transfer Facility and otherwise comply
with the Book-Entry Transfer Facility's procedures for withdrawal.
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, properly withdrawn Shares may be retendered at any
subsequent time prior to the Expiration Date by following any of the procedures
set forth in Section 3.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be resolved by Purchaser, in its sole discretion,
which resolution shall be final and binding. None of Purchaser, Parent, the
Depositary, the Information Agent or any other person will be under any duty to
give notice of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notice.
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<PAGE>
SECTION 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
The summary of federal income tax consequences set forth below is for
general information only and is based on Purchaser's understanding of the law as
currently in effect. The tax consequences to each stockholder will depend in
part upon such stockholder's particular situation. Special tax consequences not
described herein may be applicable to particular classes of taxpayers, such as
financial institutions, broker-dealers, persons who are not citizens or
residents of the United States, stockholders who acquired their Shares through
the exercise of an employee stock option or otherwise as compensation and other
stockholders who do not hold their Shares as capital assets. ALL STOCKHOLDERS
SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES
OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF
THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX
LAWS AND OF CHANGES IN SUCH TAX LAWS.
The receipt of cash for Shares pursuant to the Offer or in the Merger will
be a taxable sale or exchange for U.S. federal income tax purposes under the
Internal Revenue Code of 1986, as amended (the "Code"), and may also be a
taxable transaction under applicable state, local or foreign tax laws. In
general, a stockholder who receives cash for Shares pursuant to the Offer or the
Merger will recognize gain or loss for U.S. federal income tax purposes equal to
the difference between the amount of cash received in exchange for the Shares
sold and such stockholder's adjusted tax basis in such Shares. Assuming the
Shares constitute capital assets in the hands of the stockholder, such gain or
loss will be capital gain or loss and will be long term capital gain or loss if
the stockholder has held the Shares for more than one year at the time of sale.
Under current law, gain or loss will be calculated separately for each Share or,
where applicable, block of Shares (i.e., a group of Shares with the same tax
basis and holding period) tendered pursuant to the Offer.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may, although not otherwise subject to backup withholding be
subject to backup withholding if the stockholder fails to provide its TIN, fails
to certify that such number is correct or properly certify that it is awaiting a
TIN or if the Internal Revenue Service (the "IRS") notifies the Depositary that
the TIN is incorrect. A stockholder who does not furnish its TIN may be subject
to a penalty imposed by the IRS. See Section 3.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an appropriate income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, INCLUDING STOCKHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, INDIVIDUALS WHO
ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES AND FOREIGN CORPORATIONS.
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SECTION 6. PRICE RANGE OF THE SHARES.
The Shares are listed and principally traded on Amex under the symbol ASW.
The following table sets forth, for the periods indicated, the high and low
sales prices per Share on Amex, as reported by Amex:
<TABLE>
<CAPTION>
HIGH LOW
-------- ---------
<S> <C> <C>
Year Ended December 31, 1996:
First Quarter...................................................................................... $ 2 3/4 $ 1 3/4
Second Quarter..................................................................................... 2 3/4 2
Third Quarter...................................................................................... 3 2 3/8
Fourth Quarter..................................................................................... 3 2 1/8
Year Ended December 31, 1997:
First Quarter...................................................................................... $ 4 7/16 $ 2 13/16
Second Quarter..................................................................................... 3 1/16 2 7/16
Third Quarter...................................................................................... 3 3/4 2 1/2
Fourth Quarter..................................................................................... 3 5/8 2 1/2
Year Ended December 31, 1998:
First Quarter...................................................................................... $ 3 $ 2 5/8
Second Quarter..................................................................................... 3 5/8 2 3/4
Third Quarter...................................................................................... 2 7/8 1 5/8
Fourth Quarter..................................................................................... 2 1/2 1
Year Ending December 31, 1999:
First Quarter (through January 22, 1999)........................................................... $ 3 3/16 $ 1 3/8
</TABLE>
As of January 19, 1999, there were 581 holders of record of the Shares. On
January 15, 1999, the last full trading day prior to the approval of the Merger
Agreement by the Board and the announcement of the execution of the Merger
Agreement, the closing sales price on the Amex was $2 7/16 per Share.
Stockholders are urged to obtain a current market quotation for the Shares.
SECTION 7. CERTAIN INFORMATION CONCERNING THE COMPANY.
Except as otherwise set forth herein, the information concerning the Company
contained in this Offer to Purchase, including financial information, has been
furnished by the Company or has been taken from, or based upon, publicly
available documents and records on file with the SEC and other sources.
Stockholders are urged to review the publicly available information concerning
the Company before acting on the Offer. Neither Purchaser, Parent nor any of
their respective affiliates assumes any responsibility for the accuracy or
completeness of the information concerning the Company furnished by the Company
or contained in such documents and records or for any failure by the Company to
disclose events which may have occurred or may affect the significance or
accuracy of any such information but which are unknown to Purchaser, Parent or
their respective affiliates.
GENERAL. The Company is an international marketing research firm providing
clients with a broad selection of services to assist in the development of
marketing, advertising and investment strategies. The Company's marketing
research services, conducted in over 80 countries, are provided to major
commercial, industrial, institutional and academic organizations. Its most
significant clients, by 1998 revenue, include AT&T, Amerada Hess, The Coca-Cola
Company, IBM, MasterCard International, Shell Oil Company, Sunstar Inc., Volvo
Corporation of North America, United Parcel Service and Xerox. The Company was
incorporated in Delaware and its principal executive offices are at 650 Avenue
of the Americas, New York, New York 10011.
FINANCIAL INFORMATION. Set forth below is a summary of certain selected
consolidated financial information relating to the Company and its subsidiaries
which has been excerpted or derived from the
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audited consolidated financial statements contained in Part I, Item 8 of the
Company's Annual Report on Form 10-K for the fiscal years ended December 31,
1996 and 1997 (the "Form 10-Ks") and the unaudited consolidated financial
statements contained in Part I, Item 1 of the Company's Quarterly Reports on
Form 10-Q for the nine months ended September 30, 1998, 1997 and 1996 (the "Form
10-Qs"), which financial statements are incorporated herein by this reference.
More comprehensive financial information is included in the Form 10-Ks, Form
10-Qs and other documents filed by the Company with the SEC. The financial
information that follows is qualified in its entirety by reference to such
reports and other documents, including the consolidated financial statements and
related notes contained therein. Such reports and other documents may be
examined and copies may be obtained from the offices of the SEC in the same
places and in the same manner as set forth below.
AUDITS & SURVEYS WORLDWIDE, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
DECEMBER 31,
-------------------------------------------
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
INCOME STATEMENT:
Revenues.......................................................... $ 68,870 $ 60,368 $ 54,626
Income before provision for income taxes.......................... 2,395 4,408 1,553
Net Income........................................................ 1,418 2,589 846
Basic Earnings per common shares.................................. .11 .20 .07
Weighted Average common shares outstanding........................ 13,104,759 13,099,103 12,499,213
BALANCE SHEET (AT END OF PERIOD):
Cash and cash equivalents......................................... 1,524 3,827 936
Total assets...................................................... 28,455 26,509 24,887
Long-term debt (net of current portion)........................... 1,702 1,943 2,647
Stockholders' equity.............................................. 9,806 8,467 6,627
</TABLE>
AUDITS & SURVEYS WORLDWIDE, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPT. 30,
-------------------------------------------
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
(UNAUDITED)
-------------------------------------------
INCOME STATEMENT:
Revenues.......................................................... $ 40,438 $ 49,903 $ 44,997
Income (loss) before provision (benefit for income taxes.......... (158) 2,376 3,470
Net income (loss)................................................. (29) 1,402 1,904
Basic earnings (loss) per common share............................ -- .11 .15
Weighted Average common shares outstanding........................ 13,113,646 13,103,095 13,099,103
BALANCE SHEET (AT END OF PERIOD):
Cash and cash equivalents......................................... 849 1,072 2,093
Total assets...................................................... 24,893 29,302 24,090
Long-term debt (net of current portion)........................... 1,238 1,857 2,083
Stockholders' equity.............................................. 9,770 9,788 8,449
</TABLE>
11
<PAGE>
In connection with Parent's review of the Company and in the course of the
discussions between Parent and the Company described in Section 10, the Company
provided Parent with certain business and financial information that Purchaser
and Parent believe is not publicly available. For the year ended December 31,
1998, the Company forecast revenues of $58.3 million, operating income of $0.8
million, income before taxes of $1.1 million and net income per Share of $0.06
based on 13,115,000 Shares outstanding. For the year ending December 31, 1999,
the Company forecast revenues of $68.5 million, operating income of $6.3
million, income before taxes of $4.2 million and net income per Share of $0.19
based on 13,116,000 Shares outstanding.
PROJECTED INFORMATION OF THIS TYPE IS BASED ON ESTIMATES AND ASSUMPTIONS
ABOUT COMPLEX ECONOMIC AND OPERATING FACTORS THAT ARE INHERENTLY SUBJECT TO
SIGNIFICANT ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, ALL OF
WHICH ARE DIFFICULT TO PREDICT AND MANY OF WHICH ARE BEYOND THE COMPANY'S
CONTROL. ACCORDINGLY, THERE IS NO ASSURANCE THAT THE PROJECTED RESULTS WOULD BE
REALIZED OR THAT ACTUAL RESULTS WOULD NOT BE SIGNIFICANTLY HIGHER OR LOWER THAN
THOSE SET FORTH ABOVE. IN ADDITION, THESE PROJECTIONS WERE NOT PREPARED WITH A
VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE SEC
OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS REGARDING PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS OFFER
TO PURCHASE ONLY BECAUSE SUCH INFORMATION WAS MADE AVAILABLE TO PURCHASER AND
PARENT BY THE COMPANY. NONE OF PURCHASER, PARENT, THE COMPANY, ANY OF THEIR
RESPECTIVE AFFILIATES OR ANY OTHER PARTY ASSUMES ANY RESPONSIBILITY FOR THE
ACCURACY OR VALIDITY OF THE FOREGOING PROJECTIONS.
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the SEC. The reports, proxy statements and other information
filed by the Company with the SEC can be inspected and copied at the public
reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's Regional Offices at
7 World Trade Center, 13th Floor, New York, New York 10048, and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information relating to the public reference rooms.
Copies of such material also can be obtained from the Public Reference Section
of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, the SEC maintains a worldwide web site
(http://www.sec.gov) that contains certain reports, proxy statements and other
information regarding registrants, such as the Company, that file electronically
with the SEC. Material filed by the Company also can be inspected at the offices
of the Amex, 86 Trinity Place, New York, New York 10006.
Purchaser and Parent have filed a Tender Offer Statement on Schedule 14D-1
(together with any amendments thereto, the "Schedule 14D-1") with the SEC in
connection with the Offer. This Offer to Purchase does not contain all the
information set forth in the Schedule 14D-1 and the exhibits thereto. Such
additional information may be obtained from the SEC's principal office in
Washington, D.C. Statements contained in this Offer to Purchase or in any
document incorporated in this Offer to Purchase by reference as to the contents
of any contract or other document referred to herein or therein are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Schedule 14D-1 or such
other document, each such statement being qualified in all respects by such
reference.
SECTION 8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
PURCHASER. Purchaser is a newly incorporated Delaware corporation organized
in connection with the Offer and the Merger and has not carried on any
activities other than in connection with the Offer and the
12
<PAGE>
Merger. The principal offices of Purchaser are located at Two World Trade
Center, Suite 5550, New York, New York 10048. Purchaser is a direct wholly-owned
subsidiary of Parent. Until immediately prior to the time that Purchaser will
purchase Shares pursuant to the Offer, it is not anticipated that Purchaser will
have any significant assets or liabilities or engage in activities other than
those incident to its formation and capitalization and the transactions
contemplated by the Offer and the Merger. Because Purchaser is newly formed and
has minimal assets and capitalization, no meaningful financial information
regarding Purchaser is available.
PARENT. Parent is a Delaware corporation and its principal offices are at
the same address as given above for Purchaser. Parent is a wholly-owned indirect
subsidiary of United News & Media public limited company, a public limited
company registered in England and Wales ("United"), which is a leading trade
exhibition organizer, business magazine and advertising periodical publisher and
corporate news distributor. Within the United Kingdom, United also is a leading
national newspaper publisher and has significant broadcasting operations.
The name, current business address, citizenship, and present principal
occupation or employment, and five-year employment history for each of the
directors and executive officers of Purchaser, Parent and United, and certain
other information, are set forth on Schedule I hereto.
United is subject to certain limited informational filing requirements of
the Exchange Act as a foreign private issuer, and in accordance therewith is
obligated to file periodic reports, proxy statements and other information with
the SEC relating to its business, financial statements and other matters. Such
reports, proxy statements and other information filed by United are available
for inspection and copying at the public reference facilities of the SEC in the
same places and in the same manner as set forth with respect to the Company in
Section 7, except that such documents are not available on EDGAR.
For the year ended December 31, 1997, United had revenues of approximately
$3.7 billion and profit after tax of approximately $259.9 million. United's
stockholders' equity at June 30, 1998 was approximately $1,743.7 million with
approximately $502.1 million of cash and cash equivalents.
United's consolidated balance sheet and the related consolidated profit and
loss account and consolidated cash flow statement for the three years ended
December 31, 1997, 1996 and 1995 contained in Part IV, Item 19 of United's
Annual Report on Form 20-F for the year ended December 31, 1997 filed with the
SEC (the "Annual Report") are hereby incorporated by reference. A copy of the
Annual Report may be obtained (i) by writing to United at Ludgate House, 245
Blackfriars Road, London SE1 9UY, United Kingdom, attention: Corporate Secretary
or (ii) upon payment of the SEC's customary fees, by writing to its principal
office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Additionally, the Annual Report may be inspected at the SEC's offices.
Except as provided in the Merger Agreement, the Inducement Agreement and as
otherwise described in this Offer to Purchase, (i) none of Purchaser, Parent
nor, to the knowledge of Purchaser and Parent, any of the persons listed in
Schedule I to this Offer to Purchase, or any associate or majority-owned
subsidiary of Purchaser, Parent or any of the persons so listed beneficially
owns or has any right to acquire, directly or indirectly, any Shares or has any
contract, arrangement, understanding or relationship with any other person with
respect to any securities of the Company, including, but not limited to, any
contract, arrangement, understanding or relationship concerning the transfer or
the voting of such securities, joint ventures, loan or option arrangements, puts
or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies and (ii) none of Purchaser, Parent nor, to the knowledge
of Purchaser and Parent, any of the persons or entities referred to above nor
any director, executive officer or subsidiary of any of the foregoing has
effected any transactions in any Shares during the past 60 days.
13
<PAGE>
Except as provided in the Merger Agreement, the Inducement Agreement and as
otherwise described in this Offer to Purchase, since January 1, 1996 none of
Purchaser, Parent nor to the knowledge of Purchaser and Parent, any of the
persons listed in Schedule I to this Offer to Purchase, has had any transactions
with the Company or any of its executive officers, directors or affiliates that
is required to be reported under the rules and regulations of the SEC applicable
to the Offer. Except as provided in the Merger Agreement, the Inducement
Agreement and as otherwise outlined in this Offer to Purchase, since January 1,
1996 there have been no contacts, negotiations or transactions between any of
Purchaser, Parent, or any of their subsidiaries or, to the best knowledge of
Purchaser and Parent, any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, a tender offer for or other
acquisition of securities of any class of the Company, an election of directors
of the Company, or a sale or other transfer of a material amount of assets of
the Company or any of its subsidiaries.
SECTION 9. FINANCING OF THE OFFER AND THE MERGER.
The total amount of funds required by Purchaser to consummate the Offer and
the Merger is estimated to be approximately $43.9 million, including
approximately $0.8 million to pay related fees and expenses. Purchaser will
obtain all such funds from Parent. Parent will obtain such funds from the
working capital of its affiliates.
SECTION 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; MERGER
AGREEMENT; INDUCEMENT AGREEMENT; EMPLOYMENT AMENDMENTS.
BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
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 16. Allen prepared a list of
prospects which included United Information Group Limited, a subsidiary of
United ("UIG").
In late May 1997, Alain Tessier, the Chief Executive Officer of Mediamark
Research Inc ("MRI"), a subsidiary of UIG, approached Solomon Dutka, Chairman
and Chief Executive of the Company 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 H. Arthur
Bellows, Jr., President of the Company, 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
14
<PAGE>
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 Mr. Bellows, Alan Ritter and Robert Miller of the Company (Mr.
Miller also being 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.
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.
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
15
<PAGE>
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.
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
16
<PAGE>
($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's 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, 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 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 attached as Annex II to the Company's Schedule 14D-9
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 Company and United News & Media
Group Limited executed the Merger Agreement. On January 19, 1999, the Purchaser
and the Company separately announced the transaction.
THE MERGER AGREEMENT.
The following summary of certain provisions of the Merger Agreement is
presented only as a summary and is qualified in its entirety by reference to the
Merger Agreement, a copy of which has been filed as an exhibit to Purchaser's
and Parent's Schedule 14D-1 and 13D.
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, 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 set forth in Section 14 of
this Offer to Purchase and, subject only to the terms and
17
<PAGE>
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. Purchaser may waive any condition to the Offer, increase the price
per Share payable in the Offer and make any other changes in the terms and
conditions of the Offer. However, no change may be made which decreases the
price per Share 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
in Section 14 of this Offer to Purchase or which extends the Offer (except as
set forth in the following sentence). Notwithstanding the foregoing, 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 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, Purchaser expressly waives any
condition (other than the Minimum Condition) 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 Parent, Purchaser
will be merged with and into the Company and the separate corporate existence of
Purchaser will cease. At the Effective Time, by virtue of the Merger and without
any action on the part of Purchaser, the Company or the holders of Shares, each
Share issued and outstanding immediately prior to the Effective Time (other than
Shares owned by Purchaser, Parent or any direct or indirect wholly-owned
subsidiary of 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 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 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 of Purchaser and the 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.
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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.
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. See Section 11 for a further discussion of certain
provisions of the DGCL and the Company Certificate of Incorporation applicable
to the Merger.
CONDUCT OF BUSINESS. Pursuant to the Merger Agreement, prior to the
Effective Time, except to the extent that Purchaser shall otherwise consent
(including by virtue of action by the Board approved by all of Purchaser's or
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 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 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 Plan, 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 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, 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;
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(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 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 Purchaser, (a) the Company and the
Subsidiaries shall make reasonable arrangements for representatives of
Purchaser to meet with suppliers and customers of the Company and the
Subsidiaries, and (b) the Company and the Subsidiaries shall schedule, and
the management of the Company and the Subsidiaries shall participate in,
meetings of representatives of 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 manner, 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 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 Acquisition in writing of all material order
cancellations;
NO SOLICITATION. The Company will not, directly or indirectly, through any
officer, director, agent, financial adviser 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
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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 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.
Subject to applicable law, the Company shall take all actions requested by
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, and the Company agrees to make such mailing with the mailing of its
Schedule 14D-9.
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
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extended by action of the Surviving Corporation), 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 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 (referred to collectively as the "Options" and individually
as an "Option") 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 the Per Share Amount 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 (see Section 14), 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) 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 Purchaser and Parent to consummate the Merger,
and that the accuracy of representations and warranties of Purchaser and Parent,
and the performance, in all material respects, of agreements and covenants of
Purchaser and 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.
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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 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 Purchaser if not in material breach of the Merger Agreement, if
any of the conditions of Purchaser 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 Purchaser if the Offer shall have expired or been terminated
without any Shares being purchased thereunder by Purchaser and its
subsidiaries as a result of the occurrence of any of the events described in
Section 14 of this Offer to Purchase; and
(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 Purchaser terminates the
Merger Agreement in the manner described in clause (f) of "--Termination of
Merger Agreement" above, or in the manner described in clause (e) of
"--Termination of Merger Agreement" above because the failure of any condition
set forth in Section 14 hereof resulted from a willful and intentional breach by
the Company of any provision of the Merger Agreement, then promptly after such
termination, the Company shall pay to Parent $1,250,000 and shall reimburse
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.
The Merger Agreement states that, from the date thereof through the
consummation of the Offer, Analyze will not issue any stock options under the
Option Plans or any other options, warrants, convertible securities or other
capital stock, and will not accelerate the vesting or otherwise modify the terms
of any option outstanding under the Option Plans.
INDUCEMENT AGREEMENT. Under the Inducement Agreement, certain stockholders
of the Company, holding approximately 48.7% of the Shares outstanding as of
January 19, 1999, have (i) granted Purchaser an irrevocable proxy to vote and
otherwise act with respect to the Shares then owed 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
Acquisition Transaction and any action in furtherance thereof, (ii) granted
Purchaser an irrevocable option to purchase such stockholder's Shares at a price
of $3.24 per Share, under certain circumstances (see Section 10) and (iii)
agreed to tender such stockholder's Shares in the Offer.
EMPLOYMENT AMENDMENTS. The Company has entered into Employment Agreement
Amendments (the "Employment Agreement Amendments"), which, effective upon the
consummation of the acquisition
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(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, Carl Ravitch, Joel 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 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,
(iii) Mr. Ravitch waives, in connection with the transactions (the
"Transactions") contemplated by the Merger Agreement, any termination rights he
may otherwise be entitled to, and (iv) 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 Agreements, 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, 2002.
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.
SECTION 11. PURPOSE OF THE OFFER; PLANS FOR THE SURVIVING CORPORATION AFTER THE
OFFER AND THE MERGER.
PURPOSE OF THE OFFER. The purpose of the Offer and the Merger is for Parent
to acquire control of, and the entire equity interest in, the Company. The
purpose of the Merger is for Parent to acquire all Shares not purchased pursuant
to the Offer. Upon consummation of the Merger, the Surviving Corporation will
become a wholly-owned subsidiary of Parent. The Offer is being made pursuant to
the Merger Agreement.
PLANS FOR MERGER CONSUMMATION. Under the DGCL, the approval of the Board
and the affirmative vote of the holders of a majority of the outstanding Shares
are required to approve and adopt the Merger Agreement and the transactions
contemplated thereby, including the Merger. The Board has unanimously approved
and adopted the Merger Agreement and the transactions contemplated thereby, and
the only remaining required corporate action of the Company is the approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the affirmative vote of the holders of a majority of the Shares. Accordingly, if
the Minimum Condition is satisfied, Purchaser will have sufficient voting power
to cause the approval and adoption of the Merger Agreement and the transactions
contemplated thereby without the affirmative vote of any other stockholder.
In the Merger Agreement, the Company has agreed to take all action
necessary, as promptly as practicable after the expiration of the Offer, to
convene a meeting of its stockholders to consider and vote upon the approval of
the Merger Agreement, the Merger and such other matters as may be necessary to
effectuate the transactions contemplated by the Merger Agreement. Parent and
Purchaser have agreed that all Shares owned by them and their subsidiaries will
be voted in favor of the Merger Agreement and the transactions contemplated by
the Merger Agreement at any such meeting.
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The Merger Agreement provides that if Purchaser purchases Shares sufficient
to constitute a majority of the then outstanding Shares, Purchaser will be
entitled to designate representatives to serve on the Board in proportion to
Purchaser's ownership of Shares following such purchase constituting at least a
majority of the Board. See Section 10. Purchaser expects that such
representation would permit Purchaser to exert control over the conduct of the
Company's business and operations.
The DGCL generally permits a merger of a subsidiary with a parent
corporation which owns at least 90% of the outstanding shares of each class of
the stock of the subsidiary, without a vote of the stockholders of the
subsidiary. However, the Certificate of Incorporation of the Company includes a
provision, Article Eleventh, which effectively will require a meeting of the
Company's shareholders to approve the Merger whether or not Purchaser acquires
90% of the outstanding Shares.
APPRAISAL RIGHTS. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders will have certain
rights under the DGCL to dissent and demand appraisals of, and to receive
payment in cash of the fair value of their Shares. Such rights to dissent, if
the statutory procedures are complied with, could lead to a judicial
determination of the fair value of the Shares, as of the day prior to the date
on which the stockholders' vote was taken approving the Merger (excluding any
element of value arising from the accomplishment or expectation of the Merger),
required to be paid in cash to such dissenting holders for their Shares. In
addition, such dissenting stockholders would be entitled to receive payment of a
fair rate of interest from the date of consummation of the Merger on the amount
determined to be the fair value of their Shares. In determining the fair value
of the Shares, the court is required to take into account all relevant factors.
Accordingly, such determination could be based upon considerations other than,
or in addition to, the market value of the Shares, including, among other
things, asset values and earning capacity. In Weinberger v. UOP, Inc., the
Delaware Supreme Court stated, among other things, that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. Therefore, the value so determined in any appraisal
proceeding could be the same, more or less than the purchase price per Share in
the Offer or the Merger Consideration.
The SEC has adopted Rule 13e-3 under the Exchange Act, which is applicable
to certain "going private" transactions. Rule 13e-3, if applicable to the Offer
and the Merger, would require, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transactions contemplated by the Merger Agreement and
the consideration offered to minority stockholders in such transaction be filed
with the SEC and disclosed to stockholders prior to consummation of such
transaction. Purchaser believes that Rule 13e-3 will not be applicable to the
Offer or the Merger.
PLANS FOR THE SURVIVING CORPORATION. It is expected that, initially
following the Merger, the business and operations of the Surviving Corporation
will, except as set forth in this Offer to Purchase, be continued by the
Surviving Corporation substantially as they are currently being conducted.
Parent will continue to evaluate the business and operations of the Company
during the pendency of the Offer and after the consummation of the Offer and the
Merger, and will take such actions as it deems appropriate under the
circumstances then existing. Parent intends to seek additional information about
the Company during this period. Thereafter, Parent intends to review such
information as part of a comprehensive review of the Company's business,
operations, capitalization, Board and management with a view to optimizing
realization of the Company's potential in conjunction with the businesses of
Parent's affiliates. It is expected that the business and operations of the
Surviving Corporation would form an important part of Parent's future business
plans.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation involving
the Company, a sale or transfer of a material change in the Company's
capitalization or dividend policy or any other material changes in the Company's
corporate structure or business.
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SECTION 12. DIVIDENDS AND DISTRIBUTIONS.
The Merger Agreement provides that the Company will not, between the date of
the Merger Agreement and the Effective Time, without the prior written consent
of Parent, declare or pay any dividends or other distributions in respect of any
of its capital stock.
SECTION 13. EFFECT OF THE OFFER ON MARKET FOR SHARES; AMERICAN STOCK EXCHANGE
LISTING; REGISTRATION UNDER THE EXCHANGE ACT.
The purchase of Shares by Purchaser pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly, may reduce the number of
holders of Shares and could thereby adversely affect the liquidity and market
value of the remaining publicly held Shares.
Depending upon the aggregate market value and per share price of any Shares
not purchased pursuant to the Offer, the Shares may no longer meet the standards
for continued inclusion in the Amex, which require, among other things, that an
issuer have at least 200,000 publicly held shares with a market value of $1
million held (in round lots) by at least 300 stockholders. In the event the
Shares were no longer eligible for Amex quotation, quotations might still be
available from other sources. The extent of the public market for the Shares and
availability of such quotations would, however, depend upon the number of
holders of Shares remaining at such time, the interest in maintaining a market
in the Shares on the part of securities firms, the possible termination of
registration under the Exchange Act, as described below, and other factors.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the SEC if the
Shares are not listed on a national securities exchange and there are fewer than
300 record holders. The termination of the registration of the Shares under the
Exchange Act would substantially reduce the information required to be furnished
by the Company to holders of Shares and to the SEC and would make certain
provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy statement in
connection with stockholders' meetings and the requirements of Rule 13e-3 under
the Exchange Act with respect to "going private" transactions, no longer
applicable to the Shares. In addition, "affiliates" of the Company and persons
holding "restricted securities" of the Company may be deprived of the ability to
dispose of such securities pursuant to Rule 144 promulgated under the Securities
Act. If registration of the Shares under the Exchange Act were terminated, the
Shares would no longer be eligible for Amex reporting. Purchaser currently
intends to seek to cause the Company to terminate the registration of the Shares
under the Exchange Act as soon after consummation of the Offer as the
requirements for termination of registration are met.
SECTION 14. 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 number of shares of Company Common Stock 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 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 Shares (whether or not any Shares have
26
<PAGE>
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
(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
27
<PAGE>
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.
SECTION 15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
GENERAL. Based upon its examination of publicly available information with
respect to the Company and its review of certain information furnished by the
Company to Parent and discussions by representatives of Parent with
representatives of the Company during Parent's investigation of the Company,
Parent is not aware of any license or regulatory permit that appears to be
material to the business of the Company and its subsidiaries, taken as a whole,
that might be adversely affected by Purchaser's acquisition of the Shares
pursuant to the Offer. Except as disclosed herein, Parent is not aware of any
approval or other action by any domestic (federal or state) or foreign
governmental, administrative or regulatory authority or public body that would
be required for the acquisition or ownership of Shares by Purchaser pursuant to
the Offer. Should any such approval or other action be required, it is Parent's
and Purchaser's current intention to seek such approval or action. There is,
however, no current intent to delay acceptance for payment of Shares tendered
pursuant to the Offer pending the outcome of any such matter or the receipt of
any such approval (subject to Purchaser's right to decline to purchase Shares if
any of the conditions in Section 14 shall have occurred). There is no assurance
that any such approval or other action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to the
business of the Company, Purchaser or Parent or that certain parts of the
business of the Company, Purchaser or Parent might not have to be disposed of or
held separate or other substantial conditions complied with in order to obtain
such approval or other action or in the event that such approvals were not
obtained or such other actions were not taken. Purchaser's obligation under the
Offer to accept the Shares for payment and to pay for such Shares is subject to
certain conditions, including conditions relating to certain legal matters
discussed in this Section 15, which are described in Section 14.
28
<PAGE>
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions contemplated by the
Merger Agreement may not be consummated unless certain information has been
furnished to the Antitrust Division and the FTC and certain waiting period
requirements have been satisfied. The acquisition of Shares pursuant to the
Offer is subject to such requirements. See Section 14.
United expects to file by January 29, 1999 a Premerger Notification and
Report Form under the HSR Act with respect to the purchase of Shares pursuant to
the Offer with the Antitrust Division and the FTC. Under the provisions of the
HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer
may not be consummated until the expiration of a 15-calendar day waiting period
following the filing by Parent. Accordingly, it is anticipated that the waiting
period with respect to the Offer under the HSR Act will expire at 11:59 p.m. New
York City time, by not later than February 13, 1999, unless early termination of
the waiting period is granted. In addition, the Antitrust Division or the FTC
may extend such waiting periods by requesting additional information or
documentary material from Parent prior to the expiration of the waiting period.
If such a request is made with respect to the Offer by either the Antitrust
Division or the FTC, the waiting period related to the Offer will expire at
11:59 p.m. New York City time on the tenth calendar day after substantial
compliance by Parent with such request. Thereafter, the waiting period could be
extended only by court order. With respect to each acquisition, the Antitrust
Division or the FTC may issue only one request for additional information. In
practice, complying with a request for additional information or material can
take a significant amount of time. In addition, if the Antitrust Division or the
FTC raises substantive issues in connection with a proposed transactions
contemplated by the Merger Agreement, the parties may engage in negotiations
with the relevant governmental agency concerning possible means of addressing
those issues and may agree to delay consummation of the transactions
contemplated by the Merger Agreement while such negotiations continue.
Expiration or termination of applicable waiting periods under the HSR Act is a
condition to Purchaser's obligation to accept for payment and pay for Shares
tendered pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed purchase of the Shares
by Purchaser pursuant to the Offer. At any time before or after such purchase,
the Antitrust Division or the FTC could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the purchase of Shares pursuant to the Offer by Purchaser or
seeking divestiture of the Shares so acquired or divestiture of substantial
assets of Parent, the Company or their respective subsidiaries. Litigation
seeking similar relief could be brought by private parties.
Based upon an examination of information available to Parent relating to the
business in which Parent, the Company and their respective subsidiaries are
engaged, Parent and Purchaser believe that the Offer and the other transactions
contemplated by the Merger Agreement will not violate the antitrust laws and
that such transactions will lead to increased competition. However, there is no
assurance that a challenge to the Offer and the other transactions contemplated
by the Merger Agreement on such grounds will not be made, or if such a challenge
is made, what the result will be. See Section 14 for certain conditions to the
purchase of the Shares, including conditions with respect to litigation and
certain governmental actions.
The parties expect to file on January 26, 1999, a notification with the
Minister for Enterprise, Trade and Employment under the Irish Mergers and
Take-Overs (Control) Acts, 1978 to 1996 (the "Irish Merger Act"). This is
because under Irish law the Minister may require a transaction involving at
least one enterprise engaged in the printing and/or publication of one or more
newspapers, to be notified under the Irish Merger Act regardless of the assets
or turnover of the parties concerned. Where the Minister decides that the Irish
Merger Act applies, he will have one month from notification to clear or refer
the merger to the Competition Authority. If the Minister does not state in
writing that he has decided not to prohibit or make conditional the merger in
that time, three months from notification (or the date on which information
requested by the Minister within a month of notification was supplied) must
elapse before an
29
<PAGE>
automatic clearance is obtained. If the Minister within one month from
notification refers the proposal to the Competition Authority, the Authority has
at least one month, or any longer period specified by the Minister to report on
its investigation to the Minister. The Minister must publish the report within a
further two months. The Minister may only make an order prohibiting a
transaction or permitting a transaction subject to conditions in cases in which
he has made a reference to the authority. Title to any shares or assets in
Ireland will not pass until a legal clearance has been obtained or confirmation
is received from the Minister that the Irish Merger Act does not apply.
Based upon an examination of the information available to Parent relating to
the business in which Parent, the Company and their respective subsidiaries are
engaged, Parent and Purchaser believe that the Offer and the other transactions
contemplated by the Merger Agreement will not raise competition concerns in
Ireland and that, if the Irish Merger Act applies, clearance from the Minister
should be forthcoming within three to four weeks of the notification being made.
STATE TAKEOVER LAWS. The Company is incorporated under the laws of the
State of Delaware. In general, Section 203 of the DGCL prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the time such person became an interested stockholder
unless, among other things, prior to such time the board of directors of the
corporation approved either the business combination or the transaction in which
the interested stockholder became an interested stockholder. On January 19,
1999, prior to the execution of the Merger Agreement and the Inducement
Agreement, the Board, by unanimous vote of all directors at a meeting held on
such date, approved the Merger Agreement, the Inducement Agreement, the Merger,
the Offer and the other transactions contemplated by the Merger Agreement,
including the Inducement Agreement, and exempted Parent and Purchaser from the
application of Section 203 in connection therewith. Accordingly, Section 203 is
inapplicable to the Offer and the Merger and the transactions contemplated by
the Merger Agreement.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. Mite Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, an anti-takeover statute, which, as a matter of state
securities law, made takeovers of corporations meeting certain requirements more
difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the
Supreme Court held that the State of Indiana may, as a matter of corporate law
and, in particular, with respect to those aspects of corporate law concerning
corporate governance, constitutionally disqualify a potential acquiror from
voting on the affairs of a target corporation without the prior approval of the
remaining stockholders. The state law before the Supreme Court was a shareholder
rights statute that was, by its terms, applicable only to corporations that had
a substantial number of stockholders in the state and were incorporated there.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Purchaser does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not complied with any such laws. Should
any person seek to apply any state takeover law, the Purchaser will take such
action as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is asserted that one or more state takeover laws is applicable to the Offer
or the Merger, and an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer, Purchaser might be required to
file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer and the
30
<PAGE>
Merger. In such case, Purchaser may not be obligated to accept for payment any
Shares tendered. See Section 14.
SECTION 16. FEES AND EXPENSES.
Except as set forth below, neither Parent nor Purchaser will pay any fees or
commissions to any broker, dealer or other person for soliciting tenders of
Shares pursuant to the Offer.
Allen has provided certain financial advisory services in connection with
the acquisition of the Company, and for those services has received $100,000 and
additionally will be entitled to receive approximately $440,000 upon the closing
of the Merger. Parent has also agreed to reimburse Allen for all reasonable
out-of-pocket expenses incurred by Allen, including the reasonable fees and
expenses of legal counsel, and to indemnify Allen against certain liabilities
and expenses in connection with its engagement, including certain liabilities
under the federal securities laws.
Purchaser has retained D.F. King & Co., Inc. as the Information Agent, and
United States Trust Company of New York as the Depositary, in connection with
the Offer. The Information Agent may contact holders of Shares by mail,
telephone, telex, telecopy, telegraph and personal interview and may request
banks, brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners.
As compensation for acting as Information Agent in connection with the
Offer, D.F. King & Co., Inc. will be paid a fee of $10,000 and will also be
reimbursed for certain out-of-pocket expenses and may be indemnified against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws. Purchaser will pay the Depositary
reasonable and customary compensation for its services in connection with the
Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including under federal securities laws. Brokers, dealers, commercial banks and
trust companies will be reimbursed by Purchaser for customary handling and
mailing expenses incurred by them in forwarding material to their customers.
SECTION 17. MISCELLANEOUS.
Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will
make a good faith effort to comply with such state statute. If, after such good
faith effort, Purchaser cannot comply with such state statute, the Offer will
not be made to (nor will tenders be accepted from or on behalf of) the holders
of Shares in such state.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of Purchaser by one or more registered broker-dealers licensed
under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER OR IN THE
LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the SEC a Schedule 14D-1 and
13D, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and 13D and any amendments thereto,
including exhibits, may be inspected at, and copies may be obtained from, the
same places and in the same manner as set forth in Section 7 (except that they
will not be available at the regional offices of the SEC).
31
<PAGE>
UNITED INFORMATION ACQUISITION CORP.
JANUARY 26, 1999
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. 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 of Parent. 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.
The directors and executive officers of Parent are:
<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>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table sets
forth the name, current business address, citizenship, and present principal
occupation or employment, and material occupations 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 of Purchaser. Unless
otherwise indicated, each such person (i) has held his or her principal
occupation for the past five years, has as his or
32
<PAGE>
her current business address, 2 World Trade Center, Suite 5550, New York, New
York 10048, and (ii) has not been convicted in a criminal proceeding and has not
been party to a proceeding related to state and federal securities laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT POSITION AND
NAME AND BUSINESS ADDRESS CITIZENSHIP FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------- --------------- -------------------------------------------------
<S> <C> <C>
Richard M. Block............................. United States Executive Vice President and Chief Financial
Officer, United News & Media, since April 1996.
Vice President - Director of Taxation, MAI North
America, Inc., 1985 - April 1996.
Anne W. Gurnsey.............................. United States Corporate Counsel and Secretary, United News &
Media, since April 1996. Corporate Secretary, MAI
North America, Inc., 1990 - April 1996.
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF UNITED. 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 executive officer of United. Unless
otherwise indicated, each such person (i) has held his principal occupation for
the past five years, (ii) has as his 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>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT POSITION AND
NAME AND BUSINESS ADDRESS CITIZENSHIP FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------- --------------- -------------------------------------------------
<S> <C> <C>
Lord Stevens of Ludgate...................... British Chairman since 1981.
Sir James McKinnon........................... British Deputy Chairman and Non-Executive Director since
Huxley House, April 1996. Chairman, MAI plc, 1992 - April 1996.
28 Copsem Lane,
Esher, Surrey KT10 9HE
Clive Hollick................................ British Group Chief Executive since April 1996. Group
Managing Director, MAI plc, 1974 - February 1997.
Charles Stern................................ British Finance Director since 1992.
Charles Gregson.............................. British Executive Director since April 1996. Director,
MAI plc, since 1984.
Nigel Donaldson.............................. British Executive Director since 1991.
Roger Laughton............................... British Executive Director since April 1996. Chief
Executive Officer, MAI Broadcasting, 1990 - April
1996.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT POSITION AND
NAME AND BUSINESS ADDRESS CITIZENSHIP FIVE-YEAR EMPLOYMENT HISTORY
- --------------------------------------------- --------------- -------------------------------------------------
<S> <C> <C>
Tony Tillin.................................. British Executive Director since March 1998 and Chief
Blenheim House, Executive of Miller Freeman subsidiary since
630 Chiswick High Road, August 1997. Senior executive, EMAP Group, May
London W4 5BG 1996 -August 1997. Senior executive, Reed
International, 1989 - December 1994.
Christopher Powell........................... British Non-Executive Director since April 1996. Chief
12 Bishops Bridge Road Executive, BMP DDB, since 1984.
London W2 6AA
Geoffrey Unwin............................... British Non-Executive Director since April 1996. Chief
Cap Gemini House, Executive Officer, Cap Gemini Group, since 1992.
130 Shaftsbury Avenue
London W1V 8HH
John Botts................................... United States Non-Executive Director since July 1997. Chairman,
Lintas House, Botts & Company Limited, since August 1988.
15-19 New Fetter Lane
London EC4A 1BA
Fields Wicker-Miurin......................... United States Non-Executive Director since March 1998. Director
Lansdowne House of finance and strategy, London Stock Exchange,
Berkeley Square September 1994 - December 1997. Partner, Mercer
London W1X 5DH Management Consulting, 1989 - September 1994.
Partner, A.T. Kearney, since August 1998.
Anne Claire Siddell.......................... British Company Secretary since June 1997. Company
Secretary and Group Legal Director House of
Fraser plc, December 1993 - May 1997.
</TABLE>
34
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35
<PAGE>
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36
<PAGE>
(This page has been left blank intentionally.)
37
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and the Share Certificates should be sent by each stockholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of the following addresses:
THE DEPOSITARY FOR THE OFFER IS:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY HAND BEFORE 4:30 P.M.:
The United States Trust Company The United States Trust Company
of New York of New York
P.O. Box 843 Cooper Station 111 Broadway
New York, New York 10276 New York, New York 10006
Attention: Corporate Trust Services Attention: Lower Level Corporate Trust Window
BY OVERNIGHT COURIER AND BY FACSIMILE TRANSMISSION:
BY HAND AFTER 4:30 P.M. (212) 780-0592
ON EXPIRATION DATE ONLY: Attention: Customer Service
The United States Trust Company CONFIRM BY TELEPHONE TO:
of New York (800) 548-6565
770 Broadway, 13th Floor
New York, New York 10003
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent at its address and telephone number listed below. Additional copies of the
Offer to Purchase and the Letter of Transmittal and other tender offer materials
may be obtained from the Information Agent as set forth below and will be
furnished promptly at Purchaser's expense. You may also contact your broker,
dealer, commercial bank, or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005-4495
Telephone: (800) 488-8075
38
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
AUDITS & SURVEYS WORLDWIDE, INC.
AT $3.24 PER SHARE, NET
PURSUANT TO THE OFFER TO PURCHASE DATED JANUARY 26, 1999
BY
UNITED INFORMATION ACQUISITION CORP.,
A WHOLLY-OWNED SUBSIDIARY
OF
UNITED INFORMATION GROUP, INC.
----------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, FEBRUARY 23, 1999 UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY HAND BEFORE 4:30 P.M.:
The United States Trust Company The United States Trust Company
of New York of New York
P.O. Box 843 Cooper Station 111 Broadway
New York, New York 10276 New York, New York 10006
Attention: Corporate Trust Services Attention: Lower Level Corporate Trust
Window
BY OVERNIGHT COURIER AND BY FACSIMILE TRANSMISSION:
BY HAND AFTER 4:30 P.M. (212) 780-0592
ON EXPIRATION DATE ONLY: Attention: Customer Service
The United States Trust Company CONFIRM BY TELEPHONE TO:
of New York (800) 548-6565
770 Broadway, 13th Floor
New York, New York 10003
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF
TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR, WITH
SIGNATURE GUARANTEE IF REQUIRED, AND COMPLETE THE SUBSTITUTE
FORM W-9 SET FORTH BELOW. SEE INSTRUCTION 1.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE>
This Letter of Transmittal is to be completed by stockholders either if
certificates (the "Share Certificates") evidencing Shares (as defined below) are
to be forwarded herewith or, unless an Agent's Message (as defined in the Offer
to Purchase) is utilized, if delivery of Shares is to be made by book- entry
transfer to the account maintained by the Depositary at The Depository Trust
Company (the "Book-Entry Transfer Facility") pursuant to the book-entry transfer
procedures described in Section 3 of the Offer to Purchase (as defined below).
Stockholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other documents required hereby
to the Depositary prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase) or who cannot complete the procedures for delivery by
book-entry transfer on a timely basis and who wish to tender their Shares must
do so pursuant to the guaranteed delivery procedures set forth in Section 3 of
the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s): ___________________________________________
Window Ticket No. (if any): ________________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
2
<PAGE>
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES)
OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF
BLANK, EXACTLY AS NAME(S) APPEAR(S) ON
SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ---------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
REPRESENTED NUMBER OF
SHARE BY SHARE SHARES
CERTIFICATE CERTIFICATES* TENDERED**
<S> <C> <C> <C>
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET
FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to United Information Acquisition Corp., a
Delaware corporation (the "Purchaser") and wholly-owned subsidiary of United
Information Group, Inc., a Delaware corporation ("Parent"), all outstanding
shares of common stock, par value $.01 per share (the "Shares"), of Audits &
Surveys Worldwide, Inc., a Delaware corporation (the "Company"), pursuant to
Purchaser's offer to purchase all Shares, at a price of $3.24 per Share, net to
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"), receipt of
which is hereby acknowledged, and in this Letter of Transmittal (which, together
with the Offer to Purchase, constitute the "Offer"). The undersigned understands
that Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more affiliates of Parent, the right to purchase all
or any portion of the Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby and all dividends, distributions (including, without limitation,
distributions of additional Shares) and rights declared, paid or distributed in
respect of such Shares on or after January 19, 1999 (collectively,
"Distributions") and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Share Certificates for such Shares and all Distributions, or
transfer ownership of such Shares and all Distributions on the account books
maintained by the Book-Entry Transfer Facility, together, in either case, with
all accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Richard Block and Anne Gurnsey,
and each of them, as such stockholder's attorneys and proxies, each with full
power of substitution, to vote in such manner as each such attorney or proxy or
his substitute shall, in his sole discretion, deem proper, and otherwise act (by
written consent or otherwise) with respect to all the Shares tendered hereby
which have been accepted for payment by Purchaser prior to the time of such vote
or other action (and any and all other Shares or securities issued or issuable
in respect thereof on or after January 19, 1999). This proxy and power of
attorney is coupled with an interest in the Shares tendered hereby, is
irrevocable and is granted in consideration of, and is effective upon, the
acceptance for payment by Purchaser of such Shares in accordance with the terms
of the Offer. Upon such acceptance for payment, all prior proxies and powers of
3
<PAGE>
attorney granted by such stockholder will, without further action, be revoked,
and no subsequent proxy or power of attorney may be given nor any subsequent
written consent executed by such stockholder (and if given or executed, shall
not be effective). The designees of Purchaser will be empowered, with respect to
such Shares for which the appointment is effective, to exercise all voting and
other rights (whether by written consent or otherwise) of such stockholder as
they, in their sole discretion, may deem proper at any annual or special meeting
of the Company's stockholders or any adjournment or postponement thereof, by
written consent in lieu of any such meeting or otherwise. The undersigned
understands that, in order for Shares to be deemed validly tendered, immediately
upon Purchaser's acceptance of such Shares, Purchaser must be able to exercise
full voting rights with respect to such Shares.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that when such Shares are accepted for payment by
Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver any additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase
price, the amount or value of such Distribution as determined by Purchaser in
its sole discretion.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall not be affected by, and all such authority shall survive, the
death or incapacity of the undersigned. Any obligations of the undersigned
hereunder shall be binding upon the heirs, executors, administrators and legal
and personal representatives, successors and assigns of the undersigned. Except
as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the acceptance by the undersigned of the
terms and conditions of the Offer. Purchaser's acceptance of such Shares for
payment will constitute a binding agreement between the undersigned and
Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the undersigned at the address shown above under "Description of
Shares Tendered." In the event that both the Special Payment Instructions and
the Special Delivery Instructions are completed, please issue the check for the
purchase price of all Shares purchased and return all Share Certificates
evidencing Shares not tendered or accepted for payment in the name(s) of, and
mail such check and Share Certificates to, the person(s) so indicated. Unless
otherwise indicated herein in the box entitled "Special Payment Instructions,"
please credit any Shares tendered hereby and delivered by book-entry transfer,
but which are not purchased, by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name(s) of the registered holder(s) thereof if Purchaser does not
purchase any of the Shares tendered hereby.
4
<PAGE>
- -------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6 AND 7)
To be completed ONLY if Share Certificates for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are to
be issued in the name of someone other than the undersigned, or if Shares
tendered hereby and delivered by book-entry transfer which are not purchased
are to be returned by credit to an account maintained at the Book-Entry
Transfer Facility other than that designated above.
Issue check and/or certificate to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
/ / Credit unpurchased Shares delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
____________________________________________________________________________
(ACCOUNT NUMBER)
- ------------------------------------------------------
- ------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 5, 6 AND 7)
To be completed ONLY if Share Certificates for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are to
be sent to someone other than the undersigned, or to the undersigned at an
address other than that shown above.
Issue check and/or certificate to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
- -----------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
X___________________________________________________________________________
X___________________________________________________________________________
(SIGNATURE(S) OF HOLDER(S)
Dated: __________________, 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by Share Certificates and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, agent, officer of a corporation
or other person acting in a fiduciary or representative capacity, please
provide the following information. See Instructions 1 and 5.)
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title) ______________________________________________________
(SEE INSTRUCTION 5)
Address ____________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No. ( )___________________________________________
Taxpayer Identification or Social Security No. _____________________________
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature _______________________________________________________
Name _______________________________________________________________________
(PLEASE PRINT)
Title ______________________________________________________________________
Name of Firm _______________________________________________________________
Address ____________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No. ( )___________________________________________
Dated: __________________, 1999
- --------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if (a) this Letter of Transmittal is signed by the
registered holder of the Shares (which term, for purposes of this document,
includes any participant in the Book-Entry Transfer Facility whose name appears
on a security position listing as the owner of the Shares) tendered herewith
unless such holder has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the reverse
hereof or (b) such Shares are tendered for the account of a bank, broker,
dealer, credit union, savings association or other entity that is a member in
good standing of the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each an "Eligible Institution"). In all other cases, all
signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of
Transmittal is to be completed by stockholders either if Share Certificates are
to be forwarded herewith or if tenders of Shares are to be made pursuant to the
procedures for delivery by book-entry transfer set forth in Section 3 of the
Offer to Purchase. Share Certificates evidencing all physically tendered Shares,
or any Book Entry Confirmation of Shares, as the case may be, as well as a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase) in connection with a book-entry transfer
facility, and any other documents required by this Letter of Transmittal, must,
in any case, be received by the Depositary at its addresses set forth herein on
or prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase). If Share Certificates are forwarded to the Depositary in multiple
deliveries, a properly completed and duly executed Letter of Transmittal must
accompany each such delivery.
Stockholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other required documents to the
Depositary on or prior to the Expiration Date or who cannot complete the
procedures for delivery by book-entry transfer on a timely basis may tender
their Shares by properly completing and duly executing the Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedures set forth in Section 3
of the Offer to Purchase. Pursuant to such procedures: (a) such tender must be
made by or through an Eligible Institution; (b) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made available
by Purchaser, must be received by the Depositary prior to the Expiration Date;
and (c) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or Book Entry Confirmation of Shares, in
each case together with properly completed and duly executed Letter of
Transmittal (or a facsimile thereof), unless an Agent's Message is utilized,
properly completed and duly executed, with any required signature guarantees,
and any other documents required by this Letter of Transmittal, must be received
by the Depositary within three American Stock Exchange trading days after the
date of execution of such Notice of Guaranteed Delivery, all as provided in
Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE SHARE CERTIFICATE
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF THE TENDERING STOCKHOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
7
<PAGE>
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers and/or the number
of Shares should be listed on a separate schedule attached hereto.
4. PARTIAL TENDER. (Not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share Certificate
submitted are to be tendered, fill in the number of Shares which are to be
tendered in the box entitled "Number of Shares Tendered." In such cases, new
Share Certificate(s) evidencing the remainder of the Shares that were evidenced
by your old Share Certificates will be sent to you as soon as practicable after
the Expiration Date. All Shares represented by Share Certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the Share Certificates without alteration, enlargement or
any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names, it will be
necessary to complete, sign and submit as many separate Letters of Transmittal
as there are different registrations of Share Certificates.
If this Letter of Transmittal or any Share Certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority to so act must be
submitted.
When this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share Certificates or
separate stock powers are required unless payment or Share Certificates for
Shares not tendered or purchased are to be issued to a person other than the
registered owner(s). Signatures on such Share Certificates or stock powers must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares listed, the Share Certificate(s) must be
endorsed in blank or accompanied by appropriate stock powers, in either case
signed exactly as the name(s) of the registered holder(s) appear(s) on such
Share Certificate(s). Signatures on such Share Certificate(s) or stock powers
must be guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6,
Purchaser will pay or cause to be paid any stock transfer taxes with respect to
the sale and transfer of purchased Shares to it or its order pursuant to the
Offer. If, however, payment of the purchase price is to be made to, or if Share
Certificate(s) for Shares not tendered or purchased are to be registered in the
name of, any person other than the registered holder(s), or if tendered Share
Certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder(s), such other person or otherwise)
payable on account of the transfer to such person will be deducted from the
purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT
WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE SHARE
CERTIFICATES EVIDENCING THE SHARES TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s) for
unpurchased Shares are to be issued, in the name of a person other than the
person(s) signing this Letter of Transmittal or if a check is to be sent or such
Share Certificates are to be returned to someone other than the person(s)
signing this Letter
8
<PAGE>
of Transmittal or to the person(s) signing this Letter of Transmittal but at an
address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed. Stockholders tendering Shares by book-entry
transfer may request that Shares not purchased be credited to such account
maintained at the Book-Entry Transfer Facility as such stockholder may designate
hereon. If no such instructions are given, such Shares not purchased will be
returned by crediting the account at the Book-Entry Transfer Facility from which
such Shares were delivered.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Information Agent at its address
or telephone number set forth below. Additional copies of the Offer to Purchase,
this Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained
from the Information Agent or from brokers, dealers, commercial banks or trust
companies.
9. SUBSTITUTE FORM W-9. The tendering stockholder is required to provide the
Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price. If the
tendering stockholder has not been issued a TIN and has applied for a number or
intends to apply for a number in the near future, such stockholder should write
"Applied For" in the space provided for the TIN in Part I of the Substitute Form
W-9, and sign and date the Substitute Form W-9. If "Applied For" is written in
Part I and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% on all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
10. LOST, DESTROYED OR STOLEN SHARE CERTIFICATES. If any Share
Certificate(s) representing Shares has been lost, destroyed or stolen, the
stockholder should promptly notify the Information Agent. The stockholder will
then be instructed as to the steps that must be taken in order to replace the
Share Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed Share
Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND
SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED
DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If a tendering stockholder is subject to backup withholding, he or she
must cross out Item (2) of the Certification box on the Substitute Form W-9. If
the Depositary is not provided with the correct TIN, the stockholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding. If a stockholder
makes a false statement that results in no imposition of backup withholding, and
there was no reasonable basis for such statement, a $500 penalty may also be
imposed by the Internal Revenue Service.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a statement, signed under penalties of
perjury, attesting to that individual's exempt status. Such statements may be
obtained from the Depositary. Exempt stockholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below and sign, date and return the Substitute Form W-9 to
the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions. A
stockholder should consult his or her tax advisor as to such stockholder's
qualification for exemption from backup withholding and the procedure for
obtaining such exemption.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent federal income tax backup withholding on payments of cash that
are made to a stockholder with respect to Shares purchased pursuant to the
Offer, the stockholder must provide the Depositary with such stockholder's
correct TIN by completing the form below certifying under penalties of perjury
(a) that the TIN provided on Substitute Form W-9 is correct (or that such
stockholder is awaiting a TIN) and (b) that (i) such stockholder has not been
notified by the Internal Revenue Service that such stockholder is subject to
backup withholding as a result of a failure to report all interest or dividends
or (ii) the Internal Revenue Service has notified such stockholder that such
stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price until a
TIN is provided to the Depositary.
10
<PAGE>
PAYER'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<C> <S> <C>
- -----------------------------------------------------------------------------------------
SUBSTITUTE PART I--PLEASE SOCIAL SECURITY NUMBER
FORM W-9 PROVIDE YOUR TIN IN OR ------------------------
Department of the Treasury THE BOX AT RIGHT AND EMPLOYER IDENTIFICATION NUMBER
Internal Revenue Service CERTIFY BY SIGNING
AND DATING BELOW.
-------------------------------------------------------
PART II--For Payees exempt from backup withholding, see
the enclosed Guidelines for Certification of Taxpayer
Payer's Request for Taxpayer Identification Number on Substitute Form W-9 and
Identification Number (TIN) complete as instructed therein.
-------------------------------------------------------
(If awaiting TIN write "Applied For")
- -----------------------------------------------------------------------------------------
CERTIFICATION--Under the penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or a
Taxpayer Identification Number has not been issued to me) and either (a) I have mailed
or delivered an application to receive a Taxpayer Identification Number to the
appropriate Internal Revenue Service ("IRS") or Social Security Administration office or
(b) I intend to mail or deliver an application in the near future. (I understand that if
I do not provide a Taxpayer Identification Number within 60 days, 31% of all reportable
payments made to me thereafter will be withheld until I provide a number); and
(2) I am not subject to backup withholding either because I have not been notified by
the IRS that I am subject to backup withholding as a result of a failure to report all
interest or dividends, or the IRS has notified me that I am no longer subject to backup
withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified
by the IRS that you are subject to backup withholding because of underreporting interest
or dividends on your tax return. However, if after being notified by the IRS that you
were subject to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out item (2). (Also see
instructions in the enclosed Guidelines).
SIGNATURE -------------------------------------------------- DATE--------------- , 1999
- -----------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THIS OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
Facsimiles of the Letter of Transmittal, properly completed and duly signed,
will be accepted. The Letter of Transmittal, Share Certificates and any other
required documents should be sent or delivered by each stockholder to such
stockholder's broker, dealer, commercial bank, trust company or other nominee to
the Depositary at one of its addresses set forth below.
11
<PAGE>
THE DEPOSITARY FOR THE OFFER IS:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY HAND BEFORE 4:30 P.M.:
The United States Trust Company The United States Trust Company
of New York of New York
P.O. Box 843 Cooper Station 111 Broadway
New York, New York 10276 New York, New York 10006
Attention: Corporate Trust Services Attention: Lower Level Corporate Trust Window
BY OVERNIGHT COURIER AND BY FACSIMILE TRANSMISSION:
BY HAND AFTER 4:30 P.M. (212) 780-0592
ON EXPIRATION DATE ONLY: Attention: Customer Service
The United States Trust Company CONFIRM BY TELEPHONE TO:
of New York (800) 548-6565
770 Broadway, 13th Floor
New York, New York 10003
</TABLE>
Questions or request for assistance may be directed to the Information Agent
at its address and telephone number listed below. Additional copies of the Offer
to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery
may be obtained from the Information Agent. A stockholder may also contact
brokers, dealers, commercial banks or trust companies for assistance concerning
the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, NY 10005-4495
Telephone: (800) 488-8075
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
AUDITS & SURVEYS WORLDWIDE, INC.
TO
UNITED INFORMATION ACQUISITION CORP.,
A WHOLLY-OWNED SUBSIDIARY
OF
UNITED INFORMATION GROUP, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) (i) if certificates ("Share
Certificates") evidencing shares of common stock, par value $.01 per share (the
"Shares"), of Audits & Surveys Worldwide, Inc., a Delaware corporation (the
"Company"), are not immediately available, (ii) if Share Certificates and all
other required documents cannot be delivered to United States Trust Company of
New York, as Depositary (the "Depositary"), prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase (as defined below)) or (iii) if
the procedures for book-entry transfer cannot be completed on a timely basis.
This Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram, telex or facsimile transmission to the Depositary. See
Section 3 of the Offer to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL: BY HAND BEFORE 4:30 P.M.:
The United States Trust Company The United States Trust Company
of New York of New York
P.O. Box 843 Cooper Station 111 Broadway
New York, New York 10276 New York, New York 10006
Attention: Corporate Trust Services Attention: Lower Level Corporate Trust
Window
BY OVERNIGHT COURIER AND BY FACSIMILE TRANSMISSION:
BY HAND AFTER 4:30 P.M. (212) 780-0592
ON EXPIRATION DATE ONLY: Attention: Customer Service
The United States Trust Company CONFIRM BY TELEPHONE TO:
of New York (800) 548-6565
770 Broadway, 13th Floor
New York, New York 10003
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE
TRANSMISSION OR TELEX OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to United Information Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of United Information Group,
Inc., a Delaware corporation, 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 constitute the
"Offer"), receipt of each of which is hereby acknowledged, the number of Shares
specified below pursuant to the guaranteed delivery procedures described in
Section 3 of the Offer to Purchase.
<TABLE>
<CAPTION>
Please Type or Print
<S> <C>
Number of Shares: Name(s) of Record Holder(s)
Share Certificate No(s). (if available) -----------------------------------------
------------------------------------------ -----------------------------------------
------------------------------------------ Address(es)
Check box if Shares will be tendered by -----------------------------------------
book-entry transfer through The Depository -----------------------------------------
Trust Company: -----------------------------------------
Zip Code
/ / Account Number Area Code and Tel. No.
-----------------------------------------
x ---------------------------------------------------------------------------------
x ---------------------------------------------------------------------------------, 1999
Signature(s) Dated
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity that is a member in good standing of the Securities Transfer
Agents Medallion Program, the New York Stock Exchange Medallion Signature
Guarantee Program or the Stock Exchange Medallion Program, guarantees delivery
to the Depositary, at one of its addresses set forth above of Share Certificates
representing the Shares tendered hereby in proper form for transfer, or
confirmation of book-entry transfer of such Shares into the Depositary's account
at the Book-Entry Transfer Facility (as defined in the Offer to Purchase) with
delivery of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees or an Agent's Message
(as defined in the Offer to Purchase) in the case of a book-entry delivery, and
any other required documents, within three American Stock Exchange trading days
after the date hereof.
<TABLE>
<CAPTION>
- -------------------------------------------- --------------------------------------------
<S> <C>
Name of Firm Authorized Signature
- -------------------------------------------- --------------------------------------------
Address Please Type or Print Name
- -------------------------------------------- --------------------------------------------
Zip Code Title
- -------------------------------------------- --------------------------------------, 1999
Area Code and Tel. No. Date
</TABLE>
NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AUDITS & SURVEYS WORLDWIDE, INC.
AT
$3.24 PER SHARE, NET
BY
UNITED INFORMATION ACQUISITION CORP.,
A WHOLLY-OWNED SUBSIDIARY
OF
UNITED INFORMATION GROUP, INC.
- ----------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON, TUESDAY, FEBRUARY 23, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
January 26, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
United Information Acquisition Corp., a Delaware corporation ("Purchaser")
and a wholly-owned subsidiary of United Information Group, Inc., a Delaware
corporation, is offering to purchase all outstanding shares of common stock, par
value $.01 per share (the "Shares"), of Audits & Surveys Worldwide, Inc., a
Delaware corporation (the "Company"), 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
Purchaser's Offer to Purchase, dated January 26, 1999 (the "Offer to Purchase"),
and the related Letter of Transmittal (which together constitute the "Offer")
enclosed herewith. Please furnish copies of the enclosed materials to those of
your clients for whose accounts you hold Shares registered in your name or in
the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE OUTSTANDING SHARES OF THE COMPANY ON A FULLY DILUTED BASIS AND
(II) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. THE OFFER IS
ALSO SUBJECT TO OTHER TERMS AND CONDITIONS WHICH ARE CONTAINED IN THE OFFER TO
PURCHASE.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following documents:
1. Offer to Purchase, dated January 26, 1999;
2. Letter of Transmittal to be used by stockholders of the Company in accepting
the Offer and tendering Shares;
<PAGE>
3. Notice of Guaranteed Delivery to be used to accept the Offer if certificates
evidencing such Shares (the "Share Certificates") are not immediately
available or time will not permit all required documents to reach United
States Trust Company of New York (the "Depositary") prior to the Expiration
Date (as defined in the Offer to Purchase) or if the procedures for
book-entry transfer, as set forth in the Offer to Purchase, cannot be
completed on a timely basis;
4. A letter to stockholders of the Company from Solomon Dutka, Chairman of the
Board and Chief Executive Officer of the Company, together with the
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose account you hold Shares
registered in your name or in the name of your nominees, with space provided
for obtaining such clients' instructions with regard to the Offer;
6. Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9; and
7. A return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, FEBRUARY 23, 1999, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
Share Certificates or timely confirmation of a book-entry transfer of such
Shares, into the Depositary's account at The Depository Trust Company pursuant
to the procedures set forth in Section 3 of the Offer to Purchase, (ii) a Letter
of Transmittal (or facsimile thereof) properly completed and duly executed, with
any required signature guarantees, or an Agent's Message (as defined in the
Offer to Purchase) in connection with a book-entry delivery of Shares and (iii)
any other documents required by the Letter of Transmittal.
If a holder of Shares wishes to tender, but cannot deliver his, her or its
Share Certificates or other required documents, or cannot comply with the
procedures for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedures
set forth in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Depositary and the Information Agent as described
in the Offer to Purchase) in connection with the solicitation of tenders of
Shares pursuant to the Offer. However, Purchaser will, upon request, reimburse
you for customary mailing and handling expenses incurred by you in forwarding
the enclosed materials to your clients. Purchaser will pay or cause to be paid
any stock transfer taxes payable with respect to the transfer of Shares to it,
except as otherwise provided in Instruction 6 of the enclosed Letter of
Transmittal.
Any inquiries you may have with respect to the Offer, and requests for
additional copies of the enclosed materials, should be made to D.F. King & Co.,
Inc. by telephone at (800) 488-8075 or at its address set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
UNITED INFORMATION ACQUISITION CORP.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON TO ACT ON BEHALF OF OR AS AN AGENT OF PARENT, PURCHASER, THE
INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AUDITS & SURVEYS WORLDWIDE, INC.
AT $3.24 PER SHARE, NET
BY
UNITED INFORMATION ACQUISITION CORP.,
A WHOLLY-OWNED SUBSIDIARY
OF
UNITED INFORMATION GROUP, INC.
----------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, FEBRUARY 23, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
January 26, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated January 26,
1999 (the "Offer to Purchase"), and a related Letter of Transmittal (which
together constitute the "Offer") in connection with the offer by United
Information Acquisition Corp., a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of United Information Group, Inc., a Delaware
corporation (the "Parent"), to purchase all outstanding shares of common stock,
par value $.01 per share (the "Shares"), of Audits & Surveys Worldwide, Inc., a
Delaware corporation (the "Company"), 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. Also enclosed is the letter to stockholders of the Company
from Solomon Dutka, Chairman of the Board and Chief Executive Officer of the
Company, together with the Solicitation/Recommendation Statement on Schedule
14D-9 filed with the Securities and Exchange Commission by the Company.
We are (or our nominee is) the holder of record of Shares held by us for
your account. A TENDER FOR SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender on your behalf
any or all of such Shares held by us for your account, pursuant to the terms and
conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $3.24 per Share, net to the seller in cash.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company unanimously has determined that each
of the Offer and the Merger pursuant to the Offer (as defined in the Offer
to Purchase) is fair to, and in the best interests of, the Company's
stockholders and recommends that stockholders of the Company accept the
Offer and tender their Shares.
4. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, FEBRUARY 23, 1999, UNLESS THE OFFER IS EXTENDED.
<PAGE>
5. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE OUTSTANDING SHARES OF THE COMPANY ON A FULLY DILUTED BASIS
AND (II) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED.
THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS WHICH ARE CONTAINED
IN THE OFFER TO PURCHASE.
6. Stockholders who tender Shares will not be obligated to pay brokerage
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant
to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, signing and returning to us the instruction form contained in
this letter. An envelope in which to return your instructions to us is enclosed.
If you authorize the tender of your Shares, all such Shares will be tendered
unless otherwise specified in your instructions. YOUR INSTRUCTIONS TO US SHOULD
BE FORWARDED IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR
TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal, and is being made to all holders of Shares. The Offer is not being
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER
TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AUDITS & SURVEYS WORLDWIDE, INC.
BY
UNITED INFORMATION ACQUISITION CORP.,
A WHOLLY-OWNED SUBSIDIARY
OF
UNITED INFORMATION GROUP, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase of United Information Acquisition Corp., a Delaware corporation
("Purchaser") and a wholly-owned subsidiary of United Information Group, Inc., a
Delaware corporation, dated January 26, 1999, and the related Letter of
Transmittal relating to shares of common stock, par value $.01 per share (the
"Shares"), of Audits & Surveys Worldwide, Inc., a Delaware corporation.
This will instruct you to tender to Purchaser the number of Shares indicated
below (or, if no number is indicated below, all Shares) that are held by you for
the account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and Letter of Transmittal.
- --------------------------------------------------------------------------------
SIGN HERE
NUMBER OF SHARES TO BE TENDERED:* ___________________________________ SHARES
Account Number:
-----------------------
----------------------------------------------------------, Dated:
------------------, 1999
Signature(s)
____________________________________________________________________________
Please print name(s) and address(es) here
____________________________________________________________________________
Tax Identification or Social Security Number
----------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all of your Shares
held by us for your account are to be tendered.
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------
GIVE THE
SOCIAL SECURITY
OR EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------
<S> <C> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, any
one of the
individuals(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the
minor(1)
6. Account in the name The ward, minor, or
of guardian or incompetent
committee for a person(3)
designated ward,
minor, or
incompetent person
7. a. The usual The grantor-
revocable savings trustee(1)
trust account
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is
not a legal or
valid trust under
State law
8. Sole proprietorship The owner(4)
account
- -----------------------------------------------------
<CAPTION>
GIVE THE
SOCIAL SECURITY OR
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
<S> <C> <C>
- -----------------------------------------------------
9. A valid trust, The legal entity (Do
estate, or pension not furnish the
trust identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(5)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
held in the name of
the business
13. Association, club or The organization
other tax-exempt
organization
14. A broker or The broker or
registered nominee nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ---------------------------------------------
- ---------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a)
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount renewed is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure due to reasonable cause and not to
willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE>
Exhibit 99(a)(7)
UNITED NEWS & MEDIA
FOR IMMEDIATE RELEASE
TO ALL CITY EDITORS 20 JANUARY 1999
UNITED NEWS & MEDIA DOUBLES US MARKET RESEARCH PRESENCE
United News & Media's fast-growing market research and information company,
United Information Group (UIG), has made an agreed offer to acquire Audits &
Surveys Worldwide Inc. (Audits & Surveys), a market research company
headquartered in New York, for $3.24 per share, a total cash consideration of
$42.5 million. Audits & Surveys is traded on the American Stock Exchange
under the symbol "ASW".
The acquisition, which will make a positive contribution to earnings in the
first year, makes United Information Group one of the world's top 5 custom
research organisations with about $240 million of revenues and doubles its
size in the United States. 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 the ability
of UIG's UK subsidiary, NOP, to sell US market research to its established
blue-chip clients while allowing Audits & Surveys to increase substantially
the international products and services offered to its own US customers.
UIG 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, and 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.
Audits & Surveys was founded in 1953 by its current Chairman, Sol Dutka, and
has grown to become 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. With services
offered in over 80 countries, Audits & Survey' clients list is largely
composed of household names such as Coca-Cola, IBM, Visa and Volvo.
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 in addition to his present role. H. Arthur
Bellows Jr., current President of Audits & Surveys Worldwide, will serve as a
consultant to Audits & Surveys after completion of the transaction.
Jim Rose, CEO of United Information Group, said:
<PAGE>
-2-
"This move greatly enhances United Information Group's presence in the US
market and allows Audits & Surveys to provide an expanded international
service to its 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.
Sol Dutka, Chairman of Audits & Surveys, said:
"The combination of Audits & Surveys and United Information Group brings
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."
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."
Enquiries:
Ricardo Tejada United News & Media 0171 921 5031
Richard Sauders Cardew & Co. 0171 930 0777
NOTE TO EDITORS:
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 26 JANUARY 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 TO SELL THEIR AUDITS & SURVEYS WORLDWIDE SHARES TO UNITED
INFORMATION ACQUISITION CORP (UIAC) 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 CONDITIONAL 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 UIAC TO MERGE INTO AUDITS & SURVEYS AND ALL
REMAINING COMMON SHARES WILL BE CONVERTED INTO THE RIGHT TO RECEIVE $3.24 PER
SHARE.
<PAGE>
<TABLE>
<S> <C>
This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares.
The Offer is made solely by the Offer to Purchase dated January 26, 1999 and the related
Letter of Transmittal and is being made to all holders of Shares. The Offer is not
being made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction. In
those jurisdictions where securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of United Information
Acquisition Corp. by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
</TABLE>
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
AUDITS & SURVEYS WORLDWIDE, INC.
AT
$3.24 NET PER SHARE
BY
UNITED INFORMATION ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
UNITED INFORMATION GROUP, INC.
United Information Acquisition Corp., a Delaware corporation ("Purchaser")
and a wholly-owned subsidiary of United Information Group, Inc., a Delaware
corporation ("Parent"), is offering to purchase all outstanding shares of
common stock, par value $.01 per share (the "Shares"), of Audits & Surveys
Worldwide, Inc., a Delaware corporation (the "Company"), 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 in the related Letter of Transmittal (which
together constitute the "Offer"). Following the Offer, Purchaser intends to
effect the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, FEBRUARY 23, 1999, UNLESS THE
OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer at least a
majority of the Shares outstanding on a fully diluted basis and (ii) the
expiration or termination of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Offer
is also subject to other terms and conditions contained in the Offer to
Purchase.
<PAGE>
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of January 19, 1999, among United News & Media Group Limited,
Purchaser and the Company (the "Merger Agreement"). The Merger Agreement
provides that, among other things, after the purchase of Shares pursuant to
the Offer and the satisfaction of the other conditions set forth in the
Merger Agreement and in accordance with the relevant provisions of the
General Corporation Law of the State of Delaware (the "DGCL"), Purchaser will
be merged (the "Merger") with and into the Company (following the Merger, the
"Surviving Corporation"). Following consummation of the Merger, the Surviving
Corporation will be a wholly-owned subsidiary of Parent. At the effective
time of the Merger (the "Effective Time"), each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by
Purchaser, Parent or any direct or indirect wholly-owned subsidiary of
Parent, or owned by the Company or any direct or indirect wholly-owned
subsidiary of the Company or held by stockholders who shall have demanded and
perfected appraisal rights, if any, under the DGCL) will be canceled and
converted automatically into the right to receive $3.24 in cash, or any
higher price that may be paid per Share in the Offer, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT
EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF,
THE STOCKHOLDERS OF THE COMPANY, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to United
States Trust Company of New York (the "Depositary") of Purchaser's
acceptance for payment of such Shares pursuant to the Offer. Upon the terms
and subject to the conditions of the Offer, payment for Shares accepted for
payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase
price for Shares be paid, regardless of any extension of the Offer or delay
in making such payment. In all cases, payment for Shares tendered and
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of (1) the certificates evidencing such Shares (the
"Share Certificates") or timely confirmation of a book-entry transfer of
such Shares into the Depositary's account at the Book-Entry Transfer Facility
(as defined in Section 2 of the Offer to Purchase) pursuant to the procedure
set forth in Section 3 of the Offer to Purchase, (ii) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message (as defined in Section 3 of the Offer to
Purchase) and (iii) any other documents required under the Letter of
Transmittal.
<PAGE>
Purchaser expressly reserves the right, in its sole discretion (subject
to the terms and conditions of the Merger Agreement), at any time and from
time to time, to extend for any reason the period of time during which the
Offer is open, including the occurrence of any condition specified in Section
14 of the Offer to Purchase, by giving oral or written notice of such
extension to the Depositary. Any such extension will be followed as promptly
as practicable by public announcement thereof, such announcement to be made
no later than 9:00 a.m., New York City time, on the next business day after
the previously scheduled Expiration Date (as defined below) of the Offer.
During any such extension, all Shares previously tendered and not withdrawn
will remain subject to the Offer, subject to the rights of a tendering
stockholder to withdraw his, her or its Shares.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
February 23, 1999, unless and until Purchaser, in its sole discretion, shall
have extended the period of time during which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by Purchaser, will expire.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer,
may also be withdrawn at any time after March 27, 1999. For the withdrawal to
be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover page of the Offer to Purchase. Any such notice of
withdrawal must specify the name of the person who tendered the Shares to be
withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in Section 3 of the Offer to Purchase), unless such
Shares have been tendered for the account of an Eligible Institution. If
Shares have been tendered pursuant to the procedure for book-entry transfer
as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares. All questions as to the
form and validity (including the time of receipt) of any notice of withdrawal
will be determined by Purchaser, in its sole discretion, whose determination
will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares whose
<PAGE>
names appear on the Company's stockholder list and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance or for additional copies of the
Offer to Purchase and the related Letter of Transmittal and other tender
offer materials may be directed to the Information Agent as set forth below,
and copies will be furnished promptly at Purchaser's expense. No fees or
commissions will be paid to brokers, dealers or other persons (other than the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
77 Water Street
New York, New York 10005-4495
Banks and Brokers Call Collect: (212) 269-5550
Call Toll Free: (800) 488-8075
January 26, 1999
<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).
2
<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
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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."
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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.
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(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
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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
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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
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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
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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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(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
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<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>
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<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>
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